Celsius To Settle Bankruptcy Case With Shareholders By Paying $25 Million
- Celsius has won court approval to settle the bankruptcy fight with its preferred shareholders.
- The bankrupt crypto lender will pay $25 million instead of prolonging the lawsuit potentially costing it $600 million.
- Preferred shareholders had sued the lender last year over repayment priorities following clawbacks and asset sales.
- The settlement comes a week after Celsius settled with two large preferred shareholders over mining asset claims.
The Celsius Network has received the bankruptcy court’s nod to proceed with a deal that will put an end to one of its longest-running legal battles in its Chapter 11 proceedings. The bankrupt crypto lender is set to settle a lawsuit filed by its preferred shareholders amid its bankruptcy case. The shareholders had sued the lender in September last year to stake their claim in its bankruptcy payouts.
Celsius’ CEL Token Jumps 14% After Settlement News
According to a report by Bloomberg, Judge Martin Glen of the U.S. Bankruptcy Court for the Southern District of New York approved Celsius’ deal to settle the case by paying $25 million to the owners of its preferred stock. Company attorney Christopher S. Koenig revealed in the court hearing earlier today that prolonging the legal battle would have added to the bankrupt crypto lender’s legal bills. He added that the lender could’ve owed as much as $600 million to the preferred shareholders in the event of a defeat.
The settlement deal comes more than nine months after the preferred shareholders initially sued the bankrupt crypto lender to ensure the clawbacks of their investments as well as lay claim to the proceeds of asset sales. At the time, the shareholders expressed their concerns about the Chapter 11 proceedings being heavily focused on retail customers rather than the initial investors.
As per the settlement deal, equity investors who wish to extract further funds from the Celsius Network are free to pursue litigation in the bankruptcy court. The $25 million payment will reportedly be made using the proceeds of one of Celsius’ crypto service businesses. The bankrupt platform’s native token CEL jumped over 14% following the news of the settlement deal.