Celsius Approved to Pay Shareholders $25 Million in Bankruptcy

Celsius Network LLC won court approval of a deal to end a bankruptcy fight with preferred shareholders by paying $25 million to them, instead of risking an extended legal battle that could have cost $600 million.

US Bankruptcy Judge Martin Glenn approved the settlement, which ends one of the longest-running fights in the Chapter 11 case of the crypto firm. Celsius and preferred shareholders had battled over the payment priority the investors should receive and other complex legal details. A bankrupt company’s owners typically don’t receive any recovery until creditors are fully repaid.

Had the two sides kept fighting, legal fees would have been expensive and if Celsius lost, the shareholders may have been entitled to as much as $600 million, company attorney Christopher S. Koenig said during a court hearing Tuesday in Manhattan.

Under the deal, investors who want to keep fighting Celsius can pursue the litigation in bankruptcy court. The settlement was negotiated with a group that represents $600 million of the $690 million worth of the preferred equity, shareholder attorney Andrew Leblanc said in court.

At the heart of the dispute was whether the company’s customer agreement entitled customers to collect only from Celsius Network LLC, or if they could also make claims against the top of the corporate family, Celsius Network Ltd.

Investors argued their equity stakes in Celsius entitle them to value that flows from the company’s crypto mining business and its loan book, among other assets, according to court papers.

The bankruptcy is Celsius Network LLC, 22-10964, US Bankruptcy Court for the Southern District of New York (Manhattan).

To contact the reporter on this story:
Steven Church in Wilmington, Delaware at schurch3@bloomberg.net

To contact the editors responsible for this story:
Claire Boston at cboston6@bloomberg.net

Rheaa Rao

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