In the aftermath of Celsius Network's bankruptcy and subsequent reorganization, a group of creditors who utilized the firm's lending services is actively exploring legal avenues to challenge the approved restructuring plan. These individuals allege that the agreement unfairly favors creditors of Celsius Earn, the company's interest-yielding crypto account, over those who borrowed funds through the Celsius Loan platform.

The disgruntled creditors have reached out to multiple law firms, seeking counsel on the viability of appealing the reorganization plan. Their primary grievance stems from the belief that the existing plan has significantly diminished the recoveries they are entitled to as borrowers holding debts from Celsius' estate.

One creditor, speaking on the condition of anonymity, revealed to The Block their intention to recover a portion of the funds they had provided as collateral on the now-defunct Celsius platform. However, the creditors face a potential roadblock in the form of strict deadlines imposed by the Bankruptcy Code, which limit the window for filing appeals.

According to legal experts at Weil Restructuring, appeals must generally be filed within 14 days of the court's judgment or order being appealed. While it is possible for the court to approve amendments to the reorganization plan, the process is likely to be complex and arduous.

The creditors have not yet specified a timeline for filing any potential legal challenge, as they are currently in the preliminary stages of assessing their options. One source familiar with the matter revealed that the major Celsius Loan creditors would finance any forthcoming legal action.

This push for legal recourse coincides with a resurgence in digital asset prices, which has raised critical questions for bankruptcy courts and stakeholders alike. Key among these concerns are determining the true value of creditors' crypto holdings and deciding the appropriate form in which these holdings should be returned.

Last November, Chief Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York approved Celsius' restructuring plan, over a year after the lender filed for bankruptcy in July 2022. However, the execution of this plan has resulted in lower-than-expected payouts for Celsius Loan customers, with some creditors alleging they received less than 30% of what they believed they were owed.

The potential appeal is premised on two main claims, according to a source close to the matter. Firstly, the creditors assert that the court failed to ensure "fair and equal" treatment between users of Celsius Earn and customers of Celsius Loan. A creditor informed The Block that Earn creditors' claims were processed earlier this year, weeks before those of Loan customers, resulting in higher recoveries for users of the company's flagship interest-bearing product.

The second claim challenges an order dated December 27, 2023, which directs that Celsius' new mining entity be capitalized with $225 million from the lender's bankruptcy estate. Some Loan creditors argue that this funding should have been allocated toward enhancing creditors' recoveries instead.

As the legal battle brews, all eyes will be on the court's handling of this matter, as it could set a precedent for how future crypto bankruptcy cases are adjudicated, particularly regarding the fair treatment of creditors across various product offerings.