Celsius Initiates Bankruptcy Proceedings to ‘Stabilize’ its Business
Celsius has initiated a financial restructuring to “stabilize” its business and has filed for reorganization under Chapter 11 of the US Bankruptcy Code
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key takeaways
- The lender recently replaced its former lawyers to those at Kirkland & Ellis LLP, the same lawyers handling Voyager’s bankruptcy filings
- Celsius is said to have resisted calls from its previous lawyers to file for bankruptcy
Embattled crypto lender Celsius has filed for bankruptcy following notification to individual US regulators, heeding earlier advice from its previous lawyers to do so.
To implement the restructuring, Celsius said late Wednesday it and particular subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the US Bankruptcy Code in the US Bankruptcy Court for the Southern District of New York, according to a company blog post.
“Celsius initiated a financial restructuring to stabilize the business and maximize value for all stakeholders, the lender said in its post. “Acting in the best interest of our stakeholders, including our entire customer community, is our top priority.”
CNBC first reported the news citing one person familiar with the matter.
The lender said it intends to “put forward a plan” to restore activity across its platform. Celsius halted withdrawals last month citing “extreme market conditions” as a reason for doing so. The majority of account activity will be paused until further notice, Celsius said.
“Celsius is not requesting authority to allow customer withdrawals at this time,” it said. “Existing loans originated by Celsius affiliates will continue to be serviced while new loans are not expected to be issued “at this time.”
It’s the latest development for the lender which, at its height, had managed around $8 billion in crypto loans with around $11.8 billion in assets for around 1.7 million users as of May.
Celsius is said to have resisted advice from its own lawyers to file for bankruptcy, claiming user support would help it avoid the process altogether.
The New Jersey-based lender replaced its former lawyers at Akin Gump Strauss Hauer & Feld LLP with new ones from Kirkland & Ellis LLP earlier this week. Voyager, another troubled lender, is also using the same law firm.
A former crypto money manager and ex employee of Celsius has also sued the lender over allegations the firm misappropriated user funds to cover its shortfalls in its lending business. That manager is said to have cost Celsius $61.2 million in liquidations, according to data from Arkham Intelligence.
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