Crypto lending platform Celsius Network has announced a business reorganization plan focused on a mining subsidiary. The profits from Bitcoin mining are planned to be used to compensate users for losses and pay creditors.

On July 14, Celsius filed for Chapter 11 bankruptcy in New York City court. Secondly, it does not allow the initiation of legal proceedings against the debtor and allows him to make financial transactions.

Later, the company’s president, Alex Mashinsky, said Celsius had $4.3 billion in assets as of July 13, with $5.5 billion in debt to customers and creditors.

On July 18, the first Celsius bankruptcy hearing took place. On the same day, the law firm Kirkland & Ellis, which represents the interests of the platform, submitted a new document to the court.

According to Securities, between March 30 and July 14, 2022, the value of assets under management of the company decreased by $17.8 billion.

• $12.3 billion – a drop in cryptocurrency prices;
• $1.9 billion – outflow of funds from deposits;
• $1.9 billion — liquidation and repayment of loans;
• $0.9 billion – liquidation of Tether’s debt position;
• 0.1 billion dollars – losses associated with unsuccessful investments.

According to the document, the platform’s plan to recover losses largely depends on the future profits of mining subsidiary Celsius Mining. In the corporate structure of the company, the latter is also listed as a “borrower”.

According to CoinDesk, at the hearing, Celsius’s lawyers sought approval for more than $5 million in additional costs to complete a mining facility in Texas. According to them, it will take another two months.

The judge approved the request and decided that during the organization the assets of the company would be under the control of representatives of the US Department of Justice.

The Justice Department expressed its concerns about the viability of the Celsius mining business. At the hearing, state attorney Shara Cornell said:

“I think there is a mining company that is not operating at the moment but is bringing in a substantial amount of money to the borrower. It is not clear to me whether the building will be the best option [для Celsius]. Why don’t you just consider liquidation and move on?”

Platform representatives objected, stating that Celsius Mining owns more than 43,000 bitcoin mining rigs. Their number is scheduled to increase to 112,000 “somewhere in the second quarter of 2023”.

The company’s chief attorney, Pat Nash, said that Celsius Mining generates about 14.2 BTC per day. By the end of 2022, the company expects to mine 10,100 BTC (~$221 million at the time of writing).

“If all goes well, we plan to generate around 15,000 BTC in 2023,” he added.

Recall that Financial Times journalists discovered Celsius owed $439 million to EquitiesFirst, a private financial firm.

The latter is also on the list of creditors of bankrupt hedge fund Three Arrows Capital.

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