Bankrupt crypto lender Celsius failed to properly record transactions between its affiliate companies, according to court filings on Thursday.
This means that it is nearly impossible to accurately “fully reconstruct” intercompany claims. The filing was made in response to a court order from a New York bankruptcy court to Celsius Network LLC on the amount and type of any potential claims it held against its affiliates.
While the intercompany claim held by Celsius Network LLC against Celsius Network Limited was estimated at approximately $9.1 billion based on books and records, it did not take into account an estimated 7,000 unrecorded transactions between the two entities in the three months leading up to the bankruptcy filing.
Celsius recently presented a sale plan to the court to fuel the company’s reorganization following its Chapter 11 bankruptcy filing in July of last year.
The statement filed on Thursday reflects the company’s books as of the bankruptcy petition date on July 14. The review of the company’s books showed that intercompany transfers “in many cases” were not recorded at all.
The 7,000 unrecorded transfers “were not reflected via intercompany transactions in the accounting books and records.”
The filing added that due to the lack of record-keeping, it may not be possible to fully reconstruct the intercompany claim.
It would be a time and cost-intensive forensic accounting exercise that would likely require the engagement of a forensic accounting firm at a significant cost to the Debtors’ estates.
Following “months of analysis,” the best estimate for the full claim held by the LLC against CNL is $3.5 billion, according to the filing.
