Board of Directors Changes Cause Concern
There has been some controversy around the new board of directors for Celsius Network’s reorganized company, Celsius NewCo. According to sources, some creditors are upset that the new board does not include any normal creditors besides Scott Duffy and Thomas from the Unsecured Creditors Committee (UCC).
People on Twitter have expressed frustration that whale creditors like Simon Dixon are not included on the new board. The concern is that the board may not adequately represent the interests of smaller creditors who lost funds when Celsius froze withdrawals in June.
Tax Implications Remain Murky
Well-known creditor Simon Dixon released a new video discussing the complicated tax implications creditors may face when receiving distributions. He warned that the tax situation is complex, especially for U.S. creditors.
Dixon plans to reinvest his litigation trust proceeds into Ethereum staking in order to try to recoup his lost Bitcoin holdings. By staking ETH and converting it to BTC later, he hopes to regain his full Bitcoin balance over time by benefiting from Ethereum’s growth potential.
For U.S. creditors, there are many unclear variables around how distributions will be taxed. Factors like whether assets are classified as income or capital gains make a major difference. The type of account the assets are transferred into is also very important.
Dixon advised creditors to pay close attention to the tax implications based on their individual situations. He noted that high net worth individuals with large claims should be especially cautious about how distributions are handled for tax purposes.
Non-U.S. creditors face their own tax complexities based on their jurisdictions. The lack of clarity around how assets will be distributed makes tax planning very difficult at this stage.
In the coming weeks, there are some important court dates covering topics like the controversial Celsius Earn Interest Accounts (EIA) and clawbacks. The first creditor distribution could happen as soon as November, according to Dixon’s estimates.
Equity distributions may come sometime in early 2023, though exact timing is still undetermined. When they do arrive, the stock will go to a transfer agent first before being moved to individual brokerage accounts.
Celsius NewCo still has major challenges ahead to regain customer trust and stabilize its business. But the reorganized company hopes to eventually relaunch its platform after completing the Chapter 11 process.
For now, creditors anxiously await further news on the first distributions. The community continues to speculate on what Celsius 2.0 will look like and whether it can re-establish itself as a major player in crypto lending.
What Should Creditors Do Now?
At this time, there are no action items for creditors beyond completing the Chapter 11 plan vote if they have not already done so. Votes can be changed later if desired once new information emerges.
The Celsius team has made it clear the confirmation vote is non-binding. However, participating is important to have a say in the final plan that moves forward.
Creditors should continue monitoring for any new updates on distribution timelines, equity transfers, and tax guidance. With so much uncertainty around the process, staying informed is essential.
The road through Chapter 11 continues to be long and complex. But creditors hope they are one step closer to finally recovering some of their locked funds. The coming months will determine if Celsius can emerge and rebuild trust under new leadership.