Celsius Proposes Reorganization Plan
• Defunct crypto lender Celsius has revised its bankruptcy filing, awaiting approval from a bankruptcy court in New York after a successful acquisition deal with the Fahrenheit crypto consortium.
• The new reorganization plan proposes to deal with the claims of retail borrowers through the set off treatment.
• David Adler from the law firm McCarter & English tweeted that the restructuring proposal by Celsius could face opposition from the borrowers.
Crypto Lender’s Proposal
Crypto lender Celsius has proposed converting all its altcoin holdings into Bitcoin and Ethereum to quell growing regulatory concerns and maximize the value of its assets starting July 1st. This comes as part of their revised bankruptcy filing, which awaits approval from a bankruptcy court in New York after a successful acquisition deal with the Fahrenheit crypto consortium.
Set Off Treatment
Under the proposed plan, claims by retail borrowers will be dealt with through a “set off treatment”, which refers to comparing losses against profits in a given year. Losses that are not offset against income can be carried over and offset against income in later years. A Twitter user explained how this would work for borrowers depending on how much of their loan they have returned so far.
David Adler from McCarter & English noted that borrowers may oppose this plan since Celsius is demanding repayment of loans yet it has no intention of fulfilling its contractual obligations such as returning collateral to them. He added that this proposed ‘treatment’ violates every consumer lending law out there (state, federal).
Celsius seeks to convert alts to Bitcoin and Ether under its reorganization plan as it attempts to maximize asset value and quell regulatory concerns amidst fears of borrower opposition due to an unconventional set-off treatment proposed by them.