Celsius Network gets court approval to shift to mining-only company

By Sarah Lizee

Olympia, Wash., Dec. 29 – Celsius Network LLC received approval from the U.S. Bankruptcy Court for the Southern District of New York to transition to a Bitcoin mining-only company when it emerges from Chapter 11 bankruptcy, according to an order filed Thursday.

Celsius and the official committee of unsecured creditors had filed a joint motion seeking approval to implement the transaction. An objection to the motion was filed by the U.S. trustee overseeing the case, who argued that the winddown motion is a modification to the Chapter 11 plan that requires a new solicitation and vote by all impaired creditors.

The debtors and committee argued that the plan, which was overwhelmingly approved by Celsius’ creditors, expressly included a toggle alternative to the plan’s orderly winddown.

Celsius said creditors will now receive increased distributions compared to the previously approved orderly winddown, which makes a new solicitation and vote unnecessary.

The company and committee also argued that even if the winddown motion is determined to be a modification, because no impaired creditors’ recoveries are materially adversely affected, applicable law does not require a new disclosure statement, solicitation or vote.

The court held a hearing on Dec. 21 and agreed with the debtors and committee.

As previously reported, Celsius has chosen Hut 8 Corp. to build out and install mining operations in Cedarvale, Tex., as part of the transaction.

Once complete, the site will house around 66,000 miners and be powered by more than 215 MW of energy.

Under the interim agreement with Celsius Mining LLC, Hut 8 will provide end-to-end development services for the Cedarvale site, and construction is expected to begin in the coming weeks.

The scope of the services to be provided includes site design, engineering, financial modeling, budgeting, accounting, construction management, procurement, logistics, and request-for-proposals coordination.

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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