Individuals involved in Celsius’ bankruptcy case objected to a motion made by the defunct crypto lender that would extend a key deadline for the second time.
Since it filed for Chapter 11 bankruptcy in July of last year, the company has had the exclusive right of putting forth a restructuring plan for the lender.
In December, the court overseeing Celsius’ Chapter 11 bankruptcy case extended that timeline for Celsius to February 15, after the company stated it needed additional time.
But a motion filed in late January asked the court to push that period out again by 44 days through to March 31, with Celsius being able to solicit votes on the proposed plan through the end of June.
Such a request has, however, been met with concern by entities involved in the case.
Celsius could ‘run out of cash’
A new filing from the Celsius committee of unsecured creditors has objected to this extension.
“The Debtors face a looming liquidity cliff in June,” the filing reads. “If the Debtors pursue their current schedule, they simply cannot emerge from bankruptcy by that time.”
The committee contended that Celsius could “run out of cash” by the end of June given the company’s “cash burn,” putting itself in a position where the defunct lender would need to sell more assets to fund its bankruptcy case.
Additionally, William Harrington–a trustee from the U.S. Department of Justice tasked with overseeing administrative processes in the case–said the extension would be “inappropriate.”
Harrington said that the company provided no reasons in its motion that warranted extending its solicitation period to the end of June.
He also cited the rate at which legal professionals are “consuming” Celsius’ assets as a reason to rule against the extended timeline, despite the crypto lender’s claim that many creditors will have to weigh in on the proposed plan.
“Notwithstanding the Debtors’ lip service to the volume of creditors in this case needing to be sent the plan and disclosure statement, it cites to no other case being granted such a long extension for solicitation during one motion for exclusivity,” said Harrington.
The Southern District of New York bankruptcy court had previously ruled that Celsius could sell $18 million worth of stablecoins held in Earn Accounts–which offered customers rewards on deposits of digital assets–to help fund its administrative expenses.
A hearing for the motion is set to take place next Wednesday on February 15.
The committee of unsecured creditors said that if an agreement can’t be reached, it plans to ask the court to deny Celsius’ motion, stating it would be prepared to file its own restructuring plan “expeditiously.”