April 19, 2024
Crypto Lender Genesis Global Nears Settlement with Creditors in Chapter 11 Bankruptcy Case
Latest Cryptocurrency News

Crypto Lender Genesis Global Nears Settlement with Creditors in Chapter 11 Bankruptcy Case

According to a document submitted on Monday to the U.S. bankruptcy court in the Southern District of New York, Digital Currency Group (DCG) and Genesis Global’s creditors have struck an in-principle agreement to settle the claims that surfaced during the crypto lender’s bankruptcy.

Genesis Global Holdco, LLC, Genesis Global Capital, LLC, and Genesis Asia Pacific Pte. Ltd., two of its lending company subsidiaries, voluntarily filed petitions under Chapter 11 of the U.S. Bankruptcy Code in January 2023.

Genesis had almost $3.5 billion in debt to its top 50 creditors, one of them being the Winklevoss twins’ exchange Gemini, according to the bankruptcy documents. The exchange and Genesis collaborated to give their users the option to lend Genesis their cryptocurrency holdings in return for the promise of interest payments through the now-defunct Genesis Earn program.

The agreement indicates that unsecured creditors may receive a recovery of between 70% and 90% in U.S. dollar equivalent, potentially settling lingering disputes and securing a fair recovery for creditors.

Depending on the value of the digital assets involved, the recovery on an in-kind basis is anticipated to be between 65% and 90%.

The resolution of DCG’s current obligations, which total about $630 million in unsecured loans due in May 2023 and $1.1 billion under an unsecured promissory note due in 2032, is one of the agreement’s essential components.

According to the contract, the payback will take place in two stages: an initial repayment of about $328.8 million with a two-year maturity and a second repayment of $830 million with a seven-year maturity.

DCG has also agreed to make a further $275 million payment, which will be made in four equal installments. These payments, which will take care of the maturing debts connected with the unsecured loans due in May 2023, are scheduled to be made after the partial repayment agreement date.

Particularly, the acquisition is not supported by Gemini or the Ad Hoc Group of Genesis’ lenders.

“Although the mediation has terminated, constructive discussions with the Ad Hoc Group and Gemini regarding the aforementioned agreed-upon deal in principle are ongoing and the parties remain committed to continuing these discussions with a goal of achieving a fully consensual plan,” the filing reads.

The Winklevoss twins filed a complaint against DCG and its CEO, Barry Silbert, last month, accusing them of deceit and making “false, misleading, and incomplete representations and omissions to Gemini.”

Additionally, the letter warns that “there can be no assurance” that the debtors, the Official Committee of Unsecured Creditors, and DCG will agree on the final documents or that other parties in interest participating in the Debtors’ chapter 11 cases will support the agreement in principle.

Image: Freepik

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