Celsius Pursues Fraud Claims Against UK Subsidiary Amid Bankruptcy Case

Celsius Bankruptcy Proceedings

Celsius is tackling significant challenges in its ongoing bankruptcy case, focusing on claims against its UK-based subsidiary, CNL. The crypto lender's debtors have filed a motion to consolidate its UK and US entities, citing severe deficiencies in record-keeping.

Joint Agreement and Fraud Claims

A joint agreement has been established between Celsius and its Committee of Unsecured Creditors (UCC) to pursue fraud claims against CNL. This move aims to clarify the ownership stakes of creditors and shareholders. The US-based subsidiary, LLC, has initiated these actions to address issues arising from regulatory pressures that led to the relocation of Celsius's UK operations to the US in 2021.

Record-Keeping Concerns

The transition resulted in incomplete documentation and missing records of intercompany transactions. These deficiencies have complicated efforts to determine the claims between the two subsidiaries. The debtors argue that the costs of separating the entities outweigh the benefits, prompting them to opt for substantive consolidation rather than a complete reconciliation.

Substantive Consolidation

The Committee of Unsecured Creditors supports the consolidation, claiming that CNL and LLC functioned as a single entity. They assert that the transfer from CNL to LLC was a sham. This consolidation is seen as a more efficient solution to streamline the process and address the chaotic state of record-keeping.

Celsius's pursuit of these legal actions highlights the ongoing complexities in resolving its bankruptcy and ensuring fair outcomes for all stakeholders involved.