- Celsius files a new reorganization plan.
- The plan proposes converting all altcoin holdings to BTC and ETH.
- The proposed conversion has drawn heavy opposition from borrowers.
As part of its reorganization plan filed on June 15, 2023, bankrupt crypto lending protocol Celsius Network proposes converting altcoin holdings into BTC and ETH, except for holdings stored in Custody and Withheld accounts. While the move aims to address regulatory concerns and maximize asset value, it has drawn opposition from borrowers who fear potential losses.
Concerns of Borrowers
Celsius Network seeks court approval to convert its altcoin holdings to Bitcoin and Ethereum starting on July 1. The proposed plan has raised concerns among borrowers with collateral locked up in Celsius Network. They fear potential losses due to implementing a “set off” treatment, whereby Celsius could nullify the collateral it owes to borrowers.
Borrowers argue that this violates consumer lending laws and have opposed the plan.
The Celsius Network Official Committee of Unsecured Creditors has approved the reorganization plan. However, this approval does not negate the concerns raised by borrowers opposing the plan. The committee’s stance highlights the situation’s complexity and the need for thorough assessment and consideration of all parties involved.
Legal Complexity
Opponents of Celsius Network’s reorganization plan have until June 26 to submit written objections electronically. These objections will be addressed during a court hearing on June 28.
Celsius has also sought permission to appoint Chris Ferraro as the foreign representative, protecting the company’s assets in the United Kingdom under the Cross-Border Insolvency Regulations.
This measure safeguards U.K. assets while acknowledging the United States Chapter 11 bankruptcy proceedings as the “foreign main proceedings.” The global resolution approach intends to organize a comprehensive solution for Celsius Network.
Conclusion
Celsius Network’s reorganization plan to convert altcoin holdings to Bitcoin and Ethereum has triggered concerns and opposition from borrowers who fear potential losses due to the “set off” treatment.
While the Celsius Network Official Committee of Unsecured Creditors has approved, borrowers plan to challenge the plan in court, citing violations of consumer lending laws. The upcoming court hearing will shed light on the legal implications and the fate of Celsius Network’s reorganization efforts.
