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.
- Bankrupt crypto lender Genesis is trying to recover around $500 million from DCG, and another 4,550.5 BTC from DCGI, which it had loaned to the two companies in 2022.
- Both DCG and DCGI requested that the debts were converted to open loans on 9 May, but Genesis declined both offers and demanded the repayment of the loans with interest.
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- The U.S. Department of Justice has expressed its concerns over Sam Bankman-Fried’s seven expert witnesses, and requested they be barred from testifying on the case.
- The DoJ claimed most of the proposed experts lacked the necessary foundation for their opinions, making them unqualified to be an expert witness.
- The bankrupt crypto lender has agreed on a settlement with its Series B holders on how to distribute the $25 million from the sale of self-custody platform GK8.
- The majority of funds, $24 million, will be allocated for legal expenses, while the remaining $1 million will be distributed between the Series B holders.