An international law firm representing Celsia investor groups has filed a proposal to appoint a committee to represent their interests in the case of the crypto-lending firm’s bankruptcy.
In a filing Thursday in U.S. Bankruptcy Court for the Southern District of New York, attorneys at the Milbank law firm requested the appointment of an “Official Preferred Equity Committee” to represent certain shareholders of Celsius. According to the filing, the stockholders “urgently request their own fiduciary” to represent them in court along with the Celsius debtors and the Unsecured Creditors Committee, or UCC.
“The need for the fiduciary to advance the interests of stockholders is particularly critical given the practical reality of these cases: There are only two sets of real economic stakeholders — retail customers and stockholders,” the court filing states. “Not only is UCC laser focused on maximizing value for customers, regardless of equity holders, but debtors have also made it abundantly clear that UCC is their partner and these cases are ‘all about the customer.’
The legal team added:
“An asset manager is needed to take the other side of this dispute before a plan of reorganization is proposed that violates bankruptcy law. […] An official preferred equity committee should be appointed now – not later – or these cases will be inappropriately and unfairly skewed in favor of customers at the expense of stockholders.”
The shareholders included investors in a $750 million Celsius Series B funding round from November 2021, one of the last before the company. filed for Chapter 11 bankruptcy in July 2022. A hearing on Milbank’s motion will be held on October 6 — the same day the court had decide on the proposal which allowed Celsius to sell its stablecoins to create liquidity and help “fund the borrowers’ operations.”
We expect to begin the claims process soon. Our goal is to make the entire process simple and straightforward for all customers.
— Celsius (@CelsiusNetwork) September 15, 2022
Since filing for bankruptcy in July, Celsius has faced legal challenges from numerous clients trying to recover their funds. In August, a group of creditors filed a complaint the goal is to recover more than $22.5 million worth of cryptocurrencies held in the loan company’s escrow service. However, the price of Celsius THE the token has roughly doubled since filing for Chapter 11, from $0.78 to $1.54 at the time of publication.
Cointelegraph reached out to Milbank but had not received a response at the time of publication.