Genesis Bankruptcy Plan Disrupted by New Creditor Demands
- Genesis reached an “agreement in principle” with DCG and its creditors back in February, which would have seen creditors recover roughly 80% of their funds.
- A group of creditors has now moved away from that agreement, forcing Genesis to request a court appointed bankruptcy mediator.
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Troubled crypto lender Genesis Global has asked for a mediator for its bankruptcy proceedings after a group of creditors moved away from the initial agreement, parent company Digital Currency Group (DCG) said via Twitter on 25 April.
According to the announcement, a subset of Genesis creditors has decided to walk away from a preliminary restructuring agreement that was reached more than two months ago. Recently filed documents show that the company has now requested the court appoint a mediator who would look over the “amount, form, timing and other terms and conditions of DCG’s contribution to the debtors’ reorganization plan”.
Genesis reached an “agreement in principle” with DCG and its creditors on 6 February, which would have seen the company sell its trading and market-making arms as part of its restructuring efforts. Under those conditions, creditors were expected to recover around 80% of the assets they lost after the company collapsed. DCG said on Tuesday:
“While it is difficult to understand the rationale given the limited engagement from Genesis creditors since the February court filing, our understanding is that a subset of creditors have decided to walk away from the prior agreement. We do not know if the hundreds of thousands of individual creditors are aware of this development, but the latest maneuver will prolong the court process.”
The troubled crypto lender filed for Chapter 11 bankruptcy protection in the Southern District of New York back in January, revealing that it had estimated assets and liabilities between $1 billion and $10 billion. The lending arm of Genesis had halted all customer withdrawals in November 2022, shortly after the collapse of cryptocurrency exchange FTX.
- A little over $13 million in altcoins were sent to crypto exchanges Binance and Coinbase in the past 24 hours, which is in accordance with a September court order.
- The court ordered a phased liquidation process, which allows the bankruptcy estate to sell $3.4 billion worth of digital assets over a certain period of time.
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- An investigation from the New York Attorney General’s office has allegedly found that Gemini was aware of Genesis’ weak financial position, but still lied to investors.
- The lawsuit is looking to ban DCG, Genesis, and Gemini from the New York financial industry, seek restitutions for investments, and the return of “ill-gotten gains”.
- The bankrupt crypto lender said that if its reorganization plan is approved, it is ready to start repaying its customers using $2 billion in BTC and ETH by the end of the year.
- If given the green light, Celsius will restart its business under the “NewCo” brand without any funded debt, and with seed funding of up to $450 million.