Bankrupt crypto lender, Celsius, has been denied its request to extend the timeline for its Chapter 11 restructuring plan submission. The unsecured committee of creditors, Celsius borrowers, and the US trustee, William K. Harrington, refused to grant Celsius any more extensions.
Celsius filed a motion on January 25, 2023, to extend its exclusivity period by 44 days. The exclusivity period is when it has the exclusive right to submit a Chapter 11 reorganization plan. It was requesting that the date be shifted from February 15 to March 31, 2023.
Celsius also sought an extension for June 31, 2023, which is the Proposed Solicitation Deadline. However, the US trustee stated it was inappropriate to grant the request.
This is because there are no reasons in the Second Exclusivity Motion warranting an extension of the planning process for another five months. Also, extending the exclusivity to solicit creates a three-month gap from when Celsius is supposed to file a plan to when it should be sent to all its creditors.
It does not also consider that dates have to be shifted for balloting and hearings on the disclosure statement.
According to the filing,
“This proposed procedure begs the question of whether the Debtors already anticipate the need for an additional three months to amend the plan after filing in March before soliciting at the end of June. It is also questionable if the extended dates for solicitation have something to do with regulatory approval of licensing.”
Another reason for denying Celsius the extension period was the cash burn rate. Celsius borrowers stated the crypto lender has been burning large amounts of assets on professional fees, and yet the outcome remains highly uncertain. Hence, it is inappropriate to grant an extension.
