The bankrupt crypto lender Celsius is facing a race against time to extend its deadline for filing a restricting plan after its US trustee and creditors objected to the company’s move. The recent development arises after the firm made a move to file another Chapter 11 restructuring strategy once again.
Following its July 2022 Chapter 11 bankruptcy protection filing, Celsius, on January 25, requested that it be allowed to extend its exclusivity period, the time to be given to submit another Chapter 11 restructuring plan. According to reports, the latest move will require Celsius to be given 44 days to solicit votes from the US trustees and creditors to approve its plan scheduled to end on June 2023.
However, the committee of creditors, the company’s borrowers, and the US trustees have denied Celsius this request. It is worth noting that the Chapter 11 bankruptcy process allows a debtor to file a reorganization plan, and it is expected to be filed within four months after court approval.
In the case of Celsius, the lender has already been approved by the court to extend its exclusivity time to February 15 upon filing a motion last November. In the motion filing, Celsius’s lawyers disclosed that the extension is vital to allow the firm to reach the end of the Chapter 11 issues swiftly and efficiently without being disrupted in its track.
The legal team further added that the debtors are on the way to concluding the Chapter 11 cases by filing the restructuring extension plan. However, the matter is expected to be discussed in a motion slated for February 15.
The Cash Burn Argument
According to William Harrington, a US trustee and an official at the Department of Justice, there is lip service shown toward the creditors by Celsius and its request to be granted a long extension.
Hence, no case has been given such an extension for exclusivity in one motion. Similarly, the firm’s borrowers echoed the US trustee’s objection to the extension request.
Since the start of the year, the twists and turns in the bankruptcy case involving Celsius have been a trending topic in the crypto space. Based on the January 4, 2023 pronouncement by the Judge handling the case, users who have deposited their crypto assets in the firm’s “Earn Accounts” can transfer the ownership of the tokens to Celsius.
As a result, when Celsius filed for bankruptcy protection, the Judge announced that the firm owned all the crypto assets in its Earn Accounts.