- Genesis and DCG have reached a new consensus on Chapter 11 cases.
- DCG plans to enter new financing plans to service unsecured loans.
- The agreement awaits approval by the bankruptcy court.
Genesis Global and parent company Digital Currency Group (DCG) have reached an in-principal deal with Genesis’ creditors, agreeing to resolve claims in the subsidiary’s Chapter 11 cases.
The crypto lender and its subsidiaries filed for bankruptcy with the U.S. Bankruptcy Court for the Southern District of New York in January 2023, where it was revealed that it owed its top 50 creditors over $3.5 billion.
The Amended Recovery Plan
A court filing dated August 29 reveals an amended plan that could see unsecured debtors recover 70%–90% in the U.S. dollar equivalent. The plan could culminate in 65%–90% recovery on an in-kind basis, depending on the denomination of the underlying digital asset.
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To fulfill current debt obligations, a new partial repayment consensus has been reached, with DCG agreeing to enter into new debt facilities and to repay its existing liabilities, including $630 million in unsecured loans due by May 2023 and a $1.1 billion promissory note expiring in 2032, in two tranches:
- a $328.8 million debt facility with a two-year maturity
- a $830 million debt facility with a seven-year maturity.
DCG had also proposed financing $275 million in installments before the amendment plan came into play. Â
A Respite for DCG?
The agreement could be a crucial relief for DCG as recent developments in the company’s subsidiaries point to a struggling venture capital firm. CoinDesk plans to lay off a part of its workforce ahead of an anticipated sale. Grayscale was also forced to temporarily suspend redemptions for its flagship Bitcoin Trust following the fall of FTX in November 2022.
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The biggest hurdle is getting the amended agreement approved by the bankruptcy court.
Read how Genesis was accused of offering unregistered securities:
Gemini Users File a Class Action Arbitration Against Genesis Global Capital
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