Over a month after pausing withdrawals, Celsius announces the first step to recovery through a chapter 11 bankruptcy filing.
This decision was made with the intention to provide the best opportunity to stabilize the business, consummate a comprehensive restructuring transaction that maximizes value for all stakeholders, and emerge from Chapter 11 positioned for success in the crypto industry.
— Celsius (@CelsiusNetwork) July 14, 2022
Several rumored takeovers later, Celsius Network has officially announced that it’s filing for Chapter 11 bankruptcy. The announcement follows Voyager which announced last week it too was seeking protection from creditors.
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- Celsius had paused withdrawals for over a month while communicating very little with the public. The board of directors, via press release, gave an explanation for the actions. “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.”
- Filing for Chapter 11 isn’t as bad as it sounds. It gives a company the opportunity for a certain amount of time to generate cash flow to help the repayment process by keeping creditors at bay.
- That said, it’s no guarantee that Celsius will be able to generate the cash flow. However, they do have a Bitcoin mining business, as well as locked up assets. So there’s some hope Celsius can rise like the phoenix.
- Some on Twitter took umbrage with Celsius’ insistence to pay their employees rather than retail investors. Truthfully, not paying their employees wouldn’t have made much of a dent.
- The recently quiet CEO of Celsius Network, Alex Mashinsky, gave a rare statement: “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.”
- The move follows Simon Dixon’s (founder of Bnk To The Future) proposal inject 6 billion USD into the company. However, Dixon said Mashinksy refused because he didn’t want to expose his books to investors. However, the move to file Chapter 11 exposes Celsius far more than the offer could, casting doubt on the reasoning behind turning down the offer.