Crypto Lender Celsius Hires New Restructuring Attorneys
Beleaguered cryptocurrency lending platform Celsius has hired new restructuring lawyers for advice on how best to navigate its current financial predicament, the Wall Street Journal reported Sunday, citing people familiar with the matter.
Celsius Hires New Law Firm
According to the report, the newly hired law firm, Kirkland & Ellis LLP, will replace the Philadelphia-based Akin Gump Strauss Hauer & Feld LLP to counsel Celsius on options such as a possible restructuring or bankruptcy filing.
The crypto lender initially hired restructuring consultants from Akin Gump Strauss Hauer & Feld LLP last month after abruptly freezing users’ accounts and suspending withdrawals due to severe liquidity issues that stemmed from extreme market conditions.
Although the report did not state why Celsius chose to change its restructuring attorneys, the firm is also working with other experts, including advisory firm Alvarez & Marshal and banking behemoth Citigroup.
Celsius Repays Its Loans
Meanwhile, Celsius has repaid some of its debtors, perhaps as part of its restructuring strategy. Last week, the firm managed to clear its entire Bitcoin loan with the decentralised lending protocol Maker to reclaim collateral worth over $450 million.
Celsius has also paid its debt to stablecoin issuer Tether and is repaying DeFi protocols Aave and Compound to unlock $950 million in assets used as collateral for the loans. Clearing its debts will allow Celsius to free up enough collateral to solve its liquidity issues and possibly resume withdrawal services.
Crypto Firms Going Bankrupt
It is still unclear whether Celsius will file for bankruptcy like other troubled crypto firms, including Voyager Digital and Three Arrows Capital (3AC). However, the crypto lender recently added Alan Carr, founder and chief executive of fiduciary services firm Drivetrain LLC, to its board of directors. Carr is known for working with companies that have gone through bankruptcy.
Meanwhile, Celsius is not the only crypto lending company having a tough time due to the recent market crash. Rival firms, including Vauld and Babel Finance, have also halted withdrawals due to liquidity issues.
United States-based crypto lender BlockFi also experienced financial difficulties, although the company did not suspend withdrawals like its competitors. Leading crypto derivatives exchange FTX recently rescued BlockFi through a $640 million deal.
~By William A. Frederick ~
