Celsius loan creditors are voicing discontent with the proposed restructuring plan put forth by the bankrupt cryptocurrency lender Celsius (CEL), raising concerns about fairness and equitable treatment.
Reports indicate that creditors are dissatisfied with the restructuring proposal, believing it favors certain parties over others, potentially resulting in diminished returns for users of the loan services.
Expressing grievances over what they perceive as an imbalanced allocation of funds, creditors are contemplating launching an appeal against the current plan. The decision to allocate $225 million towards company capital rather than bond repayment has sparked particular outrage, with creditors citing discrepancies in recovery rates among different creditor groups.
Creditors are in talks with legal counsel regarding potential appeals, cognizant of the stringent deadlines imposed by the Bankruptcy Code. While extensions are possible under certain circumstances, the process is intricate and subject to strict criteria.
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A central issue driving discontent among loan creditors is the contrast in treatment between customers of Celsius Earn and Celsius Loan services. While Earn creditors have seen comparatively higher returns, loan creditors have faced lower payouts, with some receiving less than 30% of their expected amounts.
Moreover, frustration mounts over the court’s decision to allocate a substantial portion of the bankruptcy estate towards establishing a new mining entity rather than bolstering creditor recoveries. This move has left loan creditors feeling overlooked and undervalued.
The ambiguity surrounding the restructuring plan and the prospect of appeals has cast doubt on the actual value of creditors’ crypto assets and the manner in which they will be reimbursed.
With time ticking on appeal deadlines and the intricacies of bankruptcy law posing formidable challenges, creditors are actively seeking legal avenues to contest the restructuring plan. Their efforts to challenge what they perceive as an unfair distribution of benefits could significantly impact the outcome of the bankruptcy proceedings and resonate across the crypto community.
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Celsius’ restructuring plan may leave some creditors feeling colder than ever. Stay tuned for updates.
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