There have been rumors that Celsius Network LLC is considering issuing a bankruptcy cryptocurrency to reimburse creditors. This new move is a part of a larger plan by the defunct cryptocurrency lender to reemerge as a new publicly listed firm.
The plan is referred to as a "recovery corporation." The attorneys for Celsius have concluded that liquidating the company would result in a lower amount of money being generated compared to reforming the business.
We May See these Tokens Soon
Celsius has revealed (1) that its intentions to reorganize and file for bankruptcy using digital asset tokens might take "months," pending regulatory approval. According to Ross M. Kwasteniet, an attorney for the insolvent corporation, creditors would gain more from this arrangement than from trying to sell assets that are difficult to dispose of at rates below market value.
According to the recently disclosed scheme, creditors with frozen assets worth more than a predetermined amount would be given a one-of-a-kind token. The value of these clients' assets would be reflected on this token, known as the Asset Share Token (AST).
In addition, holders of AST tokens had the option of either keeping their tokens, which would entitle them to quarterly dividends or selling their tokens on the open market.
Additionally, Celsius offers compensation options to its remaining clients who fall outside the threshold, accounting for between 60 and 70 percent of the company's total customer base.
According to the crypto lending firm located in New Jersey that just declared bankruptcy, these consumers would get a one-time payout in liquid digital currency. The following is what Kwasteniet claims:
"Your Honor, while we do not anticipate a complete recovery, we anticipate a substantial recovery. It would be a one-time dividend in a liquid crypto asset, whether you want to name it Bitcoin, Ethereum, or stablecoins. Something that anybody who has claims below a particular level may trade and easily determine its market worth for."
Kwasteniet also said:
"[Celsius depositors] all have a request for the recovery of the crypto currency, and we anticipate that all of the Earn clients will be treated similarly.
In addition, Kwasteniet clarified that these consumers would be eligible for a sizable return on their investment.
How Much Payout to Expect?
Celsius has been in the process of discussing with a variety of creditor organizations the establishment of the new firm and the token compensation scheme. Nevertheless, the company's legal counsel did not define the minimum amount of compensation.
According to Kwasteniet, Celsius is reportedly continuing to discuss with the Unsecured Creditors Committee on the threshold dollar number (UCC). In addition, the company's counsel mentioned that court documents outlining the company's plan will be filed later during the week.
In addition to Celsius's intentions to restructure and reinvent the company, its legal representatives have asked the court for permission to dispose of some of the company's idle mining equipment. In addition, the corporation has posited that its mining affiliate, Celsius Mining, which it owns, would one day return to making a profit.