Celsius Network, the troubled cryptocurrency lender, has reached a crucial stage in the ongoing drama that is its bankruptcy. A settlement option has been granted to the firm’s material account holders as part of its modified joint Chapter 11 reorganization plan, indicating that the company has just taken that step. This strategy addresses the “withdrawal preference exposure” by emphasizing the obligations of account holders who have made significant transfers in the ninety days prior to the petition date of July 13, 2022.
A notice of intent to notify creditors has been filed by the receivers of “Celsius”. The notice said account holders who withdrew more than $100,000 within the 90-day period may be asked to repay that money. Those persons who have a “withdrawal preference exposure” of more than $100,000, who are not excluded parties, who have not voted to reject the plan of reorganization, and who have not waived exemptions, are included in the particular category that is directed. By making a payment of 27.5% of the total amount by January 31, 2024, these individuals will be able to cover their liability.
It is important to note that account holders who have an exposure of less than or equal to $100,000 are excluded from this action and do not need to take any steps to settle their withdrawal preference exposure. However, there is a possibility that individuals who do not reach an agreement may be subject to legal consequences from the dispute administrator after the effective date.
Due to the logistical challenges involved in receiving payments in cryptocurrencies such as Bitcoin and Ethereum, or by dividend interception, payment for the settlement can only be made in cash. This is because the effective date of the plan would be significantly complicated by these forms of payment. In addition to providing the necessary bank account information for wire transfers, the selection form also includes instructions on how to make this cash contribution directly to the relevant party.
More broadly, the move by Celsius is part of the company’s attempts to restructure itself after filing for bankruptcy. In light of the fact that the firm’s financial statement included a deficit of $1.2 billion, the corporation filed for bankruptcy on July 13, 2022. Some of the holdings will be returned to account holders as part of the restructuring plan that was adopted from creditors. Additionally, a new mining business will be created from the assets still under Celsius’ control.
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