Dave – Cryptocurrency Expert
Two equity owners of the cryptocurrency lending platform Celsius asked a committee to protect their rights in bankruptcy proceedings lately. The investors expressed their concern that the bankruptcy procedure places an excessive amount of emphasis on retail consumers.
To establish a Preferred Equity Committee, the law firm Milbank LLP submitted an application to the bankruptcy court for the Southern District of New York. The Committee will speak for the Series A and Series B shareholders and will give them preference in the sale of the Celsius mining operations and the custodial firm GK8.
According to the two firms, if these procedures weren't taken, the court case "would be unjustly and inequitably weighted in favor of the customers to the detriment of the Equity Holders."
The statement said “Additionally, the debtors have made it very clear that the Unsecured Creditors Committee (UCC) is their partner and that these cases are all about the customer. The Unsecured Creditors Committee (UCC) is laser-focused on maximizing value for the customers without regard for the equity holders.”
A fiduciary should represent the equity holders in the court battle prior to a proposed reorganization plan, according to the attorneys.
The motion further requests that the claim ceiling be established at the claim's worth in US dollars as of the bankruptcy petition filing date. If bitcoin prices increase throughout the procedures, equity holders will profit rather than customers. But if crypto prices fall, customers are hurt. "This is a tremendous bombshell likely to alienate the whole creditor body and constituents," said Thomas Braziel, founder of bankruptcy investment expert 507 Capital.
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