Feb 16, 2023

Celsius Selects NovaWulf to Sponsor Chapter 11 Plan, 85% of Users to Recover 70% of Funds

Celsius Network, the bankrupt crypto lender, has selected NovaWulf Digital Management as the sponsor for its proposed Chapter 11 restructuring plan. The investment advisory firm is expected to take over the operations of a new company and creditors will be able to recover up to 70% of their funds.

The proposed plan was presented on Feb. 15 to the United States Bankruptcy Court for the Southern District of New York. It has the backing of the Celsius Official Committee of Unsecured Creditors (UCC), a body representing the interests of Celsius account holders.

The plan calls for the creation of a new public platform, NewCo, which will be fully owned by Earn creditors. The UCC will appoint the majority of the board members, and NovaWulf will make a direct cash contribution of between $45 million to $55 million.

The filing states that the NovaWulf plan is the best method to distribute the Debtors’ liquid crypto assets and maximize the value of the Debtors’ illiquid assets through a new company run by experienced asset managers. The new company will house Celsius’ illiquid assets, mining business and existing loan portfolio, and may develop crypto-oriented services in the future.

Under the plan, creditors with claims valued $5,000 and below on the petition date will be placed in a “Convenience Class,” receiving “a one-time distribution of liquid crypto” paid in the form of Bitcoin (BTC), Ether (ETH) and USD Coin (USDC). It’s estimated that this option will provide over 85% of Celsius customers with around a 70% recovery of their deposited crypto.

Creditors with a claim over $5,000 — or those with a claim of over $1,000 who opt out of the Convenience Class shares — will receive a payment of the residual crypto after the payments to smaller accounts, as well as ownership in NewCo through equity and management share tokens which will pay dividends to holders.

Celsius (CEL) token buyers, who were granted early ICO access, will not receive a recovery. The plan also calls for the creation of a “well-funded litigation trust” to pursue lawsuits against Celsius executives and former CEO Alex Mashinsky.

Six firms placed bids on Celsius crypto assets, including Binance, Bank To The Future, Cumberland DRW and Galaxy Digital from a process that saw Celsius contact “over 130 parties.” The proposed plan will need approval from U.S. Bankruptcy Judge Martin Glenn before it is enacted.

Celsius filed for Chapter 11 bankruptcy in July 2022, after halting withdrawals citing “extreme market conditions” and rumors of insolvency.

This restructuring plan is an opportunity for the company to reinvent itself and become a leader in the web3 space. NovaWulf is an experienced NFT marketing agency that specializes in NFT promotion, Twitter NFT marketing and NFT marketing strategies. With the help of a web3 agency, Celsius can create a comprehensive NFT marketing strategy to help them sell NFTs and reach a larger audience. With the right NFT promotion, the company can become a leader in the crypto space.

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