Celsius price soars as holders cheer potential bankruptcy exit
Celsius could return customer assets by the end of the year after parties resollved two key bankruptcy issues.
CEL price rose more than 12% to $0.18 before paring gains.
The price of Celsius Network token CEL was up by more than 12% on Saturday afternoon to rank among the top gainers on the day as Bitcoin continued to range near $30k.
CEL traded to $0.18 as news that Celsius had reached two key settlements related to its bankruptcy proceedings and potential reimbursement of customer assets encouraged traders. While the gains are modest compared to those seen on June 29 and July 1, they represent decent recovery from recent lows of $0.13.
Why is Celsius Network price up today?
According to court documents filed on July 20, Celsius has reached settlement with the Official Committee of Unsecured Creditors over a class claim in which account holders accused the crypto platform’s former management of fraud and misrepresentation and other actions that allegedly harmed them.
Also important is the resolution that could see customers with interest-bearing Earn accounts receive a percentage of their money in crypto assets. They would also be eligible for shares of the new company after bankruptcy ends.
The court document reads in part:
“This settlement, including the increased claim amounts described below, fully resolves all issues between the mediation parties relating to the Plan, will lead to the withdrawal of the adversary proceedings filed by the mediation parties, and will pave the way towards confirmation of the Plan in October and distributions to account holders by the end of this year.”
As noted in the filing, about 30,000 account holders lodged total claims of $78.2 billion against the collapsed crypto lender.
The management team has agreed to a settlement with the class, opting to increase customer’s reimbursements by 5%.
“Any eligible Account Holder who does not opt out of the Settlement will receive a claim in the amount of 105% of their scheduled claim, which will supersede and extinguish any related Proofs of Claim filed by such Account Holder.”
While account holders have the option of not taking this deal, the alternative could see delayed distribution and potentially reduced recoveries due to the huge expenses associated with the proceedings.
“Resolving the more than $70 billion of non-contract claims outside of the Settlement would be extraordinarily time-consuming and expensive. The resolution process would significantly harm creditors through delayed distributions and ultimately lower distributions as a result of increased administrative expenses incurred in connection with adjudicating such claims,” the filing states.
US Judge Martin Glenn will examine the resolutions on August 10.