In a pivotal moment for Celsius Network, the United States Bankruptcy Court for the Southern District of New York has given the green light to the proposed $225 million “MiningCo Transaction” within the framework of its Chapter 11 bankruptcy proceedings.
Chief Judge Martin Glenn’s order on December 27 paves the way for Celsius Network to proceed with the transaction, focusing on stabilizing and restructuring the company by creating a dedicated public company for bitcoin mining.
The MiningCo Transaction involves capitalizing the new entity, named “NewCo,” with $225 million in fiat and transferring specific mining assets, excluding Core Rhodium, Mawson, and Luxor assets. Celsius aims to relaunch as NewCo, focusing on staking and mining, projecting a $1.25 billion balance sheet with $450 million in liquid cryptocurrency.
Key terms include NewCo’s mining capacity target of 23 EH/s within the initial three years. If this target isn’t met, NewCo can terminate the agreement without an early termination fee, subject to a six-month transition period. Fahrenheit has also committed to buying a $50 million minority stake in NewCo, benefiting Celsius customers.
The court ruling has nullified previous agreements related to unsecured claims, resetting guidelines for operational wind-down and creditor settlements. The “Wind-Down Budget and Procedures,” approved by the court, outlines crucial expenses totaling approximately $70 million for the orderly execution of the plan.
Importantly, the court ruling does not affect the Securities and Exchange Commission’s (SEC) rights regarding crypto tokens. It explicitly states that it doesn’t determine the status of crypto tokens under federal securities laws, preserving the SEC’s authority to challenge related transactions.
Celsius Network, once valued at $3 billion, faced financial difficulties in 2022, resulting in a significant crypto collapse. The approved MiningCo Transaction is poised to play a crucial role in reshaping the company’s trajectory in the coming months.
