The US trustee in charge of Celsius’ bankruptcy proceedings has called in an independent examiner to “unravel” the financial affairs and commercial operations of the conflicting network.
In a motion filed on August 18 to the US Bankruptcy Court by William K. Harrington, the US trustee asked an examiner to look into allegations of “incompetence or gross mismanagement” as well as “significant transparency issues” surrounding Celsius’ transactions in the context of bankruptcy proceedings.
Examiners are appointed by the bankruptcy courts to investigate the details of complex cases brought before them. They are able to present information to the courts from an independent perspective and have been named in other high profile bankruptcy cases such as Lehman Brothers during the subprime mortgage crisis.
According to the motion, the appointment of an examiner would be beneficial to the parties involved given the complexity of the case, as they could provide information beyond the jurisdiction of the court.
“An investigation by an independent examiner, who would present his conclusions in an understandable way, is essential to provide the Court, the US trustee, creditors and other interested parties with transparency and clarity regarding the business structure. , to the practices, and the liquidity of the Debtors “.
Harrington also said an examiner would be able to determine whether lawsuits should be brought against management, as there are claims of “credible allegations of incompetence or gross mismanagement.”
The US trustee also suggested that there are “significant transparency issues” surrounding Celsius’ business operations.
“Debtors have not provided adequate information regarding their liquidity position, business model, flow of traditional cash funds or the value of their cryptocurrencies,” said Harrington, adding that the information can then be used to help evaluate any restructuring proposals or balances.
Related: Celsius CEO personally directed cryptocurrency exchanges months before bankruptcy: Report
Harrington also added that an examiner may be able to sift through the plethora of information on the Internet that confuses the facts surrounding Celsius, leading his clients to draw their own conclusions.
Not all parties involved support the request for an examiner, with the Celsius Official Board of Unsecured Creditors pointing out the costs of doing so.
@CelsiusUcc he is concerned about the effort of intruding on an external “examiner” @CelsiusNetwork bankruptcy case. It will increase millions of costs when CEL is expected to cut costs. To allow @CelsiusUcc does its job for account holders @TheJusticeDept
– Official Celsius Committee of Unsecured Creditors (@CelsiusUcc) August 18, 2022
Experts who aren’t directly involved in the case, however, like McCarter’s bankruptcy partner and Britain’s David Adler, seem to agree that an examiner is justified.
Very well established. #CelsiusFailure #centigrade https://t.co/gkAwa4Gnns
– David Adler (@ DavidJAdler1991) August 18, 2022