After weeks of enduring a severe liquidity crisis, Celsius has officially filed for Chapter 11 bankruptcy protection and begun the process of restructuring the company to meet its obligations to creditors and customers.
The company issued the news late Wednesday.
Celsius Declares Bankruptcy
Celsius has gone bust.
The embattled company announced in a press release late Wednesday that it had started voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the Southern District of New York. According to the release, Celsius’ move is intended to effectuate a comprehensive restructuring that maximizes value for all stakeholders.
A Chapter 11 bankruptcy allows a firm to continue operating while nonetheless restructuring its obligations. This reorganization is expected to be in the best interest of the company’s creditors.
Celsius claims to have $167 million in cash to support operations during the Chapter 11 process.
“This is the right decision for our community and company,” Celsius co-founder and CEO Alex Mashinsky said in the announcement. “We have a strong and experienced team in place to lead Celsius through this process. I am confident that when we look back at the history of Celsius, we will see this as a defining moment, where acting with resolve and confidence served the community and strengthened the future of the company,” he added.
Celsius’ mining unit, which announced back in March it planned to go public via an IPO, also filed for Chapter 11 bankruptcy protection, just like its parent company.
Celsius Vows To Bounce Back From Bankruptcy
Celsius’ bankruptcy filing follows a difficult but vital decision last month to suspend customer withdrawals, swaps, and transfers on the platform on June 13.
The crypto lender is yet to re-open withdrawals, but maintains that “customers will continue to accrue rewards during the pause in line with our commitment to our customers.”
Under the proposed restructuring plan, Celsius says it will pay employees and continue their benefits. The company also intends to continue servicing existing loans and maturity dates, margin calls, and interest payments will continue as they have in former times.
Kirkland & Ellis LLP is serving as legal counsel, Centerview Partners is serving as a financial adviser, and Alvarez & Marsal is serving as restructuring adviser to Celsius. The company has also tapped new directors, David Barse and Alan Carr, to assist it through the restructuring process.
The news of Celsius’ bankruptcy marks the latest victim to be mauled by the vicious bitcoin bears, which already claimed Three Arrows Capital and Voyager in recent days.
While it did not provide a timeline, the company hopes to eventually “restore activity across the platform” and “return value to customers.” Many widely-known companies, including American Airlines, Delta, General Motors, Hertz, and Marvel, have successfully restructured under Chapter 11 and emerged even stronger, according to Celsius.