By James Davis
The embattled crypto lender Celsius Network has closed the buyout deal with the New York-based digital asset manager NovaWulf. A sale plan report issued by Celsius debtors on February 15 at the New York District Court announced NovaWulf as a preferred sponsor for the company to exit the ongoing bankruptcy charges.
The Celsius unsecured creditors committee (UCC) formulated the sale plan in collaboration with the company executives.
What Does Celsius Sale Plans Report Entail?
The attempt to restore customers’ assets from the now-defunct crypto lender Celsius Network has compelled the affected stakeholders to take tentative steps. Celsius debtors teamed up to formulate a sale and reorganization plan submitted to the New York Bankruptcy Court in early February.
The Celsius buyout plan mandated the company to contact 130 digital firms and engage in more than 40 non-disclosable agreements. Following the pursuit of a potential buyer, the crypto lender was approached by six bidders interested in the Celsius lending platform. Also, three bidders were interested in investing in the Celsius Mining activities.
After a thorough search for a suitable sale, and plan sponsor, the members of the Celsius unsecured creditors committee (UCC) appointed NovaWulf for the role on February 15.
Launching of Celsius New Startup
According to the sale plan agreement NovaWulf is tasked to develop a new company that the digital asset management firm would manage. The sponsor company is expected to invest $45M to $55M in the new firm. The new company’s management will include Celsius Earn lenders, who will own a significant share of the new company.
The February 15 sale report motivates Celsius creditors to hold ownership of the new company by trading with the firm’s token on a regulated brokerage platform Provenance Blockchain.
The plan revealed that the Celsius token (CEL) would be acquired at $0.20, the initial price of the asset when it was first listed to the public.
The new company will shield the debtors from incurring costs related to liquidity assets that might trigger the company towards downscaling. The bankrupt crypto lender predicts that 85% of the devastated Celsius debtors would recover 70% of their crypto assets, excluding Ethereum staking.
Changes in Celsius Operations
Nonetheless, the Celsius community expects that the new venture would list lenders whose assets are below $5000 to the Celsius Earn Account program. The listing would facilitate the crypto transactions using the leading digital assets, including Bitcoin (BTC), Ethereum (ETH) and other stablecoins.
On the contrary, lenders whose assets exceed $5000 are offered a deal to reduce their claims below the $5000 level. The sale report revealed that all creditors with assets below $5000 would join a Celsius convenience class that allows customers’ assets to bear interest from leased digital assets.
The crypto lender plans that customers with less than $1000 assets can be excluded from the convenience class, allowing them to receive a share of the amount generated from the Celsius Earn program.
The February 15 tweet from the Celsius debtors portrays the affected stakeholders’ optimism in NovaWulf collaboration. The debtors anticipate NovaWulf to leverage its expertise in digital assets management to increase the debtors’ value on investment.
NovaWulf New Roles
The proposed sale plan tasked NovaWulf with restoring Celsius mining activities operation by setting aside $50M for investors and establishing more than 120 rigs to improve the equity holders’ value.
At the moment, NovaWulf is expected to formulate a binding agreement that legislators would approve at the US bankruptcy court. The debtors have pledged to support NovaWulf in improving the performance of the new firm.
Meanwhile, other crypto lenders filing for Chapter 11 of the bankruptcy protection law might follow in the Celsius’ footsteps if the proposed plan comes to fruition. In particular, Bahamian-based FTX crypto exchange could leverage the plan to recover from its November 2022 collapse. Victims of the FTX implosion, including BlockFi, Voyager and Genesis, could replicate the Celsius Network’s plan to overcome the liquidity crisis.
The failed attempts to regain the financial health of crypto firms compelled Voyager to file for Chapter 11 of bankruptcy protection last July. The Voyager bankruptcy decision mirrors Genesis and BlockFi’s efforts to survive the crypto winter and remain afloat.