At a court hearing in Manhattan on Wednesday, cryptocurrency lender Celsius Network announced that it would partner with asset management NovaWulf Digital Management to emerge from bankruptcy. NovaWulf would oversee the operations of a new firm that Celsius clients would hold.
Out of the more than 130 bids it received during its bankruptcy case, Celsius chose NovaWulf’s offer, claiming that NovaWulf was the only finalist who intended to maintain long-term control over some of the company’s more difficult-to-sell assets, like its loan portfolio and bitcoin mining operation.
Novawulf agreed to contribute up to $55 million
If the plan put out by Celsius is accepted by U.S. Bankruptcy Judge Martin Glenn, who presides over Celsius’ Chapter 11 procedure, those assets would be owned by Celsius creditors and managed by NovaWulf under a profit-sharing arrangement. According to court filings submitted on Wednesday, users of Celsius who have less than $5,000 in their accounts will be qualified to receive a one-time payment in bitcoin, ethereum, or the stablecoin USDC. More than 85% of Celsius’s clients, according to that company’s estimate, will be able to choose that option, which would give them nearly 70% of the value of their deposits.
Customers who have more than $5,000 in their Celsius accounts will receive ownership shares in the new firm in addition to payments from bitcoin that are left over after smaller customer accounts have been reimbursed.
NovaWulf has agreed to contribute up to $55 million to the reconstituted business, which will continue Celsius’s lending and bitcoin mining operations and be held by its creditors. Court filings state that NovaWulf will receive a portion of the new company’s earnings.
Celsius intended to emerge from bankruptcy by reinventing as a new “recovery corporation”
Just before its exclusive right to submit a Chapter 11 plan was due to expire, Celsius provided a preview of the restructuring proposal. Despite opposition from a number of creditor organisations, Celsius claimed that the NovaWulf purchase had been accepted by the court-ordered committee that was created to represent its customers.
Headquartered in New Jersey After restricting client withdrawals, Celsius filed for bankruptcy in the United States in July. At the time, Celsius reported having more than 1.7 million registered members and about 300,000 active users with account balances of $100 or more. According to the document, the reason the Debtors selected NovaWulf was that it “provides the best method to distribute the Debtors’ liquid crypto assets and maximise the value of the
Debtors’ illiquid assets through a new firm controlled by competent asset managers.”
The proposal is the end result of the court-approved sales procedure for the Debtors that Celsius Network attorneys had described in January 2023. They had claimed that the insolvent crypto lender intended to emerge from bankruptcy by reinventing itself as a new, publicly listed “recovery corporation.”
