Law Firm Files Motion Seeking Appointment of an Official Preferred Equity Committee – crypto.news
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Milbank LLC, an international law firm headquartered in New York, has filed a motion in the United States Bankruptcy Court for the Southern District of New York seeking orders directing the Office of the United States Trustee to appoint a formal preferred equity committee.
B series shareholders require representation in bankruptcy proceedings
The motion was filed on behalf of several institutional holders of Celsius Network’s Series B preferred stock, including Community First Partners, Celsius SPV Investors, Celsius New SPV Investors and CDP Investissements Inc.
According to the motion, an official preference committee is necessary to ensure adequate representation of the crypto lender’s preferred shareholders in Celsius Network’s bankruptcy proceedings. B series shareholders are part of Celsius, as they make up about 35% of the company’s ownership structure.
Attorneys for the shareholders argued that the fundamental issues affecting the crypto company’s future, which the Chapter 11 cases are set to address, will directly affect their clients’ recovery. These questions include, among other things, which Celsius subsidiaries listed as debtors in the bankruptcy case are responsible for customer claims. They also include how the proceeds from the potential sale of Celsius assets will be allocated and whether claims against the crypto-lender will be paid in US dollars or crypto-assets.
Chapter 11 Cases in which retail customers are favored at the expense of shareholders
The presentation further stated that the Celsius Network and the recently established Official Committee of Unsecured Creditors (CelsiusUCC) have made progress in resolving key issues necessary for the progress of restructuring negotiations. As such, the primary shareholders consider it important that their interests be represented in negotiations by a trust committee with the same rights, status and resources as CelsiusUCC.
Additionally, the presentation stated that there are only two real financial stakeholders in Celsius’ bankruptcy cases: the cryptolender’s retail customers and its shareholders. Although CelsiusUCC protects and promotes the interests of retail customers, the presentation stated that there has been no attempt to raise the questions, opinions, reservations or expectations of B-series shareholders.
According to preferred stockholders, the Chapter 11 proceedings have largely focused on the plight of Celsius Network’s retail customers without considering other parties. For this reason, shareholders feel that they need a seat at the table to pursue their interests and receive the necessary information on ongoing cases in a timely manner.
The lawyers further noted that Celsius Network’s retail customers have no concrete claims against its non-client companies, including Celsius Mining and GK8. As such, the motion argues that any value of these non-customer-facing subsidiaries, including the crypto lender’s loan portfolio, mined Bitcoin, and GK8’s equity, should largely be used to benefit preferred shareholders.
Does Celsius Management protect its own interests?
In the presentation, shareholders also made a thinly veiled attack on Celsius CEO Alex Mashinsky, suggesting that he and other senior executives at Celsius were more focused on pursuing a bottom line that benefited CEL token holders rather than shareholders, as they were the company’s largest owners. CEL codes.
The motion also argued that the importance of a formal preference capital committee in the ongoing bankruptcy proceedings outweighed concerns about potential costs. In addition, the presentation stated that the interests of the shareholders differed sharply from the interests of the private clients represented by CelsiusUCC. Thus, there will be no overlap between the two.
The motion is due to be heard on October 6, and any party wishing to file an objection has until September 29 to do so.