Celsius creditor committee called for CEO's removal

Quick Take

  • The group representing customers and creditors in the Celsius bankruptcy process said it called for the removal of CEO Alex Mashinsky.
  • Mashinsky stepped down earlier on Tuesday in a move that the group called “a positive step” for the bankruptcy. 

The committee representing customers and creditors in the Celsius bankruptcy process says it called for the removal of CEO Alex Mashinsky, according to a new court filing. 

The Committee of Unsecured Creditors (UCC) was conducting its own investigation into the firm and its leadership. Those findings led it to demand that Mashinsky be removed as CEO and Celsius leadership begin an orderly transition. 

Celsius promoted CFO Chris Ferraro as Chief Restructuring Officer and Interim Executive Officer. The UCC said it looks forward to further dialogue with Ferraro and that he will make a capable interim leader. 

After receiving information from Celsius' leadership as part of its investigation, the committee concluded that allowing Mashinsky to stay as CEO was "unacceptable and not in the best interests of the estates," and added that, "new executive leadership was required," the group's lawyers wrote in a court filing Tuesday. 

Mashinsky announced his resignation this morning, a move that the committee characterized as "a positive step" to allow the bankruptcy process to move forward. 

In recent weeks, leaked recordings of company meetings showed Mashinsky and other executives pitching a restructuring plan to employees that would include restarting a custody business and other previous operations paused during the bankruptcy.  

Any restructuring plan would require court approval and likely the support of the UCC. Executives said Mashinsky received positive feedback when he brought the plan to the UCC, though the committee told the court it does not support any specific end game for the firm and hopes Celsius leadership will present their plans in court. 

In today’s filing, however, the UCC said its investigation concluded “that any restructuring plan associated with Mr. Mashinsky would likely face significant challenges.” 

Depending on the outcome of the investigation, the UCC could take further action against Mashinsky. It said it “intends to pursue any actionable claims” against Mashinsky, other insiders or related parties. 

Celsius entered Chapter 11 proceedings in July and has since faced a more complicated process than usual due to perceived opacity in its dealings and financials. Regulators have accused the firm of misrepresenting its financial health in the lead-up to its collapse, and executives’ have made conflicting statements related to events surrounding the firm’s cash crunch. The court recently elected to appoint an outside examiner to the firm, a rare measure, to produce an outside report on the firm’s financials. 

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