Celsius Loan creditors are considering appealing Celsius' reorganization plan due what they see as lower-than-expected recoveries.
Some crypto traders are preparing to appeal the Celsius reorganization plan to challenge what they perceive as an "unfair" agreement that disproportionately favors Celsius Earn creditors over Celsius Loan creditors, sources familiar with the matter told The Block. This plan, they claim, has significantly diminished the recoveries for those holding debts from the lender's estate.
Celsius Loan creditors have not specified when they will officially file the appeal, as they are still in the preliminary stages of preparing for the legal process, a source told The Block. This source also said that the lender’s major Loan creditors would finance the forthcoming legal action. Chief Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York approved Celsius’ restructuring plan last November, over a year after the lender declared bankruptcy in July 2022. However, the execution of this plan resulted in lower-than-expected payouts for Celsius Loan customers, with some creditors alleging they received less than 30% of what they believed they were owed, according to one creditor.
The first claim asserts that the court failed to ensure "fair and equal" treatment between two groups of creditors: users of Celsius Earn, an interest-yielding crypto account, and customers of Celsius Loan, a collateralized crypto loan service. A creditor told The Block that Earn creditors' claims were processed earlier this year, weeks before those of Loan customers, resulting in higher recoveries for users of the company's flagship interest-bearing product.
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