After reportedly returning all of its debt to DeFi lending protocols, troubled crypto lender Celsius (CEL) said it has initiated voluntary Chapter 11 proceedings in the US in an attempt to stabilize its business. CEL dropped following the announcement.
At 03:03 UTC, CEL trades at USD 0.538 and is down 25% in a day, recovering from USD 0.40, reached earlier today. The price is still up 92% in a month.
Chapter 11 of the US Bankruptcy Code generally provides for reorganization, usually involving a corporation or partnership. A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time.
“This is the right decision for our community and company,” Alex Mashinsky, Co-Founder & CEO of Celsius, was quoted as saying in the announcement. “We have a strong and experienced team in place to lead Celsius through this process.”
The company said it has USD 167m in cash on hand, which will provide “ample liquidity to support certain operations during the restructuring process” as it aims to “continue to operate in the normal course.”
Celsius is not requesting authority to allow customer withdrawals at this time, while customer claims will be addressed through the Chapter 11 process, per the announcement.
Today’s filing follows the decision by Celsius last month to pause withdrawals, swaps, and transfers on its platform. The firm claims that, without a pause, the acceleration of withdrawals would have allowed certain customers—those who were first to act—to be paid in full while leaving others behind to wait for Celsius to harvest value from illiquid or longer-term asset deployment activities before they receive a recovery.