Celsius Networks, a crypto lending company that froze withdrawals in June and has been in Chapter 11 bankruptcy since July, applied to the United States Bankruptcy Court for the Southern District of New York for permission to sell its stablecoin holdings. This should allow the company to generate liquidity to “finance debtors’ operations.”
A notice was filed Thursday by Celsius’ legal team from the law firm of Kirkland & Ellis. A hearing at which the court would accept or deny the motion will be held on October 6.
According to the filing, the company currently holds an equivalent amount of $23 million in various stablecoins. If sold, those funds would be used to support Celsius’ ongoing operations. Citing Section 363 of the Bankruptcy Code, the filing instructions:
“Section 363 of the Bankruptcy Act seeks to strike a balance between allowing a business to continue its day-to-day operations without undue court or creditor oversight and protecting secured creditors and others from squandering the assets of the estate.”
Celsius recently filed an application and promised to partially refund money to customers. However, this would only apply to custodial and withhold accounts and to custodial assets of $7,575 or less. The move drew criticism from some industry leaders as the restriction means only $50 million out of $210 million could be released.
Related: Court records show Celsius will run out of money by October
Pressure on Celsius continues to mount as on Aug. 31 an ad hoc group of 64 custodians filed a complaint to get their assets back. The plaintiffs found that Celsius “did not honor withdrawals from any programs,” including custodial services.
According to the complaint, this contradicts the “plain text of the debtor’s terms of use”, as these stipulate that ownership of the safekeeping of assets “always remains with the user”.