Celsius unsecured creditors object to motion for equity committee

By Sarah Lizee

Olympia, Wash., Oct. 17 – Celsius Network LLC’s official committee of unsecured creditors objected to a motion filed by equity holders seeking appointment of their own official committee, according to court documents filed with the U.S. Bankruptcy Court for the Southern District of New York.

As previously reported, the motion came from Community First Partners, LLC, Celsius SPV Investors, LP, Celsius New SPV Investors, LP and CDP Investissements Inc.

“Through the motion, the movants – which hold 87% of the series B preferred equity interests, collectively manage hundreds of billions of dollars, and are already represented by two large, global law firms – request that the court mandate the appointment of an official preferred equity committee,” the official committee of unsecured creditors said.

“This unprecedented request lacks any basis in the law or the facts and circumstances of these cases, and, if granted, would subsidize private equity fund managers at the expense of the debtors’ account holders. The court should deny the motion.”

Equity holders’ motion

The group said the debtors and the unsecured creditors committee appears to be close to resolving certain key issues, including which debtors are liable with respect to customer claims, the appropriate allocation of any asset sale proceeds, and whether the claims of the debtors’ customers must be determined in dollars as of the petition date.

The equity holders said resolution of these critical issues directly affects their recoveries, and as such, they urgently require their own fiduciary – with the access, standing and resources equal to those of the unsecured creditors committee – to represent their interests.

The group said there are only two groups of real economic stakeholders in the cases: the retail customers and the equity holders. The interests of the customers are being pursued by the creditors committee, which is concededly a committee of customers, the group added.

“Not only is the UCC laser focused on maximizing value for the customers, without regard for the equity holders, but the debtors also have made it abundantly clear that the UCC is their partner, and these cases are ‘all about the customer,’” the group said.

“Thus, there is no stakeholder presently at the table advocating for the interests of the equity holders.”

The Hoboken, N.J.-based cryptocurrency lending platform filed bankruptcy on July 13 under Chapter 11 case number 22-10964.

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