Gemini deems Genesis bankruptcy plan unviable, citing lack of specifics
Attorneys representing Gemini, the cryptocurrency exchange run by the Winklevoss twins, have raised objections to the proposed bankruptcy resolution put forth by Digital Currency Group (DCG) for crypto lender Genesis.
In a court filing, Gemini argues that the proposed plan lacks sufficient detail and transparency, leaving some of the largest debtors without assurances.
DCG’s bankruptcy plan outlines a potential path for creditors of the bankrupt crypto lender Genesis to receive payments. The plan suggests that unsecured creditors could receive between 70% to 90% of their owed amount in USD, and in-kind recoveries could range from 65% to 90% based on the asset allocation. However, Gemini claims that the plan lacks clarity and crucial information, which raises concerns.
“On August 29, 2023, the Debtors revealed an ‘agreement in principle’ among the Debtors, the Committee, and DCG [Digital Currency Group] that is woefully light on specifics and remains subject to definitive documentation. The limited information provided by the Debtors makes clear that the proposed deal is also woefully light in economic consideration,” the Gemini filing reads.
A group of ad hoc creditors called the Fair Deal Group also filed an objection to the proposed plan, citing similar reasons. They expressed concerns that the proposed agreement fails to secure all the debts Genesis owes and that the troubled firm is not showing any evidence to formulate a viable plan.
All three parties are requesting an end to a special exclusivity period that allowed Genesis to negotiate terms for resolving its bankruptcy through mediations.
The situation has worsened recently, as creditors have not received payments for loans that were supposed to be paid after reaching maturity in May. These unpaid loans have a combined value of approximately $630 million.
“Debtors have repeatedly promised that a plan that resolves claims against DCG is right around the corner, as they seek extension after extension of mediation periods, hearing dates, and bid deadlines. DCG has not paid any of the approximately $630 million in loans that came due to the Debtors in May 2023,” it added.
Gemini’s filing signals that despite the promises of imminent execution of the proposed plans, there is no actual evidence to support such claims. The filing states that the debtors have not moved closer to a confirmable plan with creditor support since the cases were filed in January.
Earlier this week, Digital Currency Group (DCG) and its subsidiary, Genesis, reached an in-principle agreement with creditors to settle claims made during Genesis’ bankruptcy.
The plan addresses Genesis’ outstanding debts, including roughly $630 million in unsecured loans maturing in May 2023 and an outstanding $1.1 billion under an unsecured promissory note due in 2032.
The repayment structure involves dividing the total of $1.1 billion into two parts. The first part consists of a $328.8 million payment that will mature in two years, and the second part is a $830 million portion with a maturity of seven years. Additionally, DCG will send out four more payments adding up to $275 million to address the looming maturities.