An objection was filed against a motion made by Celsius Network by individuals involved in its bankruptcy case, which would result in the extension of an important deadline again.
Last year in July, the crypto lender filed for bankruptcy and since then, it has had the exclusive right of coming up with a restructuring plan.
The timeline
The timeline had been extended first by the court that was overseeing the Chapter 11 bankruptcy case back in December.
The company had asked for additional time and the court had granted it until February 15th to come up with a plan.
In late January, another motion had been filed in which the court had been requested to delay that period once more by 44 days until March 31st.
This would give Celsius time until June to be able to get the votes it needs for pushing the plan through. However, this request has given rise to concern amongst entities involved in the case.
Liquidity issues
The committee of unsecured creditors of the crypto lender has objected to this extension via a filing. It states that there is a looming liquidity crisis coming for the debtors in June.
They said that if they continue with the same schedule, they will not be able to put an end to the bankruptcy process by the month of June.
According to the committee, it is very likely that Celsius may run out of cash by then, considering how much cash it burns.
This would put the company into a position where it would have to sell more assets for funding its bankruptcy case.
The extension was also deemed inappropriate by the trustee from the Department of Justice (DOJ), William Harrington, who have been given the responsibility of overseeing the administrative process.
The issues
According to the US Trustee, Celsius has failed to mention the reasons why it requires an extension in its solicitation period in the motion it has filed.
He also said that another reason to rule against the timeline was that the legal professionals were consuming the assets of the crypto lender at a very fast pace.
This is despite the claims of the crypto lender that many creditors would have to weigh in on the restructuring plan.
Harrington said that Celsius had not sent a disclosure statement or a plan to its volume of creditors and this means there is no reason for it to be granted another extension, particularly when no reason is given.
The bankruptcy court in the Southern District of New York had previously permitted the defunct crypto lender to sell the stablecoins in its Earn Accounts worth $18 million.
This was to allow the company to use the money for its administrative expenses. A hearing for the latest motion will now happen on February 15th, Wednesday.
The committee of unsecured creditors asserted that if there is no agreement, they would ask the court to deny the crypto lender’s motion and file their own restructuring plan.