About a month after stopping customer withdrawals, cryptocurrency lending platform Celsius Network has filed for bankruptcy in the United States.
Now, as part of the bankruptcy court hearing, Celsius on Monday disclosed its financial overview and restructuring plan to Judge Martin Glenn of the US Bankruptcy Court for the Southern District of New York.
Restructuring plans reveal steps including, for example: negotiating the restructuring; finance BTC mining operations and sell assets. Additionally, the company will offer customers options to recoup cash at a discount or remain invested in their cryptocurrency holdings.
$1.2 billion hole
The documents say the bankruptcy filing was a way for the company to protect itself as it worked out a restructuring plan.
As Cryptheory reported, Celsius’ liabilities exceed its assets by nearly $1.2 billion. In other words, this is the size of the “gap” in the company’s balance sheet.
The documents show that as of July 13, the company held $4.3 billion in assets. Meanwhile, liabilities amounted to nearly $5.5 billion. Of this total, the majority is owed to its customers, totaling US$ 4.7 billion.
Celsius restructuring plans
In the newly revealed document, the company said it plans to negotiate a comprehensive restructuring transaction with the interested parties. Its objective is to preserve the value of the business.
Furthermore, the company said it will continue to run its BTC mining operations, using minted BTC to help the company pay off its creditors.
Although Celsius’ mining unit also filed for bankruptcy, it is still operational. Of the nearly 80,000 mining rigs under Celsius, about 43,000 are still running.
Celsius also said it will consider “asset sales and third-party investment opportunities” to meet financial obligations.
Also according to the document, most of its cryptocurrency keys are stored on Fireblocks, and the company does not depend on intermediaries to maintain its keys.
Recovery of funds
Celsius also said it will soon announce a plan that will allow customers to recover their funds. However, one of the options is to offer a discounted cash settlement.
The other option is for the user to remain invested in the company until the restructuring is completed. The plan may also include the distribution of CEL tokens. The aim is to maximize returns for stakeholders and reorganize the business, Celsius said.
According to the July 13 data, Celsius has more than 1.7 million users in more than 100 countries. In addition, the Earn Program holds 77% of deposits.