• Celsius has agreed to a settlement of $25 million with its Series B holders regarding the allocation of GK8 sale proceeds.
• The agreement was made to avoid costly legal disputes and an extensive confirmation process.
• GK8 was initially acquired by Celsius in 2021 for an unknown amount, which was later disputed to be $115 million.
Background
Celsius, a bankrupt cryptocurrency lender, its creditors, and its Series B holders have reached a settlement with regard to the distribution of $25 million in proceeds from the sale of crypto custodian GK8. The Israel-based GK8 was initially acquired by Celsius for $115 million in 2021.
Settlement Agreement
The court document states that the settlement agreement was born out of the “mutual desire” to prevent costly legal disputes and an extensive confirmation process, which would lead to higher professional fees. The agreement between the Debtors, the Committee, and the Initial Consenting Series B Preferred Holders is said to have been “thoughtfully negotiated and is eminently reasonable”.
Allocation of Funds
The filing states that $24 million will be deployed for legal expenses while allocating the rest of $1 million among the Series B holders.
Purchase Of GK8
GK8 was initially acquired by Celsius for an unknown amount, which was later disputed to be $115 million in November 2021. However, as Celsius filed for Chapter 11 bankruptcy protection earlier this year due to liquidity issues caused by Covid-19 impacts on their business operations, it had to sell off some assets including GK8 that eventually culminated into this settlement agreement among its stakeholders.
Conclusion
The Settlement brings an end to nearly a year long dispute between Initial Consenting Series B Preferred Holders and Estate Parties over proceeds from sale of GK8 exchange in exchange for a mutual release of claims between them along with cash payment worth $25 million .