According to documents by the law firm Kirkland & Ellis filed on August 16, Celsius will likely run out of money by October 2022. At the same time, the company also owes $2.8 billion more than it currently holds.
Celsius went bankrupt under Chapter 11 in July 2022 after the market crypto liquidity crisis forced the company to suspend withdrawals. Since then, Celsius has worked its way through a process of restructuring and examining ways of paying creditors.
Early in the process, it emerged that Celsius was facing a loss of $1.2 billion on its balance sheet, with reported assets of $4.3 billion and liabilities of $5. $0.5 billion at that time.
However, it now appears that the company's financial situation has deteriorated. Celsius only has about $130 million in cash left. With all current operating, capital and restructuring costs, Kirkland & Ellis forecasts the company will be close to $40 million negative by October 2022.
However, the bigger hole lies in the holdings cryptocurrency of the company. Celsius reported a significant gap between its holdings and liabilities on record, amounting to a $2.8 billion loss in liabilities. crypto. The company owes $2.5 billion Bitcoin (104,962 BTC) while the company holds $348 million Bitcoin (14,578 BTC) and USD 557 million WBTC (23,348 WBTC).
According to the filing, Celsius has 658 million CEL tokens in its reserve, which is the platform's native token. Celsius owes customers 279 million CEL, leaving the company with a balance of 379 million.
Contrasting current market prices, CEL's position would be worth close to $1 billion, more than double what is documented, as CEL has rallied over 500% from a low of around $0.4 right now. sometimes the company goes bankrupt and sometimes even reaches more than 4.5 USD when the news comes out Ripple is considering acquiring Celsius assets to expand its position. At press time, CEL is trading at $2.83.
However, the price increase did not help Celsius solve the balance sheet problem. Most of the CEL supply is locked on the platform and liquidity on exchanges is very low. If the company tries to sell CEL to offset some of the loss on its balance sheet, the price of CEL can quickly "dump" sharply and selling CEL will be very difficult.
As a result, Thomas Braziel, founder of 507 Capital, an investment firm that financed bankruptcy and restructuring, said:
“The portion of assets held by CEL may be worthless. Debts are still there because CEL holders will likely try to claim with as little damage as possible and claim $1/CEL.”
However, the figures were all filed ahead of the company's second day of hearing, scheduled for the afternoon of August 16. A meeting of creditors will also take place on August 19, before which they were determined to prevent the company from doing so. sell Bitcoin. In a related development, Celsius has just been investigated by the Canadian authorities for being involved in the huge investment loss of the second largest pension fund in the country.