Celsius Network chooses NovaWulf bid for bankruptcy exit
2023.02.15 12:49
© Reuters. FILE PHOTO: Celsius Network logo and representations of cryptocurrencies are seen in this illustration taken, June 13, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
By Dietrich Knauth
(Reuters) – Crypto lender Celsius Network will seek to exit bankruptcy under the guidance of asset manager NovaWulf Digital Management, which will take over the operations of a new company that will be owned by Celsius customers, the company said at a court hearing in Manhattan on Wednesday.
Celsius selected NovaWulf’s bid out of more than 130 proposals received during its bankruptcy case, saying that NovaWulf was the only finalist that intended to maintain long-term control over Celsius’ harder-to-liquidate assets, like its loan portfolio and bitcoin mining business.
Those assets would be owned by Celsius creditors and managed by NovaWulf under a profit-sharing agreement if Celsius’ proposal is approved by U.S. Bankruptcy Judge Martin Glenn, who is overseeing Celsius’ Chapter 11 process.
Under the plan, Celsius customers with less than $5,000 in their accounts will be eligible to receive a one-time payment in bitcoin, Etherium or the stablecoin USDC, according to court documents filed on Wednesday. Celsius estimates that option will be available to more than 85% of its customers, providing them with about 70% of the value of their deposits.
Celsius customers with more than $5,000 in their accounts would receive payments from crypto that is left over after smaller customer accounts have been paid back, and will additionally receive ownership shares in the new company.
NovaWulf has agreed to pay up to $55 million to the reorganized company, which will be owned by Celsius creditors and will continue Celsius’ bitcoin mining and loan businesses. NovaWulf will share in the new business’ profit, according to court documents.
Celsius previewed the restructuring proposal just as its exclusive right to file a Chapter 11 plan was about to expire. Several creditor groups had opposed Celsius’ request for more time to file a bankruptcy plan, but Celsius said that the court-appointed committee representing its customers approved the NovaWulf deal.
New Jersey-based Celsius filed for U.S. bankruptcy in July after freezing customer withdrawals. Celsius said at the time that it had more than 1.7 million registered users and approximately 300,000 active users with account balances greater than $100.
