Bankruptcy lawyers believe Celsius customers may have to wait years for settlement

A lawyer commenting on Celsius’ recent bankruptcy filing said Reuters The user may face a lengthy process on the way to recover the funds.

“Customers are waiting for the fate of their money to become clear, so they need to rely on bumpy vehicles.”

Bankruptcy Celsius file after loan repayment

Celsius announced a suspension of withdrawals, swaps and remittances on June 12 due to “extreme market conditions”. A few weeks before the announcement, rumors spread that the company was facing financial difficulties in a brutal market sale caused by the Terra Scandal.

Recent significant loan repayments have given hope that the company is fighting to maintain the solvent. Twitter account between July 2nd and 4th @BTCKYLE He said he paid a total of $ 270 million for the DeFi position and disappointed the expectation that normal operations would soon resume.

However, the company filed for Chapter 11 bankruptcy on July 14, blocking the hope of returning to normal business.this Types of bankruptcy Known as a “restructuring,” a company can continue to operate while restructuring its debt.

Celsius He said the intent behind this move was to stabilize operations and provide the best route to “emerge … to succeed in the crypto industry.”this Added Filed for bankruptcy in the best interests of stakeholders, including users.

Users may face long wait times

Bankruptcy lawyers said the process is likely to be lengthy, with the “small precedent” of the major crypto companies submitting Chapter 11 and the complexity of ongoing proceedings against the company and the submission of Chapter 11. I am.

Regarding the situation facing law firm Barnes & Thornburg partner Celsius, James Van Horn said:

“At best, it’s unclear how the Bankruptcy Code and the Bankruptcy Court will treat crypto companies.”

Stephen Gannon, a partner at Davis Wright Tremaine, called the process “three-dimensional chess” and said that Gannon could take at least six months in the early stages of restructuring planning.

Bankruptcy generally tends to prioritize secured creditors, unsecured creditors, and then shareholders.

Business Restructuring Associate Daniel Gwen Celsius said that the customer’s deposit is considered a transfer of ownership and is not a custody agreement similar to a bank deposit. Gwen added that the arrangement would classify users as unsecured creditors.

“Celsius has pointed out in a complaint that customers will transfer ownership of crypto assets to Celsius and make them unsecured creditors.”

A Document Following the bankruptcy filing, the company had $ 4.3 billion in assets as of July 14, but had $ 5.5 billion in debt, a $ 1.2 billion shortfall.

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