Trustee in Celsius bankruptcy case slams $3 million bonus motion for employees

The United States trustee overseeing Celsius’ Chapter 11 bankruptcy case, William Harrington, has opposed a Celsius motion that would see 62 of its 275 employees paid a retention bonus totaling $2.96 million.

The trustee has struck down Celsius in its brief in support of the opposition filed on October 27, noting:

“It defies logic, let alone the Bankruptcy Code, that a company where the majority of its functions no longer provide services now offers a multi-million dollar bonus system.”

For the “bonus motion”, as it is aptly named, to pass, the trustee says Celsius must demonstrate that the bonuses are reasonable based on the facts of the case. Without any identifiable action, the trustee says Celsius failed to do so.

While the objection does not infer that Celsius employees do not deserve an essential employee retention program (KERP), it does indicate that the information provided by Celsius is insufficient to justify such a large amount.

KERPs are designed to motivate employees to drive a successful restructuring forward. While increasing executive compensation ahead of a possible restructuring may seem counter-intuitive, it can often be in the best interests of stakeholders.

Related: The Caisse de rentes du Québec loses almost all of its Celsius investment in less than ten months

Unlike the personal information of Celsius creditorsdetails of KERP beneficiaries were kept out of public view, with an unredacted breakdown provided only to the court, the official Unsecured Creditors Committee and the trustee.

The trustee also disputed this, saying other interested parties are unable to discuss whether participants could be considered insiders, which would make them ineligible for a KERP.

Celsius had deposit the bonus motion on October 11, with a hearing on the proposal and related measures taking place on November 1.

Meanwhile, the lender is also accused of causing Bitcoin financial difficulties (BTC) miner Core Scientific, which claimed on October 19 that Celsius had refused to pay his bills since he filed for chapter 11 bankruptcy on July 13, resulting in a loss of approximately $53,000 per day for Core Scientific.

Janet E. Fishburn