The Trustee in charge of Celsius bankruptcy case has asked an examiner to help clarify a number of intricate matters.
A third-party examiner should be appointed to “untangle” the financial affairs and business activities of the troubled network, according to the United States Trustee managing Celsius bankruptcy proceedings.
The US Trustee has requested an examiner to look into claims of “incompetence or gross mismanagement” as well as “significant transparency issues” surrounding Celsius’ operations in the context of the bankruptcy case in a motion filed in August 18 to the United States Bankruptcy Court by William K. Harrington.
The bankruptcy courts appoint examiners to look into the specifics of challenging cases that are presented to them. They have been appointed in other prominent bankruptcy cases like Lehman Brothers during the subprime mortgage crisis and are able to provide information to the courts from an unbiased point of view.
Given the complexity of the case, the request argues that the appointment of an examiner would be advantageous to the parties since they may offer information that is outside the scope of the court’s knowledge.
“An investigation by an independent examiner—who would present his or her findings in an understandable way—is essential to provide the Court, the United States Trustee, creditors, and other parties in interest with transparency and clarity as to the business structure, practices, and liquidity of the Debtors.”
Harrington also stated that there are “credible charges of ineptitude or gross mismanagement,” and an examiner would be able to decide whether legal action should be taken against management.
Additionally, the U.S. Trustee has asserted that Celsius’ business activities have “serious transparency difficulties.”
“The Debtors have not provided adequate information regarding their liquidity position, their business model, the flow of traditional cash funds, or the value of their crypto assets,” Harrington said, adding the information can then be used to help evaluate any proposed restructuring or sale.
Harrington also said that an examiner might be able to sort through the wealth of online data obscuring the truth about Celsius and causing its clients to draw their own judgments.
The Celsius Official Committee of Unsecured Creditors points out the costs of doing so and is one of the parties involved who does not support the request for an examiner.
However, experts who are not directly involved in the case, including David Adler, a bankruptcy partner at McCarter & English, appear to concur that an examiner is necessary.
