Celsius Network, a bankrupt crypto lender, has completed payments to two-thirds of its creditors despite challenges in the distribution process. In its first report, the entity responsible for the plan explained the status of the distribution plan and the next steps in the repayment process.
Celsius distribution plan targets 375,000 creditors
On Monday, Celsius Plan Director made his first presentation. Status Report Regarding distributions filed in the U.S. Bankruptcy Court for the Southern District of New York. In the court filing, the bankruptcy administrator disclosed that by August 2024, Celsius had distributed more than $2.5 billion in eligible value owed to creditors.
Over the past seven months, the plan administrator has worked to make successful distributions to creditors, answer questions, and resolve issues faced by Celsius clients. According to the report, the distribution plan “is likely to be the most complex and ambitious distribution ever undertaken in a Chapter 11 case.”
The plan appears to require months of due diligence, evaluation, and collaboration between Celsius’s bankruptcy administrator and multiple advisors because it involves distributing “liquid cryptocurrency, cash, and, for creditors outside the comfort class, MiningCo common stock.”
Payouts are made through Coinbase, PayPal, Venmo, and other platforms. The administrator attempts to make distributions through Coinbase every two weeks, and cash distributions are made once a week. Meanwhile, PayPal claim codes can be redeemed at any time once they are issued.
In all, approximately 375,000 creditors in more than 165 different countries were eligible to make payments, which made the distribution process even more complicated. According to the court document, the distribution plan was made more difficult by the fact that several regulators were seeking enforcement action against Celsius for not being a “fully compliant company.”
$2.5 billion sent to creditors
As of January 31, Celsius has successfully distributed funds to 251,000 creditors. This represents about two-thirds of all eligible creditors and about 93% of eligible value.
Despite the challenges, the bankrupt crypto lender successfully paid out approximately $2.53 billion in cash and cryptocurrencies at specified prices on January 16, meaning the initial distribution to eligible creditors was successful “for a significant majority of creditors.”
Distribution plan's progress by August, 2024. Source: Celsius' Plan Administrator Status Report
In the first two weeks of distribution, Celsius’ creditors received about 65% of the total eligible value, which was about $1.7 billion. That figure rose to 80% of the then-eligible value, which was about $2 billion, a month later.
Since March, the crypto lender has distributed roughly 30% to 40% of the remaining amount, leaving around 121,000 eligible creditors. However, the remaining creditors reportedly have “very small distributions,” which may not motivate them to go through with the repayment process.
According to the report, 64,000 of the remaining 121,000 creditors have distributions of less than $100. Meanwhile, 41,000 creditors have distributions between $100 and $1,000. Ultimately, “the plan administrator has attempted more than 2.7 million total distributions to approximately 372,000 currently eligible creditors” and will continue to retry payments under the plan.
Total crypto market capitalization is at $2.13 trillion in the weekly chart. Source: TOTAL on TradingView
Featured image from pexels.com, chart from TradingView.com