Celsius will run out of money by October, which would indicate a significantly worse financial situation and would make financial consolidation near impossible. The cryptocurrency lender Celsius Network, which declared bankruptcy in July, seems in hotter waters than previously thought.
Celsius Will Run Out Of Money By October
According to financial predictions disclosed in a new court document submitted on Monday by Kirkland & Ellis, the legal firm the cryptocurrency lender hired to oversee its restructuring efforts, Celsius will run out of money by October.
The file also revealed that the cryptocurrency lender had $2.8 billion less in cryptocurrency in its possession than it owes to depositors. It was sent to the U.S. Bankruptcy Court for the Southern District of New York ahead of an imminent hearing.
“My initial thought was, ‘Wow, that’s a big hole.’ It’s pretty tough,” said Thomas Braziel – founder of 507 Capital, an investment firm that provides financing around bankruptcies and reorganizations
This year’s cryptocurrency crisis, which resulted in the suspension of withdrawals and the insolvency of several lenders, exchanges, and investment firms, also affected Celsius. In June, Celsius stopped accepting any user withdrawals, claiming extreme market circumstances.
After paying off its debt to decentralized financing protocols, Celsius revealed in a bankruptcy filing last month that it has a $1.2 billion hole in its balance sheet due to obligations exceeding assets. The estimated worth of the company’s mining machinery and undefined “other” assets were factored in.
Money Running Out
According to the most recent statement, Celsius has cash on hand for fewer than three months, and it expects to run out of funds by the end of October.
The company revealed a starting cash balance of over $130 million at the beginning of August in the monthly cash flow estimate.
The balance would go negative in October as a result of the company’s anticipated $137 million in operational expenses and other charges for the upcoming three months, including spending for restructuring initiatives. The company estimates that by that time it would have minus $33.9 million in liquidity.
“They [Celsius] could obtain debtor-in-possession financing or sell assets,” Brandon M. Hammer, from Cleary Gottlieb Steen & Hamilton, a law firm, stated. “However, to take such steps they would need court approval, which requires notice and an opportunity for interested parties, like customers and the creditors committee, to object.” (neither Mr. Hammer nor the law firm are involved with the case).
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