By Michael Scott
The efforts to transform the bankrupt Celsius into the recovery phase would wait longer. Recent legal filings revealed that the bankrupt crypto lending firm is yet to be transformed. Instead, the filings indicate the likelihood of liquidating the estate.
Joint Opposition by US Government and Creditors
Legal filings by the US government on February 8 echoed the opposition lodged by creditors to the plan by Celsius to extend the restructuring timeline by another five months. The filings acknowledged the bankrupt crypto lender plans detailed in its January 25 plans of transforming the entity into a recovery corporation.
The filings submitted by the creditors alleged that transforming Celsius into a publicly traded entity would drain the estate with accumulating lawyers’ fees. The unsecured creditors decried the delay as erosive to the estate. Instead, their filing supported expediting the cases toward the desired resolution.
Unsecured Creditors Lamenting the Motion
The unsecured creditors regretted that the eight months had lapsed since Celsius halted withdrawals. The suspension of withdrawals subjected many account holders to misery. Many users’ lives suffered trapped digital wealth owing to misconduct by debtors and directors of Celsius.
The opposition lodged by creditors leverages the provision of the US bankruptcy law that a defunct entity has the exclusive right to the front reorganization plan. Nevertheless, the law limits the period to four months. The bankruptcy law allows other stakeholders, such as creditors, to convey their ideas to the restructuring efforts.
The filing indicates that with eight months lapsing since bankruptcy protection was sought by Celsius, the lender should not seek to extend the period. The creditors’ attorneys noted that substantial work is pending before the firm finalizes the proposal. The filing noted creditors could receive liquid cryptos as no binding deal exists to include the firm’s mining assets.
Extending Deadline Unviable to the Estate
The opposition to extending the restructuring deadline responds to the January 25 motion by Celsius seeking an additional six weeks. The crypto lender indicated that granting it an exclusive deadline till March would enable it to solicit votes to postpone it till June. The lender’s motion indicated that failure to secure an exclusive deadline extension could mandate replacing the reorganization with assets liquidation.
Explaining the opposition to Celsius motion to secure an extension, US Trustee William Harrington ruled out the basis that the bankrupt lender would seek additional time. The Department of Justice executive ruled out that Celsius should seek a five-month deadline extension to file and solicit a reorganization plan.
Harrington termed the extension to June as inappropriate since the high rate of compensating lawyers would drain the estate’s resources. The motion by Celsius is due for hearing on February 15 before the Southern District Court Judge Martin Glenn of New York.