Celsius requests to extend submission of reorganization plan as bankruptcy proceedings heat up

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Bankruptcy-ridden Celsius has submitted a motion before the U.S. court to seek an extension of time to improve its reorganization plans.

Celsius today filed a motion requesting approval to extend the Exclusivity Periods in our cases. This is the period when Celsius has the exclusive right to submit a plan of reorganization.

— Celsius (@CelsiusNetwork) November 10, 2022

The firm is looking to extend the exclusivity period, a time when the company “has the exclusive right to submit a plan of reorganization.” The firm noted that the reorganization process was more complex than anticipated, requiring a tentative approach to achieve success.

“Any interruptions could undermine the very goal of all parties in our cases share: expeditiously moving these chapter 11 cases to a value-maximizing resolution,” Celsius tweeted. “ We recognize the delays and costly disruption if competing plans were to be proposed.”

Celsius has been battling a barrage of lawsuits in addition to the bankruptcy proceedings in which it has been embroiled since August. New twists and turns have surfaced as the cases inch forward, with the latest being a faceoff between company shareholders and customers.

The debacle came to the fore following a motion that sought to place shareholders ahead of customers upon the auctioning of Celsius assets.

“The equity [holders] have a direct claim against any value derived from a sale or monetization of the mining assets, to the exclusion of all the customer claims,” Vincent Indelicato, a counsel at the law firm Proskauer Rose said.

Another burning issue in the bankruptcy case is the denial of Celsius from paying a retention bonus worth almost $3 million by the courts. Celsius’ legal team argued that the payments were necessary to stop the employees from leaving the company amid troubled times.

“We plan to continue advancing our productive conversations with important stakeholders in our cases to put forward a strong and comprehensive plan,” said Celsius.

Celsius bankruptcy saga

The courts approved the appointment of an examiner to investigate Celsius’ internal activities over claims of “extreme financial irregularities.” Shoba Pillay, a partner at Jenner & Block, a Chicago-based law firm, was selected as the examiner in the matter.

There have been claims that Celsius operated as a Ponzi scheme and misled thousands of investors over its risk-hedging abilities. Disgruntled investors filed a lawsuit claiming that the company “artificially inflated the price of its own digital coin.”

“Thus, while Celsius continued to market itself as a transparent and well-capitalized business, in reality, it had become a Ponzi scheme,” read the lawsuit.

Personal details of creditors have been leaked to the public in the latest filing made by the company. The name, dates, and transactions of all users in the platform were contained in 14,500 pages of bankruptcy filings, to the dismay of digital asset enthusiasts.

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