Dive Brief:
- Cryptocurrency firm Celsius Network withdrew a motion to tap its former CFO, Rod Bolger as an advisor for its ongoing bankruptcy proceedings in a filing with the U.S. Bankruptcy Court Southern District of New York late Friday.
- The withdrawal came three days after attorneys for former Celsius investors filed an objection to Bolger’s potential advisory role on Aug. 2, alleging the crypto platform’s request gave “little detail” for including Bolger as an advisor beyond his familiarity with the company. Bolger, who previously acted as CFO for the Royal Bank of Canada as well as holding CFO positions at Bank of America, served in the top financial position at Celsius for less than six months.
- David Adler, partner at law firm McCarter & English, LLP, filed the Aug. 2 objection on behalf of some investors, pointing to the $1.8 billion gap on the company’s balance sheet and previous statements about Celsius’ presumed liquidity by Bolger as factors that outweighed his familiarity with the company’s operations. Adler stated the company’s justification for the request “reflected a level of callous indifference to the customers of Celsius” in a previous interview.
Dive Insight:
The withdrawal comes approximately a week after law firm Kirkland & Ellis filed the original request to tap Bolger as an advisor on July 25, proposing a monthly fee of $92,000 for the former CFO’s expertise during Celsius’ Chapter 11 bankruptcy proceedings.
Adler stated in a LinkedIn message that he was “pleased that the Debtors withdrew the motion and that the estate will save $94k/month.”
Bolger, who notified the cryptocurrency firm of his departure on June 30, received an annual base salary of $750,000 during his time in the company’s financial seat, complete with up to eight weeks of severance provided he gave the company eight weeks of notice per his employment agreement. Bolger is also continuing to serve as an employee of Celsius, the company’s filing showed.
It is unclear if Bolger would have received monthly severance of approximately $62,000 per month alongside the $92,000 monthly consulting fee had the company’s motion to include him as an advisor been approved.
Court filings show Celsius owes approximately $4.7 billion to its customers, reporting $5.5 billion in liabilities with total assets standing at $4.3 billion.
The company is one of several cryptocurrency firms fielding difficulties following the crash of stablecoins such as Luna and a subsequent slump in crypto’s value earlier this year: fellow cryptocurrency company Voyager also recently filed for Chapter 11 bankruptcy following a defaulted loan to Three Arrows Capital.
Developments in the cryptocurrency space have also caught the attention of lawmakers. Senator Elizabeth Warren D-MA recently asked the Office of the Comptroller of the Currency (OCC), the Federal Reserve and the Federal Deposit Insurance Corp. (FDIC) to coordinate on an approach to crypto and the banking system in a way that “protects consumers and the safety and soundness of the banking system” in a draft letter, following previous moves by the OCC in the sector.
Celsius did not respond to requests for comment.
