Crypto lender Celsius Network has initiated a financial restructuring process by filing for Chapter 11 bankruptcy in the U.S. to provide it with the opportunity to stabilize its business and consummate a comprehensive restructuring transaction. This comes a week after another crypto asset trading platform Voyager Digital filed for Chapter 11 bankruptcy protection.
Celsius and certain of its subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York.
This move comes a month after Celsius paused all withdrawals, swaps, and transfers on its platform to stabilize its business and protect its customers. The company also recently laid off 150 employees.
The company noted that the acceleration of withdrawals would have allowed certain customers, who were first to act, to be paid in full while leaving others behind to wait for their money.
Celsius said it has $167 million in cash on hand, which will provide ample liquidity to support certain operations during the restructuring process.
The company has requested the Court to allow it to continue to operate in the normal course during the restructuring process. They have also requested to pay employees and continue their benefits without disruption, for which the Company expects to receive Court approval.
The financial restructuring will position Celsius to emerge as a stronger company to restores activity across the platform and return value to customers. The sharp decline in cryptocurrencies has put a spoke in Celsius’ business of lending money and earning interest on deposits. Bitcoin has lost more than half its value since the beginning of the year.
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