Celsius Settlement Agreement: What You Need To Know

On March 29, the Official Committee of Unsecured Creditors of Celsius (UCC) tweeted that Celsius, UCC, and the Account Retention Team had reached a settlement agreement to provide creditors who chose to “withhold” accounts with a 15% physical distribution of cryptocurrency, and the rest would be treated as Earn’s claims in the plan. The hearing to approve the joint motion for the relevant application will be held on April 18, 2023.

Celsius reaches a settlement agreement with creditors and depositors holding accounts

On March 29, 2023, the Official Committee of Unsecured Creditors of Celsius (UCC) announced that Celsius, UCC, and the Account Retention Team had reached a settlement agreement. Under the terms of the agreement, creditors who chose to “withhold” accounts will receive a 15% physical distribution of cryptocurrency, while the rest will be treated as Earn’s claims in the plan. The joint motion for the relevant application has been filed, and the hearing to approve it will be held on April 18, 2023.

Understanding Celsius and Unsecured Creditors

Before delving into the specifics of the settlement agreement, it is important to understand who Celsius and unsecured creditors are. Celsius is a cryptocurrency lending and borrowing platform that allows investors to earn interest on their digital assets. Unsecured creditors, on the other hand, are individuals or entities who have lent money to Celsius without providing any form of collateral.

The Background of the Settlement Agreement

In December 2022, Celsius announced that it had filed for bankruptcy protection under Chapter 11. This meant that the company could continue operating while it restructured its debts and liabilities.
At the time of the bankruptcy filing, Celsius had over 17,000 unsecured creditors, with debts totaling over $3 billion. These creditors were left in a precarious position, unsure of whether they would be able to recoup their losses.

The Terms of the Settlement Agreement

The Celsius settlement agreement provides some hope for unsecured creditors. Under the terms of the agreement, those who chose to “withhold” accounts will receive a 15% physical distribution of cryptocurrency. The rest of their claims will be treated as Earn’s claims in the plan.
What does this mean? Essentially, those who chose to withhold accounts will receive a fraction of their initial investment in cryptocurrency. The remainder of their investment will be treated as a claim against Celsius’s remaining assets.

What Comes Next?

The joint motion for the relevant application has been filed, and the hearing to approve it will be held on April 18, 2023. If the motion is approved, unsecured creditors will receive their 15% physical distribution of cryptocurrency.
It is worth noting that the settlement agreement does not guarantee that all unsecured creditors will be able to recoup their losses. The amount of money that they will eventually receive is still uncertain, and it is possible that some creditors will receive less than others. However, the agreement does provide some much-needed clarity and hope for those who invested in Celsius.

FAQs

1. What is Celsius?
Celsius is a cryptocurrency lending and borrowing platform that allows investors to earn interest on their digital assets.
2. What are unsecured creditors?
Unsecured creditors are individuals or entities who have lent money to Celsius without providing any form of collateral.
3. Will all unsecured creditors receive the same amount of cryptocurrency under the settlement agreement?
No, it is possible that some creditors will receive more or less than others, depending on the terms of their investment and the amount of money owed to them.

Conclusion

The Celsius settlement agreement is a positive development for unsecured creditors. While it does not guarantee that all creditors will be able to recoup their losses, it does provide some much-needed clarity and hope for those who invested in Celsius. It remains to be seen how the settlement agreement will be implemented, but the fact that a joint motion has been filed is an encouraging sign.