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News

Genesis Extends Final Reconciliation Period With Creditors, Ends Before August 16

August 3, 2023 - Around 2 mins mins to read

Key Points:

  • Bankruptcy crypto company Genesis has extended a two-week extension to its main creditors.
  • The lawyer said that if the parties fail to reach an agreement by August 16, the crypto lender will continue with its existing bankruptcy plan.
  • The company has been conciliating with critical stakeholders, including parent company Digital Currency Group (DCG) and Gemini Trust Co., since May.
According to Bloomberg, attorneys for bankrupt crypto lender Genesis said at Wednesday’s hearing that the company extended its settlement period with creditors for the last time and ended on August 16.
Genesis Extends Final Reconciliation Period With Creditors, Ends Before August 16

“If we do not make substantial progress with respect to a deal in principle in the next two weeks, we do not believe that we will be seeking to extend the mediation further,” company lawyer Sean O’Neal told US Bankruptcy Judge Sean Lane. As a result, the talks will have to wrap up by August 16.

Attorneys said if the parties fail to reach an agreement by August 16, Genesis will continue with its existing bankruptcy plan, subject to certain modifications. Reconciliation is one of the final barriers preventing Genesis from going bankrupt.

The company’s largest creditor is 340,000 Gemini Earn customers who owe $795.5 million. Those clients formed a “special” committee represented by the law firm Kirkland & Ellis. Another group of about 60 institutional creditors, represented by Proskauer Rose, owes $1.5 billion.

The bankrupt crypto firm is understood to have been conciliating with key stakeholders, including parent company Digital Currency Group (DCG) and Gemini Trust Co., since May. They were trying to salvage the bankruptcy plan proposed by DCG, but the official committee of unsecured creditors rejected the plan.

Attorneys for Genesis Global Holdco filed a term sheet in February outlining a settlement agreement with creditors indicating that DCG will shoulder the heavy burden of restructuring the already established bankrupt crypto lending firm. The original settlement was backed by creditors representing more than $2 billion in claims against Genesis, including Gemini Trust Co.

The company’s lending arm filed for Chapter 11 protection in January following the collapse of crypto exchange FTX, which triggered an “unprecedented” wave of withdrawals that caused affiliates to withdraw. They have to suspend lending and borrowing.

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