Celsius Network has entered the legal realm of bankruptcy as it strives to transform itself into a user-owned Bitcoin mining operation.
In a recent New York bankruptcy hearing, the company outlined its intention to reimburse customers whose funds have been frozen since June 2022 with a portion of their owed amounts by year-end.
According to a Bloomberg report, Celsius Network's lawyer, Christopher S. Koenig revealed that the restructured company, set to emerge from Chapter 11, will secure $450 million in capital and financial support.
A consortium named Fahrenheit LLC, led by Arrington Capital, has been chosen to oversee the mining venture and provide essential financial backing.
Koenig emphasised Fahrenheit's strong belief in Celsius's revamped business, stating that "They are putting their money where their mouth is."
Judge Martin Glenn is currently assessing the approval of Celsius's plan, despite objections from some customers who have been unable to access their funds.
Additionally, an affiliate of Lantern Ventures, owed approximately $82 million, challenges the plan, citing an overvaluation of the new business by Celsius's advisors.
The new venture will also require clearance from securities regulators.
If approved, this plan would signify the first instance of a failed cryptocurrency platform being revived under Chapter 11, following a series of insolvencies that shook the industry last year.
However, in the event of the new company's failure, the company may face liquidation, potentially resulting in lower repayments for customers.
Celsius Network intends to partially repay creditors by distributing approximately $2 billion in Ethereum (ETH) and Bitcoin (BTC), along with offering stock in the new company.
Customers will also receive a stake in litigation against co-founder and former CEO Alex Mashinsky and other former executives charged with fraud by federal prosecutors.
Mashinsky, who has pleaded not guilty, stepped down after the company filed for bankruptcy.
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