Celsius shareholders want their own legal representation in bankruptcy case

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Cel­sius share­hold­ers have request­ed an offi­cial legal rep­re­sen­ta­tion that would rep­re­sent their inter­est in the bank­rupt­cy pro­ceed­ings, accord­ing to a Sept. 22 court fil­ing.

Accord­ing to the fil­ing, there is a clear need for this fidu­cia­ry rep­re­sen­ta­tion as there are only two eco­nom­ic stake­hold­er groups — retail cus­tomers and equi­ty holders.

The share­hold­ers claim the Unse­cured Cred­i­tors Com­mit­tee (UCC) is focused on ensur­ing that retail cus­tomers get max­i­mum val­ue with­out con­sid­er­ing equi­ty hold­ers. It means no one ade­quate­ly rep­re­sents Equi­ty hold­ers’ inter­ests, and any reor­ga­ni­za­tion plan might affect their interests.

Evi­dence of this is Cel­sius’ claim that the “UCC is (its) part­ner, and these cas­es are all about the customer.”

The equi­ty hold­ers said they:

“Urgent­ly require their fidu­cia­ry — with the access, stand­ing, and resources equal to those enjoyed by the UCC — to rep­re­sent their interests.”

These share­hold­ers par­tic­i­pat­ed in a $750 mil­lion fund­ing round months before Cel­sius filed for bank­rupt­cy.

Shareholders want Celsius to ‘dollarize’ its retail crypto holding

Anoth­er notable aspect of the motion is that the share­hold­ers want Cel­sius to “dol­lar­ize” the cryp­to hold­ings of its customers.

Accord­ing to the fil­ing, Cel­sius’ inten­tion to return cus­tomers’ cryp­to instead of the fiat val­ue of the asset is in con­tra­ven­tion of the Bank­rupt­cy Code, and it “could neg­a­tive­ly impact the Equi­ty Hold­ers’ recovery.”

If this motion is accept­ed, any increase in the val­ue of cryp­tocur­ren­cies dur­ing the pro­ceed­ings will like­ly go to the equi­ty holders.

A hear­ing on the fil­ing is set for Oct. 6, the same day court appear­ance and claim process­es are expect­ed to begin. How­ev­er, objec­tions to the motion can be sub­mit­ted until next week.

Celsius IOU tokens

A recent­ly leaked audio file sug­gests that Cel­sius might plan to repay its cred­i­tors using cryp­to IOU tokens.

In the leaked audio record­ing of a meet­ing, the firm’s chief tech­nol­o­gy offi­cer and co-founder Nuke Gold­stein said the com­pa­ny plans to wrap each customer’s debt into an IOU token that “rep­re­sents the ratio between how much we real­ly owe and how much we have.”

Anoth­er leaked phone call reveals that Cel­sius CEO Alex Mashin­sky has shared the idea with the UCC and got a  pos­i­tive reaction.

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