CEFI

Celsius bankruptcy update: Firm expected to run out of cash in October, CFO says it can hold on until the end of the year

share
Celsius bankruptcy update: Firm expected to run out of cash in October, CFO says it can hold on until the end of the year

The latest documents from the bankrupt lending platform Celsius show that its financial situation is deteriorating further, with the possibility of running out of operating funds in October. The $2.8 billion financial hole is also more than twice the amount revealed in the previous bankruptcy hearing. However, with the court's approval for Celsius to sell mining revenue, this will bring much-needed cash flow to the platform.

Financial Hole: $1.2 Billion

The first bankruptcy hearing for Celsius is scheduled for 7/18, and documents reveal a financial hole of nearly $1.2 billion. The related data includes:

  • Total Liabilities: $5.5 billion
  • Platform Assets: $4.31 billion
  • Financial Deficit: $1.19 billion

However, this seems to differ from the latest documents.

October Cash Burn

Celsius previously hired law firm Kirkland & Ellis to assist with bankruptcy restructuring, and the firm submitted a forecast report before the hearing on 8/17. The Block cited data indicating that Celsius still holds $130 million in cash, but with operational, capital restructuring expenses, it is likely to run out by October and incur an additional loss of nearly $40 million.

Funds may be depleted by October

Furthermore, Celsius's cryptocurrency assets have a $2.8 billion financial hole compared to total liabilities, far exceeding the reported $1.19 billion in July.

In particular, Celsius only holds 14,578 BTC but has debts to repay of 104,962 BTC.

Celsius Adds Mining Revenue

According to legal documents from the 8/17 hearing, Southern District bankruptcy judge Martin Glenn has approved Celsius's request to continue operating its Bitcoin mining business and selling BTC but still prohibits Celsius from selling other equities.

Additionally, CoinDesk documented Celsius CFO Chris Ferraro's testimony at the hearing, where he mentioned that a $61 million loan provided to Bitfinex is nearing maturity, and the purchase of new mining machines has saved around $20 million through sales and tax savings.

He believes that with the injection of new funds, it can serve as operational capital until the end of the year and is expected to shift to positive cash flow in early 2023.

The final hearing will take place on 9/1.

Note: This article was written on 8/16, with an update from Celsius on 8/22.