Celsius Begins Restructuring Process After Filing For Chapter 11 Bankruptcy Protection

Crypto lender Celsius Network confirmed that it has filed for Chapter 11 bankruptcy protection and aims to stabilize amidst a bearish market by restructuring its business. This comes after the platform had shut down withdrawals following "extreme market conditions."

In a statement released Wednesday, Celsius revealed a "comprehensive restructuring transaction" to "maximize value for all stakeholders." The crypto lender added that it holds $167 million in cash to carry on operations for the time being.

“This is the right decision for our community and company,” said Celsius CEO Alex Mashinsky. “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 Hoboken, New Jersey-based firm filed voluntary petitions for restructuring under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. It also filed a series of customary motions. This was done to ensure "a smooth transition into Chapter 11."

These motions will allow the company to function normally while the restructuring process continues and contain requests to prevent the disruption of employee payments and benefits. While customer claims will be addressed via Chapter 11 proceedings, the crypto lender has also requested authorities to not allow customer withdrawals for now.

"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,” said members of the Special Committee of the Board of Directors.

In the statement, Celsius also added that the new directors of the firm will provide additional leadership and expertise and will include David Barse, the Chief Executive Officer of XOUT Capital, an index company, and Alan Carr, an investment professional with over 25 years of experience building businesses.

Kirkland & Ellis LLP is the legal counsel of Celsius while Centerview Partners is serving as the financial adviser. Alvarez & Marsal will be the restructuring advisor for the crypto lender.