Celsius Network has been approved for a second exit route from bankruptcy, moving away from a deal with Fahrenheit consortium for a solely Bitcoin mining company. 

According to court filings on Dec. 27, Judge Martin Glenn granted permission to proceed with a second alternative previously approved by Celsius’ creditors, which involves the creation of a public company dedicated solely to Bitcoin mining instead of a company with multiple lines of business managed by the Fahrenheit consortium.

The shift came as the United States Securities and Exchange Commission (SEC) refused to grant the relief required to implement the first option in the bankruptcy exit plan, namely the creation of NewCo. As per the initial plan, NewCo would expand Celsius' existing mining operations and business activities. It would be managed by the Fahrenheit consortium , made up of several crypto-native persons and organizations, including Proof Group, Arrington Capital and Hut 8.

"As it has turned out, the SEC denied relief required to implement the NewCo Transaction. For that reason, the Debtors, with the Committee’s support, have switched to the second path approved by creditors: the Orderly Wind Down," reads the document.

Celsius scraps Fahrenheit consortium, gets court approval for Bitcoin mining company image 0 Court filing approving the creation of MiningCo. Source: Stretto

Under the new plan, creditors will receive part of their recovery through shares of the upcoming Bitcoin mining company. In addition, the plan unlocks $225 million in crypto assets initially planned to fund the new businesses that the SEC rejected. According to the previously approved plan, approximately $2 billion in Bitcoin ( BTC ) and Ether ( ETH ) will also be redistributed to Celsius creditors.

Some creditors and the U.S. Department of Justice's bankruptcy watchdog claimed that Celsius should have to put the proposal to a new vote, Reuters reported . Judge Gleen, however, determined that the new restructuring strategy would not adversely affect creditors:

"[...] the Court finds that the MiningCo Transaction falls squarely within the terms of the confirmed Plan, and does not constitute a modification. But even if it were a modification, there is no material adverse effect on creditors, so re-solicitation would not be required. Accordingly, the Wind-Down Motion is GRANTED.

Celsius was one of several crypto lenders to collapse in 2022, filing for bankruptcy in July . Its former CEO, Alex Mashinsky, was arrested in July 2023 on charges of securities fraud, commodities fraud and wire fraud.

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