Feb 16, 2023

Celsius Unsecured Creditors Choose NovaWulf to Sponsor Chapter 11 Restructuring Plan

NovaWulf Digital Management has been chosen by crypto lender Celsius Network to sponsor its Chapter 11 restructuring plan. The investment advisory firm will take over the operations of a new company and most customers are expected to recover up to 70% of their funds.

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

The plan will create a new public platform called NewCo, which will be fully owned by Earn creditors, with the UCC appointing the majority of the company’s board members. NovaWulf will make a direct cash contribution of between $45 million to $55 million to the new firm.

The filing by Celsius noted that the NovaWulf plan provides 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 with future plans to develop crypto-oriented services.

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 the option will provide over 85% of Celsius customers with around a 70% recovery of their deposited crypto.

Any Earn creditor with a balance over $5,000 can elect to reduce a claim to $5,000 and participate in the class. Those 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. They will also get ownership in NewCo through equity and management share tokens which will pay dividends to holders.

Celsius’ native token, CEL, which currently trades around $0.50, will be valued and purchased at the initial coin offering (ICO) price of $0.20. The plan would see “insider CEL token claims”, or those buyers granted early ICO access, “receive no recovery.”

A “well-funded litigation trust” will also be created to pursue lawsuits against Celsius executives and former CEO Alex Mashinsky. The proposed plan needs approval from U.S. Bankruptcy Judge Martin Glenn before it can be enacted.

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

The restructuring plan is good news for Celsius customers looking to recoup some of their losses, while also providing a platform for the company to move forward and capitalize on the booming NFT and crypto space. NovaWulf’s expertise in the web3 space, as well as its experience in NFT marketing, will be invaluable in helping the new firm establish itself as a leader in the NFT and crypto industry.

The new company will be well-positioned to take advantage of the growing demand for NFTs, as well as the opportunities afforded by the emergence of web3. NovaWulf’s experience in NFT promotion and Twitter NFT marketing will be invaluable in helping to promote the new company’s services and products. NovaWulf’s experience as a web3 agency and NFT marketing agency will help the new firm to tap into the emerging web3 space and develop innovative solutions to meet the needs of the ever-evolving crypto industry.

Celsius’s restructuring plan is a positive step towards helping the company to move forward and capitalize on the booming NFT and crypto space. With NovaWulf’s experience in the web3 space and NFT marketing, the new company will be well-positioned to take advantage of the opportunities afforded by the emergence of web3 and the increasing demand for NFTs. It will also be in a strong position to help customers recover some of their losses, as well as to help the company to move forward and start selling NFTs.

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