By Dietrich Knauth
Feb 15 (Reuters) - Crypto lender Celsius Network will
seek to exit bankruptcy under the guidance of asset manager
NovaWulf Digital Management, which will take over the operations
of a new company that will be owned by Celsius customers, the
company said at a court hearing in Manhattan on Wednesday.
Celsius selected NovaWulf's bid out of more than 130
proposals received during its bankruptcy case, saying that
NovaWulf was the only finalist that intended to maintain
long-term control over Celsius' harder-to-liquidate assets, like
its loan portfolio and bitcoin mining business.
Those assets would be owned by Celsius creditors and managed
by NovaWulf under a profit-sharing agreement if Celsius'
proposal is approved by U.S. Bankruptcy Judge Martin Glenn, who
is overseeing Celsius' Chapter 11 process.
Under the plan, Celsius customers with less than $5,000 in
their accounts will be eligible to receive a one-time payment in
bitcoin, Etherium or the stablecoin USDC, according to court
documents filed on Wednesday. Celsius estimates that option will
be available to more than 85% of its customers, providing them
with about 70% of the value of their deposits.
Celsius customers with more than $5,000 in their accounts
would receive payments from crypto that is left over after
smaller customer accounts have been paid back, and will
additionally receive ownership shares in the new company.
NovaWulf has agreed to pay up to $55 million to the
reorganized company, which will be owned by Celsius creditors
and will continue Celsius' bitcoin mining and loan businesses.
NovaWulf will share in the new business' profit, according to
court documents.
Celsius previewed the restructuring proposal just as its
exclusive right to file a Chapter 11 plan was about to expire.
Several creditor groups had opposed Celsius' request for more
time to file a bankruptcy plan, but Celsius said that the
court-appointed committee representing its customers approved
the NovaWulf deal.
New Jersey-based Celsius filed for U.S. bankruptcy in July
after freezing customer withdrawals. Celsius said at the time
that it had more than 1.7 million registered users and
approximately 300,000 active users with account balances greater
than $100.
(Reporting by Dietrich Knauth in New York
Editing by Alexia Garamfalvi and Matthew Lewis)