A court filing submitted on Friday in the Southern District of New York states that struggling lending platform Celsius has dropped its plea to reinstate former CFO Rod Bolger at a salary of $92,000 per month, prorated over a minimum of six weeks. The withdrawal notice was issued just before a hearing to evaluate it that was set for Monday.
The original motion reveals that while Bolger was employed by the firm full-time as CFO, he earned a base salary of $750,000, a performance-based cash incentive of up to 75% of his base, along with stock and token options, bringing the maximum of his total income range to over $1.3 million. Bolger is technically still on the company’s payroll, according to the document.
“On June 30, 2022, Mr. Bolger gave notice to the Debtors that he was voluntarily terminating his employment,” according to the filing. “In accordance with his Termination Notice and the terms of his Employment Agreement (as defined below), Mr. Bolger is required to give the Debtors eight weeks’ notice, which he has done, and he is continuing to serve as an employee of the Debtors.”
It is unknown if Bolger would have earned the additional $92,000 monthly consultancy fee Celsius had requested in addition to his possible income of $62,500 (his monthly base salary) had the motion been approved. Although it was indicated in the petition that Bolger was still working for Celsius, it also said that he was “not entitled to any severance payments.”
Three days after CNBC initially covered the proposal to use Bolger as a consultant throughout the bankruptcy process, it was decided to dismiss the move. Additionally, it comes in response to a written complaint put forth by Keith Suckno, a CPA and investor in Celsius, who contested the action taken by the company, claiming that “little detail” was provided for why Bolger’s services were required for the bankruptcy proceedings.
Celsius claimed in the initial motion that it need Bolger’s guidance as a counsellor to get through the bankruptcy process, “because of Mr. Bolger’s familiarity with the Debtors’ business.” It continued by stating that Bolger spearheaded initiatives to keep the company afloat during this year’s difficult market turbulence, overseeing the financial parts of the organisation and serving as its CEO.
Before leaving Celsius on June 30, approximately three weeks after the platform halted all withdrawals, Bolger, a former CFO for the Royal Bank of Canada and subsidiaries of Bank of America, had been there for five months.
Mr. Bolger’s last days at Celsius
Suckno’s objection to bringing Bolger back to supervise bankruptcy proceedings claimed that Bolger “misstated the financial condition and liquidity” in a company blog post headlined “Get to Know Rod Bolger, Chief Financial Officer, Celsius,” published five days before the platform froze withdrawals due to “extreme market conditions.”
Bolger stated in a print interview that Celsius’ “strong liquidity framework, established processes around liquidity data, and modelling” were comparable to those of other significant financial organisations in the area, which CNBC also examined.
“This put us in a strong position to weather the recent market turbulence and ensure that clients who needed to access their digital assets could get them free and clear,” Bolger’s quote from the Celsius blog post was continued. The site ceased all withdrawals and transactions on the Monday after that.
Bolger was a guest on Celsius’ weekly ask-me-anything show on YouTube two days after the blog post and three days before Celsius froze user cash on the platform, where he stated that the company welcomed regulation.
“We believe in transparency. The blockchain is about transparency. We are transparent. You know, my goal is for us to be regulated everywhere,” Bolger said in the video.
“We have voluntarily disclosed a lot of financial information. My goal — even before we’re regulated and/or public and required to do so — is to continue building out the tools that are Basel-like…Those are the standards that basically the banks work under,” Bolger went on to say that Celsius was already assessing operational risk and market risk so that they might “continue to build the level of trust in the community.”
After the video was released on Friday, June 10, Celsius closed its on-and-off ramps to user money on Monday, June 13. According to its bankruptcy petition, Celsius owes its clients somewhere around $4.7 billion.
After Bolger left his role as CFO, Celsius then hired Chris Ferraro, who was previously in charge of financial planning, analysis, and investor relations. After he was hired, the business immediately filed for bankruptcy.
Formerly a leader in the cryptocurrency lending industry, Celsius is now accused of operating a Ponzi scheme by compensating early depositors with funds it received from new customers.
CEO Alex Mashinsky claimed the cryptocurrency lender had $25 billion in assets under management at its height in October 2021. Celsius claims that its remaining $167 million in “cash on hand” will offer “ample liquidity” to continue business operations throughout the restructuring process.
In addition, the petition reveals that Celsius has more than 100,000 debtors, some of whom provided funding to the site without any supporting collateral. Alameda Research, a trade company owned by Sam Bankman-Fried, is on the list of its top 50 unsecured creditors.
Retail investors have petitioned the judge for assistance in recovering some of their lost holdings; others have claimed that their life savings have been all but destroyed.