In response to Celsius Network’s insolvency, and majorly for protection against clients pending the time the firm will work on possibilities to rescue the firm, Celsius has commenced the process of filing for Chapter 11 bankruptcy.
Celsius was the leading name on the headlines throughout last month after it announced that it is pausing all forms of withdrawal, transfers, and deposits on its platform, an event that led to States regulators launching an investigation into Celsius and other crypto lending firms.
Celsius CEO and Co-Founder, Alex Mahinsky noted in a press release posted on Wednesday that “this is the right decision for our community and company, 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 posited.
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Why are crypto lenders filing for chapter 11 bankruptcy?
Chapter 11 bankruptcy filing is usually filed to allow firms to put a hold on any legal action against the firm by any creditors so as to enable the firm to come up with strategic possibilities to make it up to the firm’s creditors while still operating during the process.
To prevent litigation, Celsius is left with no option but to file for bankruptcy so as to let the firm address its insolvency while still operating.
According to Celsius, the bankruptcy is filed to provide the opportunity to strengthen its business and consummate a comprehensive restructuring that maximizes value for all stakeholders.
In the press release, Celsius and some of its subsidiaries filed “voluntary petitions for reorganization under Chapter 11” in the United States Bankruptcy Court for the Southern District of New York. The company touts “ample liquidity with $167 million in cash to support operations.”
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