Celsius Network, the crypto lender facing a liquidity crisis, has filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of New York, according to a late Wednesday statement.
The filing today comes on the heels of Celsius’s difficult but necessary decision last month to halt withdrawals, swaps, and transfers on its platform in order to stabilize its business and protect its customers. Without a pause, the acceleration of withdrawals would have allowed certain customers – those who were the first to act – to be paid in full, while others would have had to wait for Celsius to harvest value from illiquid or longer-term asset deployment activities before receiving a recovery, the statement read.
This is the best decision for our community and company, said Alex Mashinsky, co-founder and CEO of Celsius. We have assembled a strong and experienced team to guide Celsius through this process. I am confident that when we look back on Celsius’s history, we will see this as a defining moment in which acting with resolve and confidence served the community and strengthened the company’s future.
Celsius is one of the crypto lenders experiencing financial difficulties as a result of the recent crypto liquidity crisis. It halted withdrawals on June 12, cut jobs, and hired restructuring consultants.
According to the lender, it has $167 million in cash on hand to “support certain operations during the restructuring process.”
The company has petitioned the court to allow it to continue operating “in the normal course,” allowing it to pay employees and continue benefits.
Celsius stated that it is not requesting permission to allow customer withdrawals at this time. The Chapter 11 process will be used to address customer claims.
Kirkland & Ellis LLP is the legal counsel, Centerview Partners is the financial adviser, and Alvarez & Marsal is the restructuring adviser.