A lot has happened during the Celsius bankruptcy case since the platform went bankrupt in July. Now, however, the company may be about to pay a portion of the amounts owed to customers.
According to Celsius facts profile on Twitter Which discloses information about the company, Celsius plans to release a new token for paying customers. However, this token will only go to the creditors with the most receivables.
Even Celsius’ lawyers considered bankrupting the company, but then changed their minds. Legally, a liquidation will raise less money for creditors than a restructuring. In this sense, the issuance of a new token is one of the proposals that the company may bring to the table.
A plan proposed by creditors
According to Ross Questnett, an attorney representing Celsius in bankruptcy proceedings, it would be difficult to liquidate Celsius’s assets given current prices. That is, liquidation at low prices will result in huge losses for customers.
Interestingly, the plan to issue a new token did not come from the company, but from a group of creditors. They refused to be identified, and contented themselves with proposing a restructuring plan based on a temporary recovery code.
It should be noted that Celsius already had its own token (CEL), but its value collapsed after the company crisis. In one year, the token has already lost about 85% of its value.
CEL rate decreases in one year. Source: CoinGecko.
Issuing debt-covering tokens is not a new practice in the market, as companies like exchanges CoinFLEX and Bitfinex have done this in the past. However, creating a new token out of thin air is only a palliative way to cover up the loss of assets.
According to court documents, Kwasteniet argued that a new percentile version would bring creditors more value than liquidation. The lawyer cited the issuance of a “duly licensed listed company” which raises the question as to whether the company had a license before or not.
Until the matter was closed, Celsius had not commented on the proposal. A hearing is scheduled for next week during which the company must provide the bankruptcy court with more details about its recovery plan.
The tokens will go to the major creditors
However, Celsius Facts highlighted that not all customers will receive the alleged new token. In fact, the proposal states that only those with more than $5,000 will get it. Creditors who have less than this value will receive their entire assets.
If a creditor claims between $5,000 and $7,500, 95% to 100% of the assets will be available for withdrawal, depending on the amount. The remaining percentage will be paid in the redemption code suggested by the creditor.
Unfortunately, for those who have deposited more than $7,500 in Celsius, the proposed plan will not allow withdrawals. These users will not be left without compensation except for a redemption code, which is unknown if it will gain acceptance in the market.
Celsius is expected to provide details of its plans in court during next week’s hearing.