Celsius seeks to convert alts to Bitcoin and Ether under reorganization plan
Defunct crypto lender Celsius has revised its bankruptcy filing, awaiting approval from a bankruptcy court in New York after a successful acquisition deal with the Fahrenheit crypto consortium. The crypto lender filed its reorganization plan on June 15.
Under the revised plan, Celsius will convert all altcoins from customers, with the exception of “Custody and Withhold accounts,” to Bitcoin (BTC) and Ether (ETH) starting from July 1.
Celsius will be selling all altcoins from all customers (except Custody and Withhold accounts) starting July 1st and will be converting them into Bitcoin and Ethereum.
The new reorganization plan proposes to deal with the claims of retail borrowers through the set off treatment. The term “set off treatment” refers to comparing losses against profits in a given year. Losses that are not offset against income can be carried over and offset against income in later years. A Twitter user explained how the set off treatment would work for borrowers depending on the portion of the loan they have returned:
In your example, the customer took a $25k loan secured by 2 #BTC — let’s say the customer has paid 20% back and thus has $20k outstanding principal.If the set-off counts the BTC at 7/13/22 prices, the collateral would be valued at about $40k.Subtract the $20k principal from… pic.twitter.com/ZCKC1xYegm
David Adler from the law firm McCarter & English tweeted that the restructuring proposal by Celsius could face opposition from the borrowers. He noted that the debtor (Celsius) is demanding repayment of the loans, yet it has no intention of fulfilling its contractual obligations, such as returning the collateral to the borrowers. This could be something borrowers would object to, he added.
Additionally,
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