While a recent document shows that Celsius would be twice as indebted as it said when it filed for bankruptcy, the company still gets a judge’s permission to resell the Bitcoins (BTC) it mined itself.
Celsius to sell its mined Bitcoin
On Tuesday, August 16, the various parties involved in the Celsius bankruptcy proceedings met to discuss the company’s operations in the context of a potential restructuring.
This included payment arrangements for the company’s taxes and fees, insurance costs, claims against suppliers and legal fees.
As a result, Martin Glenn, the judge in charge of the case, granted Celsius permission to resell its mined Bitcoins (BTC) in order to pay its dues.
However, the judge expressed reservations about the short-term profitability of mining, given the current state of the cryptocurrency market. Celsius responded that the Bitcoin price has risen by 25% since the company filed its initial application.
It should be noted, however, that this approval is limited exclusively to Bitcoins mined by Celsius with its own hardware. Celsius is still unable to sell equity investments and will have to provide detailed information about its production and sales.
Significant installation costs
Before declaring bankruptcy, Celsius was already mining Bitcoin for resale. However, once the proceedings began, the company was temporarily unable to resell these assets.
According to a document filed at the hearing, Celsius mined a total of 432.3 BTC in July alone, but this was not enough to offset the company’s operational costs. Therefore, although the short-term profitability of the mining business is proving to be negative, the judge wanted to give the company a chance.
Celsius’ defence lawyer, Ross Kwasteniet, explained that the company’s mining activities only started last year and that some installations were still in progress, even some machines were still awaiting acceptance, hence its deficit in this sector of activity.
It also says that Celsius’ mining operations are a “core business” of the company, and that the company expects its financial position to improve in the coming months.
The Texas Financial Supervisory Authority and attorneys for various creditors, who had previously been opposed to the sale of Celsius’ mined Bitcoins, have finally given their approval based on the information provided, which they believe to be on the mark.
Celsius is in more trouble than expected
While Celsius’ initial bankruptcy filing listed a deficit of $1.2 billion, a new report on Sunday, August 14, shows the company’s actual debt at $2.85 billion, more than double.
According to the new document, Celsius has net liabilities of $6.6 billion and a total of $3.8 billion in assets under management, which is a far cry from the figures originally announced.
In this regard, entrepreneur Simon Dixon had posted a document on Twitter showing a large deficit ahead:
People were upset with me when I said Celsius are missing lots of Bitcoin & they are making up numbers with fake $CEL valuations. They confirmed they have lost 67,147 BTC & $WBTC representing 64% of their BTC debt. $438m of the hole is assuming they can dump all $CEL for $1 pic.twitter.com/KEQg7iu9bP
– Simon Dixon (Beware Impersonators) (@SimonDixonTwitt) August 15, 2022
The document, filed by Kirkland & Ellis, indicates that Celsius could run out of funds by October. It could run out of $130 million in cash by that time, according to the forecast.
All expenses added up, the company would then have a $40 million cash hole.
