The bankruptcy of Hoboken-based Celsius took another step forward Aug. 18 when the United States Bankruptcy Court for the Southern District of New York approved its disclosure statement.

The clearance, which paves the way for creditors to vote on the plan, marks the latest development in an – eventful – few months for the bankrupt crypto lending platform.

In July, Celsius founder and former CEO Alex Mashinsky was arrested and charged with multiple counts of fraud. Along with that indictment, federal officials announced they had entered into a non-prosecution agreement with Celsius, under which the company agreed to accept responsibility for its role in the fraudulent schemes and pay the Federal Trade Commission $4.7 billion that will be delivered after creditors and customers have been repaid in bankruptcy proceedings.

On the Chapter 11 proceedings, Celsius announced in May it had selected a proposal from Fahrenheit LLC, a group consisting of US Bitcoin Corp., Arrington Capital, Proof Group, Steven Kokinos and Ravi Kaza, as the winning bid of a court-approved auction process.

Fahrenheit will provide the capital, management team and technology to establish and operate a new company – NewCo – that will be overseen by a fresh board of directors — a majority of which will be selected by the statutory committee of unsecured creditors that was appointed in Celsius’ Chapter 11 cases.

The bankruptcy plan outlines a proposed path to return as much value to the company’s creditors as possible. The creditors will receive a solicitation package that includes Celsius’ Disclosure Statement and Plan, detailed voting instructions, and additional information. Those votes must be submitted on or before Sept. 22, 2023.

A hearing is slated for Oct. 2 to approve the proposed plan.

Following that, Celsius says it expects to distribute liquid cryptocurrency to account holders on or shortly after the plan’s effective date and then create NewCo. That company will manage Celsius’ illiquid assets, including its institutional loan portfolio, mining business and alternative investments.

Under the plan, Celsius’ account holders would own 100% of the new equity in NewCo. Friday’s announcement marked the next step in this process.

“We remain laser focused on creating the best outcome for customers and creditors and returning value as soon as possible,” said Chris Ferraro, chief restructuring officer & interim chief operating officer, Celsius.

“The approval of the Disclosure Statement marks another major milestone in our process to transition Celsius’ assets to NewCo and provide a path to complete the proposal from Fahrenheit,” said David Barse and Alan Carr, members of the special committee of the board. “We remain committed to working with the Official Committee of Unsecured Creditors, regulators, Fahrenheit, and creditors throughout this process to achieve a strong result for all stakeholders.”

“We are excited about the progress that has been made and remain steadfast in our commitment to create a stronger organization coming out of this process,” said Steve Kokinos, Fahrenheit Holdings. “We are continuing to work with all stakeholders to ensure a successful transition and a bright future for NewCo. Our vision includes optimizing existing infrastructure, exploring new growth opportunities, diversifying revenue streams, and delivering meaningful benefits to Celsius’ customers and creditors. We look forward to engaging more deeply with the Celsius community in the weeks ahead regarding the plan.”