Bankrupt crypto lender Celsius is set to emerge from bankruptcy by early 2024 after its reorganization plan was approved by a New York court.
The plan would return between 67% and 85% of holdings to creditors, who largely approved the measure in September, and another $2 billion has been allocated to customers who had money on the Celsius platform.
Retail customers who had funds in the form of the company’s native CEL token are to receive 25 cents on the dollar for each token. The price of Celsius’ native token jumped more than 30% on Friday morning, to just above 27 cents, according to CoinGecko.
As part of the reorganization plan, a new company will emerge owned by Fahrenheit LLC, a group that includes Arrington Capital and the crypto miner U.S. Bitcoin Corp., which won the bidding war for Celsius’s assets in May.
The relaunched company will be referred to in filings by the placeholder “NewCo” until a new name is chosen. The enterprise, which will focus on staking and mining, will have a $1.25 billion balance sheet, which includes $450 million in liquid cryptocurrency, according to a court filing. The company expects to make “$10 to $20 million per year” through staking crypto on the Ethereum network, according to the filing.
Fahrenheit also agreed to buy a $50 million minority stake in the new company and to list those shares publicly so Celsius customers can sell their stakes and recuperate more of their losses, according to Reuters.
Celsius filed for Chapter 11 bankruptcy in July 2022 and was one of the major crypto companies to collapse following the implosion of Terraform Labs’ stablecoin TerraUSD. The company’s former CEO, Alex Mashinsky, was later charged with fraud by the Justice Department and is currently out on a $40 million bond as he awaits a trial scheduled for September. (He pleaded not guilty.)
The new company emerging from the bankruptcy proceedings intends to pursue litigation against Mashinsky, according to Reuters.