Celsius gets OK of settlement with committee, preferred stockholders

By Sarah Lizee

Olympia, Wash., July 21 – Celsius Network LLC secured approval of a settlement between the debtors, the official committee of unsecured creditors and some series B preferred stockholders, according to an order filed Thursday with the U.S. Bankruptcy Court for the Southern District of New York.

The preferred holders include Community First Partners, LLC, Celsius SPV Investors, LP, Celsius New SPV Investors, LP and CDP Investissements Inc.

Celsius said the extent of stakeholders’ respective entitlements to recover value from Celsius’ estate has been one of the most pervasive issues in the debtors’ Chapter 11 cases, many of which were set to culminate in a multi-day trial in July.

However, the parties recently reengaged in a final round of settlement negotiations, resulting in the settlement.

The settlement will provide for a $25 million cash payment, from proceeds from the prior sale of the GK8 platform, and the release of all claims between the consenting series B preferred holders on the one hand, and the debtors and the committee on the other hand.

Celsius said the settlement ends all ongoing litigation between the parties regarding substantive consolidation, the allowance of an intercompany claim, and an alleged constructive fraudulent transfer.

“That, in turn, avoids the incurrence of millions of dollars of incremental legal and administrative expenses and provides the debtors with invaluable near-term certainty as they negotiate with other constituents in pursuit of global consensus and move toward confirmation of a plan of reorganization,” the company said in the motion.

The settlement will be offered to all series B preferred holders.

All series B preferred holders who joined the settlement agreement prior to the hearing were to receive a release and be paid $24 million in cash in the aggregate within three business days.

All other series B preferred holders will receive their pro rata share of the remaining $1 million portion of the settlement funds under the Chapter 11 plan of reorganization and will not receive a release.

The Hoboken, N.J.-based cryptocurrency lending platform filed bankruptcy on July 13, 2022 under Chapter 11 case number 22-10964.

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