As discussed in the prior Bitblog update regarding the Celsius Network LLC, et al., (the “Debtor”) bankruptcy proceeding (Case No. 22-10964 (MG) in the Bankruptcy Court for the Southern District of New York (the “Court”)),  the last date for non-governmental creditors to file a proof of claims was set for today, January 3, 2023, at 5:00 p.m. Eastern Time (the “Claim Deadline”). The bar date for government-related claims was set as January 10, 2023. However, late last week, the Debtors filed a motion with the Court requesting an extension of the Claims Deadline.

Though the Court won’t decide on the Debtors’ Motion to extend the bar date until January 10, 2023, the revised bar date is likely to be set as February 9, 2022, at 5:00 p.m., Eastern Time, for both general and governmental claims. In the meantime, the Debtors have stated that creditors can rely on the bar date being extended until at least January 10, 2023. Such bar date extensions are not unheard of, and given the general deference that bankruptcy courts give to debtors for such matters, it will almost certainly be granted.

The Debtors argue that this extension of the Claim Deadline benefits all creditors, and not just those late to file since the report by the bankruptcy examiner is expected to be filed on January 17, 2023, prior to the expected new bar date. The Court-appointed examiner, Shoba Pillay, is tasked with investigating several topics related to the Debtors, including whether the company or its officers committed criminal acts in addition to asset tracing. The Debtors suggest that there might be information in this report that would affect what claimants may include on their proofs of claim. Therefore, delaying the Claim Deadline until after its publication has a theoretical benefit. For claims already filed, to the extent that the examiner report changes anything, a revised proof of claim can be filed if warranted.

A possible explanation for the last-minute request to extend the Claim Deadline is that it was requested by one or more government regulators who want to file a proof of claim. It is likely that federal and state regulators are going to file claims for damages and/or fines for violations against the Debtors. Unfortunately for all other creditors, to the extent that any governmental claims are accepted by the Debtors, it may lower recovery for individual creditors by increasing the size of the overall claim pool.

As mentioned in our prior updates, if a creditor is in complete agreement with their claim amount as listed by the Debtors on the Debtors’ Schedules, they have a valid claim against the Debtors in the amount listed in the Schedules pertaining to their claim, even if they do not file a proof of claim. In any event, it is still advisable to file a proof of claim regardless.