- Celsius filed the Chapter 11 bankruptcy protection.
- Chapter 11 allows a company to continue operating while restructuring its debt.
After a month of turbulence, cryptocurrency firm Celsius has filed for Chapter 11 bankruptcy protection to restructure in a way that increased value for all stakeholders in the US Bankruptcy Court for the Southern District of New York.
Celsius announced late Wednesday, that it has submitted several customary motions with the Court to permit the Company to proceed with business as usual in order to achieve a successful transition into Chapter 11.
Moments ago, @CelsiusNetwork filed voluntary petitions for Chapter 11 protection and announced that the company initiated a financial restructuring. https://t.co/vf5wsT6TMp
— Celsius (@CelsiusNetwork) July 14, 2022
Bankruptcy Protection For The Company
The Chapter 11 procedure will be used to handle customer claims and the company has $167 million in cash on hand to cover operating costs in the meantime.
Co-founder and CEO of Celsius Alex Mashinsky said;
This is the right decision for our community and company. We have a strong and experienced team in place to lead Celsius through this process. I am confident that when we look back at the history of Celsius, we will see this as a defining moment, where acting with resolve and confidence served the community and strengthened the future of the company.
The Company anticipates winning court approval for these first-day motions, which include requests to pay employees and maintain their benefits without interruption. At this moment, Celsius is not asking for permission to enable consumer withdrawals, so customer withdrawals will remain paused.
However, a former investment manager filed a lawsuit against Celsius last week, alleging that the company failed to hedge risk, fraudulently inflated the price of its digital token, and participated in fraudulent activity.
The lender, which at its peak had managed around $8 billion in crypto loans including about $11.8 billion in assets for over 1.7 million users as of May, went under investigation by six state regulators on Wednesday.
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