Key Points
- Since January 2024, Celsius has successfully distributed $2.53 billion to 251,000 creditors, representing 93% of eligible value.
- Challenges persist. Approximately 121,000 creditors, many holding small amounts, have yet to claim their distributions, while $147.4 million remains pending due to various issues.
Massive Distribution Effort Underway
In a comprehensive status report filed on August 26, 2024, with the United States Bankruptcy Court for the Southern District of New York, the Plan Administrator for Celsius Network LLC detailed significant progress in distributing assets to creditors following the company’s Chapter 11 bankruptcy. The report, mandated as part of the bankruptcy proceedings, revealed that since the Plan’s Effective Date of January 31, 2024, approximately 251,000 creditors have received distributions totaling $2.53 billion in Liquid Cryptocurrency and Cash. This represents about two-thirds of all eligible creditors and 93% of the eligible value.
“The distribution process contemplated by the Plan is likely the most complicated and ambitious distribution process ever attempted in a chapter 11 case,” stated the Plan Administrator in the 38-page court document.
Challenges in Reaching All Creditors
Despite the progress, the distribution process faces several hurdles outlined in the status report. Approximately 121,000 eligible creditors have yet to successfully claim their distributions, with an average distribution value of about $1,500 per creditor. Many unclaimed distributions are relatively small, with about 64,000 creditors owed less than $100 each.
The Plan Administrator cited various reasons for the delay, including creditors not opening accounts with distribution partners PayPal and Coinbase, issues with international wire transfers, and complications arising from regulatory compliance requirements. The report also noted that due to these challenges, $66.54 million in distributions remain pending through PayPal/Venmo and $80.86 million through Coinbase.
Ongoing Efforts and Future Steps
To address these challenges, the Plan Administrator has implemented several strategies, as detailed in the court filing:
- Transitioning creditors to alternative distribution methods, such as the newly introduced Hyperwallet service for cash distributions.
- Improving communication systems to ensure creditors receive critical information about their distributions.
- Creditors in certain jurisdictions can convert their cryptocurrency distributions to cash to overcome local restrictions.
The Plan Administrator emphasized their commitment to resolving outstanding issues, stating in the report, “The Post-Effective Date Debtors are committed to assisting these creditors in claiming their distributions.”
As part of the ongoing bankruptcy process, the Plan Administrator will continue to provide quarterly updates to the court and stakeholders. This latest filing represents the first such report, ensuring transparency in the cryptocurrency sector’s unprecedented bankruptcy resolution effort.
The status report, filed by Joshua A. Sussberg of Kirkland & Ellis LLP on behalf of the Plan Administrator, provides a detailed snapshot of the distribution process seven months after the Plan’s Effective Date. It highlights both the progress made and the challenges that remain in this complex bankruptcy case.
New Legal Battle Emerges
In a related development, Token Times AI reported that Celsius Network has recently filed a lawsuit against Tether, seeking the return of approximately 57,428.64 BTC (valued at about $3.48 billion) plus damages and legal fees. The lawsuit, filed on August 9, 2024, in the same court overseeing the bankruptcy proceedings, stems from a dispute over a collateralized loan agreement between the two companies. Tether has denied the allegations, describing the lawsuit as “baseless” and vowing to defend itself vigorously. This new legal battle adds another layer of complexity to Celsius Network’s ongoing bankruptcy proceedings and could have significant implications for the crypto industry.
