McCarter & English, the law firm representing four of Celsius’ borrowers, submitted A motion to appoint a Chapter 11 Trustee in lieu of an Internal Examiner from the Office of the United States Trustee.
The United States Trustee’s Office is August 18th Petitioned the court that oversees the bankruptcy process to appoint an independent examiner.
at the counter filing, The borrowers argued that a Chapter 11 trustee should be appointed to maintain Celsius’ financial transparency and unbiased valuation.
Chapter 11 Trustee Appointed by the court to examine the debtor’s financial documents and manage its business on behalf of the creditor until the bankruptcy proceedings are completed.
The borrowers argued that appointing a Chapter 11 trustee would be in the best interest of all creditors and other stakeholders. Borrowers say examiners typically take longer to issue reports, putting more financial burden on struggling cryptocurrency lenders.
In support of the Chapter 11 Trustee, the borrower said it would help speed up the resolution process and go a long way in saving tens of millions of dollars in Celsius.
Doubts about Celsius transparency
Borrowers outlined examples in which Celsius demonstrated lack of transparency and distrust to push their move.
Borrowers cited a case in which Celsius failed to disclose the identity of a “private lending platform” that defaulted on a $439 million loan.
The cryptocurrency lender has also been accused of failing to explain why it declined to meet Tether’s margin calls that led to a loss of around $97 million.
Celsius CEO Alex Mashinsky was also accused of misleading the public about the company’s liquidity shortly before it filed for bankruptcy.
Prospects for liquidity settlement
A recent update on the Celsius case shows the company is making progress toward resolving the crisis and refunding customers.
In a Sept. 1 filing, a cryptocurrency lender asked the court to allow eligible custody clients to withdraw up to $210 million in funds.
Celsius also said it will receive an additional $70 million from loan repayments to fund business operations from November 2022 onwards.