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Celsius loan creditors are unhappy with the restructuring plan proposed by the bankrupt cryptocurrency lender Celsius (CEL), expressing concerns over its fairness and consideration of their claims.
According to reports, these creditors believe the restructuring plan disproportionately favors some creditors over others, potentially leading to lower recoveries for loan service users.
Objections to the Restructuring Plan
The creditors are reportedly considering filing an appeal against the current plan due to perceived unfair treatment. They argue that the court’s decision to allocate $225 million of funds for company capital rather than repaying bonds is unjust, pointing out discrepancies in the recovery rates between different creditor groups.
Loan creditors are discussing filing appeals based on these claims with multiple lawyers. The Bankruptcy Code imposes strict deadlines for appeals, generally requiring them to be filed within 14 days of the judgment, order, or decree.
According to Weil Restructuring, the Bankruptcy Court can extend this deadline in certain cases, but the process is complex and subject to “excusable neglect.”
Concerns of Celsius Loan Creditors
One of the key complaints from loan creditors is the perceived disparity in treatment between customers of Celsius Earn, an interest-yielding crypto account, and Celsius Loan, a collateralized crypto loan service.
Earn creditors had their claims processed earlier, leading to higher recoveries, while loan creditors faced significantly lower payouts, with some reportedly receiving less than 30% of what they believed they were owed.
Another concern revolves around the court’s decision to use a significant portion of the bankruptcy estate to capitalize a new mining entity rather than allocating those funds toward enhancing creditors’ recoveries. This move has left loan creditors feeling that their interests are not being adequately considered.
What will be its impact on Creditors?
The uncertainty surrounding the restructuring plan and the potential appeals has raised questions about the true value of creditors’ crypto holdings and how they should be returned.
Given the strict deadlines for filing appeals and the complexities of bankruptcy law, creditors seeking legal recourse face significant challenges.
Celsius loan creditors are seeking legal advice on appealing the restructuring plan, arguing that it disproportionately benefits certain groups while disadvantaging others. As they explore their options, the outcome of this legal challenge could have significant implications for the bankruptcy case and the broader crypto community.