Court gives final approval to $225 million Celsius Mining Company, overrides securities ruling
The U.S. Bankruptcy Court for the Southern District of New York approved the execution of the “MiningCo Transaction” for Chelsea and its related debtors on December 27 as part of Chapter 11 bankruptcy proceedings. The order, enacted by Chief Judge Martin Glenn, reads: All opposition to the proposal was also rejected, marking a critical juncture in Chelsea’s restructuring efforts.
The court’s decision now clears the way for Celsius to proceed with a deal aimed at stabilizing and restructuring the company’s operations by creating a “public company solely focused on Bitcoin mining.” The MiningCo transaction includes certain conditions essential to the Company’s restructuring plan. This includes the capitalization of a new entity (NewCo) with $225 million in fiat capital and the transfer of certain mining assets, excluding Core Rhodium, Mawson and Luxor assets, to NewCo.
Additionally, the court order approved modifications to the management agreement, setting the initial term of the agreement at four years, with certain conditions for extension or early termination. Specifically, if NewCo’s mining capacity does not meet the specified Exahash target of 23 EH/s within the initial three years, NewCo will have the right to terminate the contract without an early termination fee, given a six-month transition period.
The court also approved the ‘budget and procedures’ essential for the orderly execution of the plan. The Wind-Down budget includes significant costs, including management fees, professional fees, and operating expenses, totaling approximately $70 million. These expenses play an important role in supporting asset sale distribution and estate management.
The court also addressed the issue of Securities and Exchange Commission (SEC) rights related to cryptocurrency tokens. The order explicitly states that none of the court’s decisions should be construed as a decision under federal securities laws regarding the status of cryptocurrency tokens or transactions related thereto. This provision maintains the SEC’s authority to object to transactions involving cryptocurrency tokens.
The approval is a change from the original plan, but marks a shift towards an orderly downsizing aimed at better outcomes for creditors. This decision was made after reviewing a variety of comments, including objections and statements of support, reflecting the court’s focus on fair and legal resolutions.
The ruling now invalidates previous agreements on how to deal with unsecured claims. The court halted the company’s operations and established new guidelines for managing creditor payments.
