Celsius Network LLC (“Celsius” or the “Company”) announced today that it has successfully emerged from bankruptcy by completing the transactions under its confirmed plan of reorganization (the “Plan”). The Plan was overwhelmingly approved by approximately 98% of the Company’s account holders and confirmed by the Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) on November 9, 2023. This milestone marks the conclusion of an eighteen-month process during which the Company built consensus among a wide range of stakeholders, resolved complex novel legal issues, fully cooperated with all regulatory investigations, and developed and consummated the transactions under the Plan. The Plan includes the distribution of over $3 billion of cryptocurrency and fiat to Celsius’ creditors, and the creation of a new Bitcoin mining company—Ionic Digital, Inc.—which will be owned by Celsius’ creditors and will have its mining operations managed by Hut 8 Corp. (Nasdaq | TSX: HUT) (“Hut 8”).
Following confirmation of the Plan and feedback from the Securities and Exchange Commission (the “SEC”) on certain aspects of the Plan, Celsius, in close coordination with the Official Committee of Unsecured Creditors (the “UCC”), announced that it would transition to the “MiningCo Transaction,” consistent with the Plan. In addition, the Company increased the amount of cryptocurrency that would be available for distribution to creditors by nearly $250 million dollars by converting altcoins to BTC or ETH and through previous settlements. The Bankruptcy Court approved the MiningCo Transaction on December 27, 2023.
Today, pursuant to the MiningCo Transaction, the Company has commenced distributions of over $3 billion of liquid cryptocurrency and fiat to creditors and Ionic Digital was created as a new Bitcoin mining company that will continue to deliver recoveries to creditors. The Ionic Digital stock is expected to be publicly traded once the requisite approvals are received. Ionic Digital will be owned by Celsius’ creditors, who will own equity in the form of common stock.
“Creating the best outcome for creditors by maximizing value and speed have been front of mind for Celsius throughout this process,” said Chris Ferraro, Plan Administrator and former Chief Restructuring Officer, Interim Chief Executive Officer, and Chief Financial Officer. “Today, over 18 months after Celsius paused withdrawals, we began distributing over $3 billion of cryptocurrency, fiat, and stock in Ionic Digital to Celsius creditors.”
“Our exit from bankruptcy is the culmination of an extraordinary team effort and extensive collaboration between Celsius, Hut 8, strategic partners, and our creditors,” added David Barse and Alan Carr, members of the Special Committee of the Board of Celsius, who have been steering Celsius though its Chapter 11 process. Barse and Carr continued: “When we were appointed in June 2022, everyone assumed Celsius would disappear completely like the other crypto lenders that were filing bankruptcy around the same time. We, however, believed that Celsius could navigate complicated legal, regulatory, and business issues. Among other achievements, Celsius secured the cryptocurrency on our platform, achieved a settlement with the preferred shareholders, ran a successful auction of the one reorganizable operating business to begin as a new Bitcoin mining company, established a litigation trust to pursue the innumerable counterparties that exploited Celsius and, possibly most importantly, settled with the DOJ, SEC, and CFTC. But most of all, we are proud of the preservation and distribution of cryptocurrency assets and enhanced recovery for customers and claim holders.”
To facilitate secure, timely, and fully compliant distributions, Celsius and its advisors have coordinated with the UCC and certain federal and state regulatory agencies throughout its restructuring.
Matt Prusak, Chief Commercial Officer, Hut 8, has been named CEO of Ionic Digital and will work with the previously announced Board of Directors, a majority of which were appointed by the UCC. Hut 8 will oversee Ionic Digital’s Bitcoin mining business under a four-year management agreement. Additional details on Ionic Digital will be forthcoming.
Celsius will now pursue an orderly wind down of its operations, including discontinuing the Celsius mobile and web applications.
Additional Information about the Restructuring Process
The full terms of the Plan and Disclosure Statement, as well as additional information about the chapter 11 filing, including court documents, can be found online free of charge at https://cases.stretto.com/celsius. Stakeholders with questions may call Stretto at +1 (855) 423-1530 (U.S.) or +1 (949) 669-5873 (international) or email celsiusinquiries@stretto.com.
Advisors
Kirkland & Ellis LLP is serving as legal counsel, Centerview Partners is serving as financial advisor, Alvarez & Marsal is serving as restructuring advisor, and C Street Advisory Group is serving as strategy and communications advisor to the Debtors.
White & Case LLP is serving as legal counsel, Perella Weinberg Partners is serving as investment banker, and M3 Partners is serving as financial advisor to the Committee.
Cleary Gottlieb Steen & Hamilton LLP is serving as legal counsel to Ionic Digital.
Brown Rudnick LLP is serving as legal counsel to Hut 8.
About Celsius
Celsius is a global cryptocurrency platform and a well-recognized leader in Bitcoin mining. For additional information on the company, please visit http://www.celsius.network. For additional information on Celsius’ ongoing Chapter 11 cases, please visit http://www.cases.stretto.com/celsius.
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