The troubled crypto lender says its purpose for the voluntary action is to enable a “comprehensive restructuring plan” that benefits all “stakeholders.”
Celsius Network, the crypto lender that is facing a liquidity crisis, has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York, Celsius said in a statement issued late Wednesday.
“Today’s filing follows the difficult but necessary decision by Celsius last month to pause withdrawals, swaps, and transfers on its platform to stabilize its business and protect its customers. Without a pause, the acceleration of withdrawals would have allowed certain customers—those who were first to act—to be paid in full while leaving others behind to wait for Celsius to harvest value from illiquid or longer-term asset deployment activities before they receive a recovery,” the statement read.
“This is the right decision for our community and company,” said Alex Mashinsky, Celsius cofounder and CEO. “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.”
Celsius is one of the crypto lenders facing financial troubles in the latest liquidity crisis in crypto. It suspended withdrawals starting June 12, cut jobs and hired restructuring experts to advise on its financial situation.
Celsius says it has $167 million in cash on hand, enough to “support certain operations during the restructuring process.”
The company has filed motions with the court to allow it to continue operating “in the normal course,” so it can pay employees and continue benefits.
Celsius is not requesting authority to allow customer withdrawals at this time, it said. Customer claims will be addressed through the Chapter 11 process.
Kirkland & Ellis LLP is serving as legal counsel, Centerview Partners is serving as financial adviser, and Alvarez & Marsal is serving as restructuring adviser to Celsius.