Celsius Investors Request Committee to Represent Equity Holders in Bankruptcy Proceedings

Celsius Investors Request Committee to Represent Equity Holders in Bankruptcy Proceedings

Two equity holders of the crypto lending platform Celsius have submitted a motion to create a Preferred Equity Committee to represent their interests in the company's bankruptcy proceedings. The investors argue that the current process disproportionately favors retail customers, potentially harming the rights of equity holders.

Motion Details and Objectives

The motion, filed by law firm Milbank LLP in the Southern District of New York, seeks to establish a committee specifically for Series A and Series B shareholders. The primary goals include:

• Representing the interests of equity holders in the sale of Celsius's custodial company, GK8, and its mining operations.
• Ensuring equity holders receive fair treatment in the bankruptcy process, which the investors claim is currently skewed toward customer interests.

Concerns Over Customer-Focused Process

The investors expressed concerns that the Unsecured Creditors Committee (UCC) is primarily focused on maximizing value for customers, with little regard for equity holders. They argue that this imbalance could lead to unfair outcomes for Series A and Series B shareholders.

Proposal to Cap Claims

The motion also requests that the court cap claims at their U.S. dollar value as of the bankruptcy filing date. This provision would ensure that any fluctuations in cryptocurrency prices during the proceedings would benefit equity holders rather than customers, potentially shifting the risk away from retail users.

Expert Opinion on the Dispute

Thomas Braziel, founder of bankruptcy investment specialist 507 Capital, described the situation as a "total bombshell" that could escalate tensions among creditors, potentially leading to significant conflict in the case.

This development highlights the complex and contentious nature of Celsius's bankruptcy proceedings, as various stakeholders vie for fair representation and outcomes.