Under the restructuring plan proposed on Feb. 15, most Celsius creditors will receive a one-time payment, while those with larger claims will receive a stake in the new company.
Celsius has finally chosen a company to help the insolvent lender exit bankruptcy. It’s NovaWulf Digital Management. As a reminder, NovaWulf’s bid was one of four others leaked by Tiffany Fong on Jan. 26.
At the time, the news caused a stir, as Tiffany stressed that no one from Celsius’ upper management or creditors knew about the offers. In addition, days before the offers became public, Celsius’ lawyers said the offers were unconvincing and that the company wanted to reorganize and go public.
Related: Celsius may issue a new token to compensate creditors
A few days later, Celsius’ lawyers accused Tiffany Fong of passing along the offers as if she were trying to thwart good deals. Still, one particular offer came through. On Feb. 15, Celsius’ attorneys submitted a new plan to the bankruptcy court, which was supported by the Celsius Official Committee of Unsecured Creditors (UCC). According to the plan, a new company would be formed, NovaWulf would take over operations, and most customers would get 70% of their money back.
The plan calls for the creation of a new public platform called NewCo, wholly owned by the majority of the company’s board members. The plan states that the new board will have no involvement of Celsius founders.
Related: Celsius creditors propose to sue Alex Mashinsky and other execs
Under the plan, creditors with claims worth $5,000 or less at the time of filing will be placed in a “Convenience Class,” receiving a “one-time distribution of liquid crypto” in the form of BTC, ETH, and USDC.
It’s estimated that over 85% of Celsius customers will get back about 70% of their deposited cryptocurrency through this option. Any Earn creditor with a balance of more than $5,000 can reduce their claim to $5,000 and participate in the class.
Those with a claim of more than $5,000 – or those with a claim of more than $1,000 who opt out of the Convenience Class shares – will receive a payout of the residual crypto following payments to smaller accounts.
They’ll also receive shares in NewCo through equity and management share tokens, which will pay dividends to the holders.
Earn users who hold Celsius CEL tokens, a native token used for user rewards that is currently trading around $0.53, will be valued and purchased at the initial coin offering (ICO) price of $0.20.
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