Now-defunct crypto lender Celsius has received a US bankruptcy judge’s permission to seek creditor approval for its plan out of bankruptcy with a sale of assets to Fahrenheit. The firm will send ballots to creditors who will vote on the proposal, which could see users recover as much as 85% of their holdings.

Celsius’ Proposed Sale to Fahrenheit

In May last year, Celsius declared bankruptcy after revealing a massive dent in its balance sheet caused by the catastrophic collapse of the Terraform ecosystem. In its bankruptcy filing, the crypto lender reported it had between $1 billion and $10 billion in assets and liabilities and over 100,000 creditors.

The implosion led to a bidding war for the bankrupt Celsius Network between multiple Wall Street firms. Earlier this year, it was revealed that the crypto consortium Fahrenheit had won the battle to acquire the company’s assets.

Fahrenheit, the group of buyers that includes prominent firms such as venture capital (VC) investor Arrington Capital and miner US Bitcoin Corp, ousted NovaWulf’s attempts to buy out Celsius, which valued the company’s assets at roughly $2 billion.

Under the new deal, it was reported that the new entity would secure $450 million to $500 million in liquid crypto funds. Furthermore, US Bitcoin Corp would build crypto mining facilities, including a new 100-megawatt plant.

In a significant development in the Celsius bankruptcy case, the company’s former CEO and co-founder Alex Mashinsky was arrested back in July. At the time, the Securities and Exchange Commission (SEC) filed a lawsuit against the crypto lender and its CEO, accusing them of securities fraud.

Celsius Users Could Recover up to 85% of Their Holdings

Celsius has taken a significant step towards recovering funds for its creditors. The company recently received approval from a judge to proceed with its plan to sell assets to the Fahrenheit consortium. The approval signals a positive development in Celsius’ year-long journey out of bankruptcy.

According to the disclosures put forth by Celsius, creditors can expect to recover anywhere between 67% and 85% of their holdings. The proposed sale of assets to the consortium, which includes Arrington Capital and U.S. Bitcoin Corp, is part of a Chapter 11 procedure initiated in July 2022. New York Bankruptcy Judge Martin Glenn is overseeing the process.

It is worth noting that creditors will have the opportunity to vote on the proposed plan. They will receive ballots to cast their votes between August 24 and September 22. The plan outlines that most returns will be made in popular cryptocurrencies like Bitcoin and Ethereum.

Earn Account holders could recover around 67% of their holdings, while Celsius’ Borrow Program participants could recoup up to 85.6% of their investments. In comparison, liquidating the assets yields only a 47% recovery rate.

Celsius’ sale proposal comes as previous cases involving crypto lenders saw notable support from creditors. Voyager, another crypto lender, saw an overwhelming 97% of its creditors voting in favor of a sale to Binance.US. However, the buyer eventually withdrew from the agreement due to legal delays.

This article originally appeared on The Tokenist

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