Celsius Loan creditors plan appeal of Celsius' reorganization plan amid frustrations over recoveries
Quick Take Celsius Loan creditors are actively looking into filing an appeal of Celsius’ reorganization plan as they see lower-than-expected recoveries from the fallen lender’s estate. The group of creditors is talking to several lawyers about filing an appeal premised on two key claims.
Chief Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York approved Celsius’ restructuring plan last November, over a year after the lender declared bankruptcy in July 2022. However, the execution of this plan resulted in lower-than-expected payouts for Celsius Loan customers, with some creditors alleging they received less than 30% of what they believed they were owed, according to one creditor.
According to a source close to the matter, Celsius Loan account holders are considering an appeal based on two main claims.
The first claim asserts that the court failed to ensure "fair and equal" treatment between two groups of creditors: users of Celsius Earn, an interest-yielding crypto account, and customers of Celsius Loan, a collateralized crypto loan service. A creditor told The Block that Earn creditors' claims were processed earlier this year, weeks before those of Loan customers, resulting in higher recoveries for users of the company's flagship interest-bearing product.
The second claim challenges an order dated December 27, 2023, which directs that Celsius’ new mining entity be capitalized with $225 million from the lender's bankruptcy estate. Some Loan creditors argue that this funding should have been allocated toward enhancing creditors’ recoveries instead, one creditor noted.
Celsius' lawyers had not responded to The Block’s request for comment at the time of reporting. It should be noted, however, that the valuation and payout of a bankruptcy claim involve numerous factors, complicating comparisons of creditors’ recoveries.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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