In a significant development in the Chapter 11 case of Celsius Network, Brown Rudnick advised crypto consortium Fahrenheit in connection with its successful bid to sponsor a Chapter 11 plan of reorganization for the insolvent crypto lender. The plan provides for the creation of a “NewCo” that will be vested with Celsius assets previously valued at upwards of $1.5 billion.
Celsius announced on May 25 that Fahrenheit – a group consisting of US Bitcoin Corp., Arrington Capital, Proof Group, Steven Kokinos and Ravi Kaza – will provide the capital, management team and technology to establish and operate NewCo owned by its creditors.
Under the terms of the deal, NewCo will receive hundreds of millions of dollars in liquid cryptocurrency and US Bitcoin will construct crypto mining facilities, including a state-of-the-art 100-megawatt plant.
The new company will also manage Celsius’ institutional loan portfolio, mining business and alternative investments.
In the coming weeks, Celsius will negotiate and publicly file a plan sponsor agreement with Fahrenheit, a backup plan sponsor agreement with the BRIC, a revised Chapter 11 plan, and a disclosure statement, all of which remain subject to bankruptcy court approval.
New Jersey-based Celsius filed for Chapter 11 protection in July 2022, following a significant decline in crypto prices after the rapid growth of the industry during the COVID pandemic. The company kicked off an auction on April 22, seeking a buyer to guide its crypto lending and bitcoin mining businesses out of bankruptcy. The auction concluded on May 24.
The announcement made headlines in Reuters, Cointelegraph, Reorg and other news outlets.
Andrew Carty led the team, which included Jonathan Fitzsimons, Matthew Uretsky and Robert Stark.
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