Celsius Network LLC announced that it has emerged from bankruptcy by completing the transactions under its confirmed plan of reorganization.
The plan was reportedly “approved by approximately 98% of the company’s account holders and confirmed by the Bankruptcy Court for the Southern District of New York on November 9, 2023.”
This milestone marks the conclusion of “an eighteen-month process during which the company built consensus among a wide range of stakeholders, resolved complex novel legal issues, fully cooperated with all regulatory investigations, and developed and consummated the transactions under the Plan.”
The Plan includes the distribution of “over $3 billion of cryptocurrency and fiat to Celsius’ creditors, and the creation of a new Bitcoin mining company—Ionic Digital, Inc.—which will be owned by Celsius’ creditors and will have its mining operations managed by Hut 8 Corp. (Nasdaq | TSX: HUT).”
Following confirmation of the Plan and feedback from the Securities and Exchange Commission “on certain aspects of the Plan, Celsius, in close coordination with the Official Committee of Unsecured Creditors, announced that it would transition to the “MiningCo Transaction,” consistent with the Plan.”
In addition, the company increased “the amount of cryptocurrency that would be available for distribution to creditors by nearly $250 million dollars by converting altcoins to BTC or ETH and through previous settlements.”
The Bankruptcy Court approved “the MiningCo Transaction on December 27, 2023.”
Today, pursuant to the MiningCo Transaction, the company has “commenced distributions of over $3 billion of liquid cryptocurrency and fiat to creditors and Ionic Digital was created as a new Bitcoin mining company that will continue to deliver recoveries to creditors.”
The Ionic Digital stock is expected “to be publicly traded once the requisite approvals are received. Ionic Digital will be owned by Celsius’ creditors, who will own equity in the form of common stock.”
Chris Ferraro, Plan Administrator and former Chief Restructuring Officer, Interim Chief Executive Officer, and Chief Financial Officer:
“Creating the best outcome for creditors by maximizing value and speed have been front of mind for Celsius throughout this process. Today, over 18 months after Celsius paused withdrawals, we began distributing over $3 billion of cryptocurrency, fiat, and stock in Ionic Digital to Celsius creditors.”
David Barse and Alan Carr, members of the Special Committee of the Board of Celsius, who have been steering Celsius though its Chapter 11 process.
Barse and Carr continued:
“Our exit from bankruptcy is the culmination of an extraordinary team effort and extensive collaboration between Celsius, Hut 8, strategic partners, and our creditors. When we were appointed in June 2022, everyone assumed Celsius would disappear completely like the other crypto lenders that were filing bankruptcy around the same time. We, however, believed that Celsius could navigate complicated legal, regulatory, and business issues.”
As noted in the update:
“Among other achievements, Celsius secured the cryptocurrency on our platform, achieved a settlement with the preferred shareholders, ran a successful auction of the one reorganizable operating business to begin as a new Bitcoin mining company, established a litigation trust to pursue the innumerable counterparties that exploited Celsius and, possibly most importantly, settled with the DOJ, SEC, and CFTC. But most of all, we are proud of the preservation and distribution of cryptocurrency assets and enhanced recovery for customers and claim holders.”
To facilitate secure, timely, and fully compliant distributions, Celsius and its advisors have coordinated “with the UCC and certain federal and state regulatory agencies throughout its restructuring.”
Matt Prusak, Chief Commercial Officer, Hut 8, has been “named CEO of Ionic Digital and will work with the previously announced Board of Directors, a majority of which were appointed by the UCC.”
Hut 8 will oversee Ionic Digital’s Bitcoin mining business “under a four-year management agreement. Additional details on Ionic Digital will be forthcoming.”
Celsius will now pursue an orderly wind-down of its operations, “including discontinuing the Celsius mobile and web applications.”
The Plan has gone effective and the Debtors have started the process of making cryptocurrency and cash distributions!
— Celsius Official Committee of Unsecured Creditors (@CelsiusUcc) January 31, 2024