News

Bankrupt Crypto Lender Genesis Revised Chapter 11 Plan As The Negotiations Continue

Key Points:

  • Genesis has filed an updated wind-up plan as mediated talks continue on the funds its owed by parent company DCG.
  • The company’s creditors and other stakeholders reserve their position in negotiations that are still ongoing.
  • The document updates a plan first proposed on January 20.
According to a Tuesday court filing, bankrupt crypto lender Genesis has submitted an amended wind-up plan. At the same time, mediated negotiations on the monies due by parent firm Digital Currency Group (DCG) continue.
Bankrupt Crypto Lender Genesis Revised Chapter 11 Plan As The Negotiations Continue 4

The amended restructuring plan reflects strong consensus on some important areas, according to the filing, although Genesis, its creditors, and other stakeholders retain their position in continuing discussions. The court appointed a mediator to address issues, including the DCG problem, in April for a 30-day term that was later extended.

The plan states that DCG and insolvent hedge fund Three Arrows Capital (3AC) claims are challenged and impaired, implying that creditors would not get the full amount of their claims. As Coincu reported, 3AC has sought to join in Genesis’ bankruptcy mediation process.

DCG claims would be treated like other unsecured creditors but will not get any revenues from debts still owed by the parent company, according to the agreement. DCG said in January that it owes Genesis Capital $526 million, due in May 2023, and $1.1 billion on a promissory note due in June 2032.

Bankrupt Crypto Lender Genesis Revised Chapter 11 Plan As The Negotiations Continue 5

The complaint said that claims linked to the insolvent crypto exchange FTX and its sibling trading arm Alameda Research should not be permitted to profit from any clawbacks of illicit payments.

FTX claims Genesis owes it $3.9 billion, a claim Genesis denies. In a concurrent filing on Tuesday, FTX contended that its claims against Genesis should be resolved as part of its own Delaware court proceedings.

Bankrupt Crypto Lender Genesis Revised Chapter 11 Plan As The Negotiations Continue 6

The proposal was initially offered on January 20, the same day that three Genesis group firms filed for bankruptcy in a New York court.

At a bankruptcy hearing, US Bankruptcy Court Judge Sean Lane prolonged a mediation session between crypto lender Genesis and its creditors as emotions flared over the role DCG would play in the lender’s rehabilitation. A similar agreement would form the basis of a Chapter 11 bankruptcy plan to pay hundreds of thousands of the company’s creditors.

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Harold

Coincu News

Harold

With a passion for untangling the complexities of the financial world, I've spent over four years in financial journalism, covering everything from traditional equities to the cutting edge of venture capital. "The financial markets are a fascinating puzzle," I often say, "and I love helping people make sense of them." That's what drives me to bring clear and insightful financial journalism to the readers of Coincu.

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