Genesis creditors to recover 70% to 90% of their claims
Digital Currency Group (DCG) and its subsidiary, Genesis, have 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 proposed plan, if approved, aims to provide a recovery of nearly 70% to 90% in U.S. dollar equivalent for unsecured creditors, and around 65% to 90% recovery on an in-kind basis, depending on the crypto assets denomination.
The repayment structure involves dividing the total of $1.1 billion into two parts, the filing notes. 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.
“DCG is pleased to reach an agreement in principle with Genesis and the Unsecured Creditors Committee, which will provide a framework for a comprehensive resolution of the claims in the Genesis Chapter 11 Cases and a pathway to significant recovery for creditors,” the firm said in a statement.
Earlier in June, US Bankruptcy Court Judge Sean Lane granted an extension to the mediation period between crypto lender Genesis and its debtors. The extended deadline was conditional on the cooperation of Genesis’ parent company, Digital Currency Group (DCG), in the lender’s restructuring process.
The mediation period between Genesis and its creditors, which was originally scheduled to end in May, has been extended until June 16.
The court’s ruling indicates the need for additional time to address and resolve creditors’ concerns and to facilitate a mutually agreeable outcome for all parties involved in the bankruptcy proceedings.
In addition, Genesis has been granted an extension for its exclusive solicitation period. Originally requested until October 1, the exclusive solicitation period has now been extended until October 26. Furthermore, the company has the option to seek additional extensions as necessary in the future.
This extension allows Genesis more time to engage in discussions with potential investors or parties interested in the restructuring process.
Nevertheless, Gemini, along with other Genesis creditors, expressed frustration over the judge’s ruling. This stems from the ongoing uncertainty surrounding the bankruptcy case, which allegedly prolongs the process and delays the creditors’ ability to reach a timely resolution.
Gemini’s legal representatives also argued that the extension could result in greater financial harm to the parties involved in the bankruptcy case.
Judge Lane also rejected the request to include FTX in the settlement talks, where the bankrupt exchange claimed that Genesis owed them $3.9 billion. Instead, the judge granted the parties involved more time to develop a revised proposal that would determine how payments would be distributed to Genesis creditors.
