Celsius Distributes Over $2.5 Billion to Creditors in Bankruptcy Process
Celsius, a crypto lending platform that ceased operations in 2022, has reached a significant milestone in its bankruptcy process by distributing over $2.5 billion to its creditors.
This distribution is part of a complex reorganization plan approved by the US Bankruptcy Court for the Southern District of New York last November. The distribution plan, which began in January, is considered one of the most ambitious attempts in a Chapter 11 bankruptcy proceeding.
The bankruptcy process of Celsius has faced challenges, including a lawsuit filed by Celsius against Tether to recover approximately $3.3 billion in Bitcoin.
A Massive and Complex Distribution
According to the first progress report published by the administrator of Celsius’ bankruptcy plan, over $2.53 billion has been distributed to approximately 251,000 creditors. These payments were made in liquid crypto and cash, based on prices as of January 16th. This amount covers about two-thirds of the total number of eligible creditors and 93% of the total value of eligible claims.
However, not all creditors have received their distributions. About 121,000 eligible creditors, with an average distribution of around $1,500 each, have not claimed their share yet. Among these creditors, 64,000 have amounts below $100, and approximately 41,000 others have distributions ranging from $100 to $1,000. The report indicates that the low value of these amounts could deter some creditors from taking the necessary steps to claim their distribution.
While the majority of creditors have received their share, challenges remain. Earlier this month, Celsius requested the bankruptcy court to order Tether to return approximately $3.3 billion in bitcoin, in a case that Tether has labeled as an ‘attempted extortion’ and intends to vigorously contest.
Official Closure of Bankruptcy and Distribution Challenges
The official closure of the bankruptcy was approved after the court’s endorsement of the reorganization plan in November, but the complexity of the distribution process has prolonged its implementation. The reorganization plan involves distributing over $3 billion in liquid crypto, cash, and common stock in MiningCo, the new entity resulting from Celsius, to approximately 375,000 creditors spread across more than 165 countries.
One of the main difficulties encountered in this distribution process stems from Celsius not being fully compliant with regulations before its bankruptcy. Several regulators were already taking coercive actions against Celsius, further complicating the fund allocation process.
