Troubled crypto lender Celsius said it filed a motion with a U.S. court asking to extend the time it needs to come up with a reorganization plan. The firm is now going through bankruptcy proceedings, months after it froze billons of dollars in customer funds in June.
In July, Celsius filed Chapter 11 bankruptcy in the Bankruptcy Court of the Southern District of New York — roughly a month after it halted customer withdrawals.
The initial filing initiated a four-month “period of exclusivity” giving the firm the right to come up with a reorganization plan that details how it will repay its debts. Meanwhile, all attempts at civil litigation from creditors are kept on hold. It owes more than $5.5 billion, the company reported.
As the exclusivity period is nearing an end, Celsius has asked for an extension. The exclusivity period can be reduced or extended by the court. Celsius must submit a standalone proposal to reorganize and the process must also include steps for the sale of its assets. Celsius said it needs more time to complete reorganization plan because the work is “complex."
"We are making substantial progress towards the determination of a value-maximizing path forward, but this important work is complex and it is critical for us to be as rigorous and thorough as possible in the interest of all stakeholders," Celsius said.
During an intense market downturn, Celsius is one among many crypto firms dealing with insolvency — the latest being FTX exchange and its sister firm Alameda Research. Other crypto companies including Three Arrows Capital, Voyager, Vauld, Zipmex and Babel Finance are also facing serious insolvency issues.
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