BnkToTheFuture Unveils 3 Proposals to Save Celsius From Bankruptcy

Key Insights:

• BnkToTheFuture CEO Simon Dixon has outlined three new proposals to help Celsius stabilise liquidity and operations.
• Celsius has kept withdrawals and transfers frozen since June 12.
• Dixon suggests deploying a similar plan used to save Bitfinex from liquidation in 2016.

BnkToTheFuture, which has more than 1,000 investors exposed to the Celsius Network, has outlined three new proposals to save the company from bankruptcy, as outlined by CEO Simon Dixon on Twitter.

Celsius (CEL) has kept withdrawals and transfers frozen since June 12 due to liquidity concerns, with rumours circulating that the company’s management has been debating with lawyers over whether the business should file for Chapter 11 bankruptcy.

What is evident is that Celsius is certainly suffering from financial hardship, as well as possible insolvency, but the company is currently is seeking restructuring advice from the advisory firm Alvarez & Marsal.

BnkToTheFuture Proposals

The three new proposals include options of restructuring and relaunching Celsius to allow depositors to benefit from any recovery through financial engineering, or potentially co-investing in the platform alongside wealthy Bitcoin whales.

Another possible option is to settle for an operational plan that allows a new entity and team to rebuild and make depositors whole.

Dixon had previously offered to assist the network by deploying similar “financial innovation” used to save cryptocurrency exchange Bitfinex from liquidation in 2016, which he claims was resolved within nine months. This was after the company announced that it lost approximately 120,000 Bitcoin (BTC) in a cybersecurity breach, causing a loss of around $72 million of customers’ funds.

Instead of opting for liquidation proceedings, Bitfinex initiated a recovery plan that involved “promises to repay” in the form of BFX tokens to customers, representing the value of the money lost in the hack.

The issuance of equity debt tokens was designed to represent $1 of debt per token. These tokens were tradable on the open market and effectively allowed customers to speculate on the company’s recovery. BnkToTheFuture later worked with Bitfinex to allow customers to convert their BFX tokens into equity in the company.

By all accounts, the plan worked, with victims recovering between 75% and 100% of their funds.

The BnkToTheFuture team has expressed that all attempts should be made to make depositors whole in order to maintain shareholder value, adding that it will be calling for a shareholder meeting that “legally cannot be ignored by the Celsius board”. For context, BnkToTheFuture Capital SPC holds over 5% of Celsius shares, which it believes grants it the right to call a shareholder meeting.

Also, Celsius’ lead investor suggested that after first submitting these proposals, it is it now looking to “apply pressure” to the firm after getting “worried that time was running out”.

Stabilising Liquidity Problems

Celsius is currently exploring all options available like pursuing strategic transactions and restructuring its liabilities in order stabilise liquidity and operations.

However, it lost out on an acquisition deal with Sam Bankman-Fried’s cryptocurrency exchange FTX after the company observed a $2 billion hole in Celsius’ balance sheet. FTX had reportedly entered into talks with Celsius to either provide financial support or acquire the firm outright.

Another report claims that Goldman Sachs was allegedly looking to buy distressed assets from the firm “at potentially big discounts in the event of a bankruptcy filing.”

Earlier this week, Celsius denied reports that CEO Alex Mashinsky had attempted to flee the U.S. after the company’s liquidity crisis worsened.