Celsius announces winning Chapter 11 bidder

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Hoboken-based Celsius Network announced Thursday it selected a proposal from Fahrenheit LLC as the winning bid of a court-approved auction process.

The proceeding follows the cryptocurrency lender’s Chapter 11 filing from last summer amid a broader downward spiral in the sector.

It also meant a large number of customers had their accounts locked as the bankruptcy process played out.

Fahrenheit is a group consisting of US Bitcoin Corp., Arrington Capital, Proof Group, Steven Kokinos and Ravi Kaza. It will provide the capital, management team and technology to establish and operate a new company, which will be implemented pursuant to the Chapter 11 plan.

Key provisions of the deal include:

• A meaningful distribution of Celsius’ liquid cryptocurrency to account holders on the plan’s effective date.
• Settlements with the Custody and Withhold groups.
• Creating a new public, regulatory compliant, reporting company that will manage Celsius’ illiquid assets, including Celsius’ institutional loan portfolio, mining business, and alternative investments.

Under the plan, Celsius’ account holders will own 100% of the new equity in the new company, subject to dilution by the equity to be distributed to Fahrenheit as management fees. Fahrenheit will also purchase $50 million of equity in the new company.

The new company will be overseen by a new board of directors, a majority of which will be appointed by creditors.

Celsius says that this plan will distribute hundreds of millions of dollars of additional cryptocurrency versus the prior stalking-horse bid that set the floor for the auction, adding that the management fees set to be paid to Fahrenheit were also reduced by hundreds of millions of dollars going this route.

“We are very pleased that our competitive auction process produced a positive result for customers, including, most prominently, hundreds of millions of dollars in lower management fee savings and increased liquid cryptocurrency distributions to Celsius’ customers,” said David Barse and Alan Carr, members of the Special Committee of the board, in a press release. “We appreciate the robust interest that the Celsius platform has received from competing bidders and look forward to working with Fahrenheit to expedite the restructuring and distribute recoveries to creditors.”

The company also confirmed that it has secured a backup bid with the Blockchain Recovery Investment Consortium (BRIC).

In the coming weeks, Celsius says it intends to negotiate and publicly file a plan sponsor agreement with Fahrenheit, a backup plan sponsor agreement with the BRIC, a revised chapter 11 plan and a disclosure statement, which are all subject to bankruptcy court approval.

“The dynamic engagement in our auction provided us with excellent options for our exit from chapter 11,” Barse and Carr added. “We are grateful for the collaboration of the committee, and with our path now set, we are looking forward to enabling our customers to move forward from this process.”