Celsius filing for bankruptcy is imminent
Even though we recently wrote about Celsius’ possibility of getting back on track, the company has decided to file for bankruptcy protection.
According to the official announcement, the faltered company filed voluntary petitions for Chapter 11 protection and announced the initiation of a financial restructuring.
Previously Celsius asserted it would focus on stabilisation of its business by restructuring in a way “that maximizes value for all stakeholders.” It then confirmed having $167 million in cash in order to support operations until everything is finished
The firm stated that the filing follows “the difficult but necessary decision by Celsius last month to pause withdrawals, swaps, and transfers on its platform to stabilise its business and protect its customers”.
“Without a pause, the acceleration of withdrawals would have allowed certain customers—those who were first to act—to be paid in full while leaving others behind to wait for Celsius to harvest value from illiquid or longer-term asset deployment activities before they receive a recovery”.
Celsius hiring new directors
Celsius CEO Alex Mashinsky added that he believes this was the right decision for the clients and the company itself.
“We have a strong and experienced team in place to lead Celsius through this process. I am confident that when we look back at the history of Celsius, we will see this as a defining moment, where acting with resolve and confidence served the community and strengthened the future of the company,” he concluded.
Last week, the firm replaced its legal advisers Strauss Hauer & Feld LLP with newly appointed Kirkland & Ellis LLP. The company still hasn’t filed for bankruptcy and hopes that pairing up with Kirkland & Ellis LLP could represent a shift in the overall strategy.
Analysts mostly agree the move was expected. The firm also hired new directors: David Barse, the Chief Executive Officer of XOUT Capital, and Alan Carr, founder and managing member of Drivetrain, LLC, a professional fiduciary services firm.
With more than 100,000 creditors and the largest unsecured claim of $81 million from Caymans Island-based Pharos Fund, the filing also mentions FTX CEO Sam Bankman-Fried’s trading firm, Alameda Research, as a creditor with a $12 million unsecured loan.
Author: Teuta Franjkovic
A sincere writer with a strong will to share knowledge on all things blockchain, crypto, metaverse and DeFi. Starting out as a writer with Cosmopolitan, Teuta has risen through the ranks of business journalism, editing newspapers and websites within the fintech industry for over 15 years. She holds a double MA in Public Politics and Entrepreneurship.