Celsius' latest bankruptcy court hearing sets stage for future decisions

Quick Take

  • Much of today’s three-hour hearing centered on arguments surrounding decisions to be made at future hearings.
  • That includes whether to seal creditor information and which custodial account holders qualify for withdrawals, which Celsius has requested to honor in a new motion. 

The latest hearing in lender Celsius' Chapter 11 bankruptcy case is setting the stage for future key decisions, but little tangible action was accomplished on key issues today.

The hearing came just hours after Celsius' counsel filed a motion in the U.S. Bankruptcy Court for the Southern District of New York requesting the authority to open withdrawals for specific custody and withhold accounts. That request won't be settled until an Oct. 6 hearing, but various parties still gave feedback for a significant portion of the three-hour hearing.

The motion indicates that Celsius has discerned that the funds are not part of the estate, meaning they should be released to the custodial account holders. However, there is contention about who qualifies.

It has discerned assets in the Earn and Borrow programs belong to the estate per the terms of service. Celsius says it has not yet completed the necessary analysis to discern if certain custody customers, such as those who transferred funds from the firm's Earn and Borrow programs, qualify. Counsel for Celsius customers is requesting the relief go to all holders of custody accounts. 

Celsius called the current, narrowed request "phase one" and said it's possible they will seek to release all the funds in the future. 

"While today’s motion, which will be considered at a later hearing, would apply only to a certain group of customers, we are preparing to address matters related to all customers as we move ahead. We continue to pursue all available avenues as quickly as possible," Celsius said in a tweet after the hearing.

What's in a name?

Judge Martin Glenn also considered whether to redact information about Celsius creditors, but ultimately kicked the decision to the upcoming Sept. 14 hearing. Celsius counsel is seeking to redact all identifiable information from the public docket, but Glenn made it clear he's opposed to the idea of allowing creditors to be fully anonymous.

"I'm not going to allow anonymous proofs of claim, I can tell you right now," he said.

THE SCOOP

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