For its proposed Chapter 11 restructuring plan, bankrupt cryptocurrency lender Celsius Network has selected NovaWulf Digital Management as the sponsor.
Under the plan, the investment advisory firm will take over the management of a new company, and most customers are expected to recover up to 70% of their money.
On February 15, Celsius filed a document with the United States Bankruptcy Court for the Southern District of New York outlining the strategy. The Celsius Official Committee of Unsecured Creditors (UCC), a group that defends the rights of Celsius account holders, supports the proposed approach.
According to the concept, a new public platform named NewCo that is entirely owned by Earn will be created, with the UCC selecting the majority of the board members. The new board will not have any “Celsius founder engagement or relationships,” according to the plan.
Additionally, NovaWulf will give the new company a direct cash contribution in the range of $45 million and $55 million. The NovaWulf plan, through a new firm operated by skilled asset managers, “provides the best option to divide the Debtors’ liquid crypto assets and maximize the value of the Debtors’ illiquid assets,” according to Celsius’ filing. With future intentions to build cryptocurrency-focused services, the new company will store Celsius’ illiquid assets, mining operation, and current loan portfolio.
Following communication with “over 130 parties,” Celsius received proposals from six companies, including Binance, Bank to the Future, Cumberland DRW, and Galaxy Digital. In July 2022, the company stopped accepting withdrawals because to “severe market conditions” and reports of insolvency, and then filed for Chapter 11 bankruptcy.
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