The legal team requested the court appoint a committee representing certain shareholders or the case could end up “inappropriately and inequitably skewed in favor of the customers.”
An international law firm representing groups of Celsius investors has filed a motion to appoint a committee to represent their interests in the crypto lending firm’s bankruptcy case.
In a Thursday filing with the U.S. Bankruptcy Court in the Southern District of New York, lawyers with the law firm Milbank requested the appointment of a ‘Official Preferred Equity Committee’ to represent certain Celsius shareholders. According to the filing, the equity holders “urgently require their own fiduciary” for representation in court alongside Celsius debtors and an Unsecured Creditors Committee, or UCC.
“The need for a fiduciary to pursue the Equity Holders’ interests is particularly critical when one considers the practical realities of these cases: there are only two groups of real economic stakeholders – the retail customers and the Equity Holders,” said the court filing. “Not only is the UCC laser focused on maximizing value for the customers, without regard for the Equity Holders, but the Debtors also have made it abundantly clear that the UCC is their partner, and these cases are ‘all about the customer.’”
The legal team added:
“An estate fiduciary is needed to take the other side of this dispute before a plan of reorganization is proposed that violates the Bankruptcy Code […] An Official Preferred Equity Committee should be appointed now — and not after the fact — or these cases will be inappropriately and inequitably skewed in favor of the customers to the detriment of the Equity Holders.”
The shareholders included investors in Celsius’ Series B $750-million funding round from November 2021, one of the last before the firm filed for Chapter 11 bankruptcy in July 2022. A hearing on Milbank’s motion will be held on Oct. 6 — the same day the court was scheduled to decide on a motion allowing Celsius to sell its stablecoin holdings to generate liquidity to help “fund the Debtors’ operations.”
We expect to soon begin the Claims process. Our objective 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 issues from many clients seeking to reclaim their funds. In August, a group of creditors filed a complaint aimed at recovering more than $22.5 million worth of crypto held in the lending firm’s custody service. However, the price of Celsius’ CEL token has roughly doubled since the Chapter 11 filing, from $0.78 to $1.54 at the time of publication.
Cointelegraph reached out to Milbank, but did not receive a response at the time of publication.