The United States Trustee handling Celsius’s bankruptcy proceedings has called for an independent examiner to be hired to “untangle” the financial affairs and business operations of the disputed network.
In a motion filed August 18 in the United States Bankruptcy Court by William K. Harrington, the United States Trustee requested an examiner to investigate allegations of “serious incompetence or mismanagement” as well as “problems of significant transparency” around Celsius. operations in the context of the bankruptcy case.
Examiners are appointed by the bankruptcy courts to investigate the details of complex cases brought before them. They can present information to the courts from an independent point of view and have been appointed in other high-profile bankruptcy cases such as Lehman Brothers during the subprime crisis.
According to the motion, the appointment of an examiner would be beneficial to the parties involved given the complexities of the case, as they would be able to provide information beyond the experience of the court.
“An investigation by an independent examiner, who would present his findings in an understandable manner, is essential to providing the Court, the United States Trustee, creditors and other interested parties with transparency and clarity regarding the business structure, practices , and liquidity of the Debtors.”
Harrington also mentioned that an examiner could determine whether legal claims should be brought against management, as there are claims of “credible allegations of incompetence or gross mismanagement.”
The US Trustee has also suggested that there are “significant transparency issues” surrounding Celsius’s business operations.
“The Debtors have not provided adequate information about their liquidity position, business model, traditional cash flow or the value of their crypto assets,” Harrington said, adding that the information can be used to help assess any restructuring. or proposal. reduction.
Related: Celsius CEO Personally Ran Crypto Exchanges Months Before Bankruptcy: Report
Harrington also added that an examiner can sift through the vast amount of information on the internet that is muddying the facts surrounding Celsius, causing their clients to form their own conclusions.
Not all parties involved support an examiner’s request, and the Official Committee of Celsius Unsecured Creditors points out the costs of doing so.
@CelsiusUcc is concerned about the effort to introduce an external “examiner” into @CelsiusNetwork bankruptcy case. Millions in costs will rack up when CEL should be cutting costs. Let @CelsiusUcc do your job for account holders @TheDepartmentOfJustice
— Celsius Official Committee of Unsecured Creditors (@CelsiusUcc) August 18, 2022
However, experts not directly involved in the case, such as McCarter & English bankruptcy partner David Adler, seem to agree that an examiner is warranted.
—David Adler (@DavidJAdler1991) August 18, 2022