Celsius Network’s creditors have moved to issue a subpoena to Equities First Holdings (EFH), an institutional investment firm that failed to repay the $439 million collateral from a loan agreement.
Celsius’ Official Committee of Unsecured Creditors filed the motion yesterday at the Bankruptcy Court for the Southern District of New York, requesting an order to issue a subpoena duces tecum to EFH.
A subpoena is a written order issued by a court that commands a person to appear at a place and time during legal proceedings to testify as a witness. On the other hand, a subpoena duces tecum instructs the recipient to bring in documentation or evidence to the court.
The creditors seek information concerning a loan agreement between Celsius and Equities First. The move comes after Celsius’s former CEO Alex Mashinsky revealed that the crypto lending firm took collateralised term loans from “a private lending platform” between October 2019 and February 2021. But when it was time to close the deal, the platform could not return the collateral.
According to the document, the creditors found out through media reports that the “private lending platform” was Equities First. EFH’s failure to repay the collateral caused Celsius to become its creditor with an uncollateralised claim of about $509 million.
As of July 14, 2022, when Celsius officially filed for bankruptcy, Equities First still owed the firm approximately $439 million in aggregate principal; to date, it has not paid the debt.
Since EFH was not in any of Celsius’s Chapter 11 filings, the creditors’ committee took it upon itself to request a subpoena.
“In connection with the discharge of its duties, the Committee believes it is necessary to serve EFH with the subpoenas to obtain information regarding not only the above facts but all loan agreements between the Debtors and EFH, transfers of cash or cryptocurrency between the Debtors, and EFH, the circumstances surrounding EFH’s inability to return the Debtors’ collateral, and related topics,” the document stated.
~ By William A. Frederick ~