Growth equity firm WestCap and Quebec’s pension fund Caisse de dépôt et placement du Québec (CDPQ), two of Celsius’ investors who hold equity in the crypto lending company, have asked for their own fiduciary to represent their interests in bankruptcy proceedings. The move comes as the two companies worry the court might favor retail investors over equity holders.

Celsius Equity Holders File for Fiduciary to Represent Their Interests

On Thursday, two Celsius equity holders WestCap and CDPQ filed a request for a committee to represent their interests in bankruptcy proceedings. “The immediate appointment of an Official Preferred Equity Committee is necessary” to ensure the representation of the crypto lender’s equity holders, according to their filing.

The filing noted that the debtors have partnered with the Official Committee of Unsecured Creditors (UCC) to resolve issues such as “customer claims, the appropriate allocation of any asset sale proceeds, and whether the claims of the Debtors’ customers must be determined in United States dollars as of the Petition Date.”

“The Equity Holders urgently require their own fiduciary – with the access, standing, and resources equal to those enjoyed by the UCC – to represent their interests,” the filing said, adding that the UCC “vigorously” pursues the interests of the customers without regard for the equity holders.

“Thus, there is no stakeholder presently at the table advocating for the interests of the Equity Holders.”

The filing also claimed that the appointment of an Official Preferred Equity Committee would reduce costs and fasten the case by preventing any future controversies. “As such a committee will provide a unified voice to the Equity Holders that will obviate the necessity for the Debtors to deal with multiple objections and requests for information.”

Celsius Desperate to Make a ComeBack

Celsius filed for Chapter 11 bankruptcy protection in July, more than a month after halting withdrawals citing a liquidity crisis it blamed on “extreme market conditions” and the catastrophic implosion of Terra. Bankruptcy proceedings have revealed that the crypto lender owes 500,000 creditors nearly $5 billion.

Earlier court filings had indicated that Celsius has a $1.2 billion gap in its balance sheet. However, a mid-August filing revealed that the crypto lender is in an even worse financial condition. According to the filing, the company has $2.8 billion in crypto liabilities and is also on its way to running out of cash by October.

Despite the big hole in its financials, the crypto lender is desperate to make a comeback. As reported, Celsius CEO Alex Mashinsky suggested that they reorganize the company with a focus on crypto custody, according to audio of an internal meeting shared by a customer of the company.

In another leaked call, Celsius executives reportedly told employees during a meeting on September 8 that Mashinsky had already shared the plan to turn its debt into crypto “IOU” (“I Owe You”) tokens with the unsecured creditors committee, which reacted with “positive feedback.”

Celsius Chief Technology Officer Nuke Goldstein reportedly explained that the IOU tokens would represent the ratio between how much the crypto lender owes and how much they have. Oren Blonstein, Celsius’ chief compliance officer, added:

“This is really how we resolve this, how we get out. What we do in this pivotal moment can be through unprecedented, really innovative solutions and this [plan] is one of them.”

Meanwhile, the crypto lender’s token has extended its losses over the past day. CEL is currently trading around $1.52, down by more than 7% over the past 24 hours. In comparison, the broader crypto market is largely flat over the past day.

This article originally appeared on The Tokenist

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