Bankrupt crypto lender Celsius is battling a Chapter 11 bankruptcy with billions of dollars in claims made by various parties. A new estimate by the Bank of the Future (BF) suggests that the troubled crypto lender could likely repay the USD claims if the price of Bitcoin and Ether, the two assets that the firm holds, doubled from its current price.
Simon Dixon, the founder of Bank of the Future, a crypto-centered investment firm tweeted the estimated price BTC and ETH would need to reach for Celsius to repay all their USD claims and keep all other assets.
Based on the final deal with Fahrenheit group which won the bid to acquire the assets of Celsius in May, if the BTC price touches $54,879 and the ETH price reaches $3,750, Celsius could repay all the claims from the price appreciation of both the assets. In June Celsius appealed in court to convert all its altcoins into Bitcoin and Ether to maximize the value of assets.
Dixon noted that these estimates are based on “imperfect knowledge made by the BF internal investment banking team with no access to privileged information.” The new restructuring plan under Fahrenheit includes mining, institutional loans and investments valued at approximately $1.4 billion along with $450 million in liquid crypto.
The BF also shared a comparison between Fahrenheit’s recovery plans and BRIC’s wind-down plans. The total recovery under the orderly wind-down comes to $3,519 million which exceeds the total assets available at $3,417 million. This discrepancy is accounted for by the variable cost.
The return to retail borrowers is approximately $339 million. BF estimates suggest recovery is about 65% for both options, which could increase to about 75% assuming 10% of claims are unclaimed. 41.4% of recovery under Fahrenheit Plan is in equity, with the remaining 58.6% in liquid crypto, while only 12.4% of recovery under BRIC orderly wind down is in equity with the remaining 87.6% in liquid crypto.
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Dixon said creditors should fight to get out of the bankruptcy proceedings before the end of 2023 or before the price of BTC and ETH hit the estimated mark, adding that to avoid “another rug pull, we will need to fight hard against if it comes up. “
It is very important that we get out of Chapter 11 before #Bitcoin & $ETH approach these numbers to avoid another rug pull that we will need to fight hard against if it comes up.
Estimation of the price of #BTC and $ETH (50/50 basis) at which claims may be paid in full: $BTC… pic.twitter.com/PITQV3pIGM
— Simon Dixon (@SimonDixonTwitt) July 19, 2023
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