Court grants final approval for $225M Celsius mining company, steers clear of securities ruling

The United States Bankruptcy Court for the Southern District of New York approved the implementation of the “MiningCo Transaction” for Celsius and its affiliated debtors as part of the Chapter 11 bankruptcy proceedings on Dec. 27. This order, enacted by Chief Judge Martin Glenn, marks a critical juncture in the restructuring efforts of Celsius as all objections to the proposal were also overruled.

The court’s decision now paves the way for Celsius to proceed with the transaction aimed at stabilizing and restructuring the company’s operations with the formation of “a public company focused solely on bitcoin mining.” The MiningCo Transaction involves specific terms and conditions that are integral to the company’s restructuring plan. This includes the capitalization of the new entity (NewCo) with $225 million in fiat and the transfer of specific mining assets to NewCo, excluding the Core Rhodium, Mawson, and Luxor assets.

Furthermore, the court’s order approves modifications to the Management Agreement, setting the initial term to four years with certain conditions for extension or early termination. Notably, if NewCo’s mining capacity does not meet the specified Exahash Target of 23 EH/s within the initial three years, NewCo holds the right to terminate the agreement without an early termination fee, provided a six-month transition period is given.

The court also sanctioned the “Wind-Down Budget and Procedures,” crucial for the orderly execution of the plan. The Wind-Down budget outlines significant expenses, including administration fees, professional fees, and operating expenses, totaling approximately $70 million. These costs are instrumental in supporting the distribution of asset sales and the administration of the estate.

Additionally, the court addressed the issue of the Securities and Exchange Commission’s (SEC) rights in relation to crypto tokens. The order explicitly states that nothing in the court’s decision should be construed as a determination under federal securities laws regarding the status of crypto tokens or transactions involving them. This clause maintains the SEC’s authority to challenge transactions involving crypto tokens.

This approval signals a shift towards an orderly wind-down, a change from the original plan but aimed at better outcomes for creditors. The decision came after weighing various inputs, including objections and supportive statements, reflecting the court’s focus on a fair and legal…