Celsius, a cryptographic company that fell into bankruptcy in July 2022, has organized a plan to resolve its financial deficit situation that sees as its main move the formation of a second entity, called NewCo, that will engage in Bitcoin mining.
The new company, run by the Fahrenheit LLC consortium that had bought a minority stake in the Celsius restructuring, will also be listed on the Nasdaq stock exchange and play a crucial role in this affair.
In fact, the lending platform’s creditors will be repaid in part through equity stakes in NewCo, which, in view of Bitcoin’s upcoming halving, could generate excellent profits and help Celsius emerge from bankruptcy.
See below for all the details in the news.
Celsius’ restructuring plan and liquidation of creditors
Celsius, a crypto lending company that fell into disgrace in July last year and was forced to formally file for insolvency through Chapter 11, has come up with a plan to become a market player again by leveraging the Bitcoin mining business.
Retracing the steps of the Celsius disaster, recall that the platform had frozen its customers’ accounts in the middle of summer 2022 due to “liquidity problems” amounting to about $3 billion.
After filing for bankruptcy, the company saw a succession of bureaucratic and judicial loopholes that extended internal liquidation practices in favor of creditors to the present day.
Now we are at a turning point because, after the consortium “Fahrenheit LLC,” a group that runs the hedge fund “Arrington Capital” and the Bitcoin mining company “US Bitcoin Corp,” purchased a restructuring stake in Celsius, all the problems have gradually faded away.
The consortium, after receiving approval from a Delaware bankruptcy court, agreed to reorganize the crypto company by going to form a separate entity, called NewCo, on which it plans to invest $450 million.
The investment,is planned so that NewCo can list on Nasdaq and aim for capital maximization in the Celsius house, so that it can fully repay the platform’s creditors.
The latter, coming to the subject of the payout of their claims, will be settled partly with $2.03 billion in crypto present in Celsius’ coffers, and partly precisely through equity shares in the new company.
Needless to say, the performance that NewCo will go on to perform in the market will be crucial for the stock to channel as much value as possible, so that Fahrenheit LLC can repay all of its acquired corporate debts and use the positive wake to restart the former crypto business stronger than before.
The trump card with which the consortium wants to create value for the new ecosystem is none other than Bitcoin mining.
Celsius and the new company NewCo: Bitcoin mining is passed on
We are nearing a likely restart point for Celsius, now that the NewCo company has planned to make itself active in the context of Bitcoin mining
According to Bloomberg data Fahrenheit LLC will make its first payments to creditors indicatively in January 2024, a few months before halving impacts the crypto market totally changing the game.
The decision to manage the liquidity shortage by going to invest in a business as fraught with pitfalls as mining speaks volumes about the consortium’s expectations for the near-term future of Bitcoin and the entire industry.
Launching then at such a sensitive time, such as when rewards are going to be cut in half for all Bitcoin miners, makes it all the more telling that sentiment is blatantly bullish.
This tendency toward optimism in the months leading up to the halving of the market’s first cryptocurrency represents a widespread attitude within the industry, but it could prove to be a double-edged sword.
While it is true that historically each halving leads to a substantial increase in Bitcoin’s price, it is also well established that only the most prepared, most resourceful, and most future-investing mining companies are able to survive the storm following this heyday.
NewCo seems to come from a well-established and experienced entity in this field, so we do not expect any unpleasant surprises between now and the next few years, but it is good to always remember all the risks involved.
The reorganization plan at Celsius then actually includes a focus on staking activities, which were and will be in the future central to the management of the platform, which in its heyday had come to manage over $25 billion.
Finally, after more than a year of legal wrangling, we may soon be celebrating the return to the field of one of the platforms that made history in the field of centralized staking.
Its future, as well as that of NewCo and ultimately that of the creditors in this affair, depends on Bitcoin and the eventual success of the mining niche.
Once again, directly or indirectly, the king is in charge.