Genesis Creditors DCG ‘Walk Away’ From Previously Agreed Bankruptcy Restructuring Plan

Photo of author

By Degen Lipsa

Following Genesis’ restructuring proposal being contested by the creditors, DCG has sought a mediator for the bankruptcy proceedings.

Digital Currency number (DCG) claimed that more than two months after agreeing to a full settlement, a number of Genesis Capital creditors “reneged and raised” additional demands.

The bankruptcy case appeared to be nearing resolution, but the Barry Silbert-led cryptocurrency corporation expects the most recent refusal to draw out the legal proceedings.

Genesis Filing Motion for Mediation

Along with competitors like Celsius Network and Vault, Genesis was one of a number of cryptocurrency businesses that suffered from the market’s turbulence last year. The ensuing bankruptcy declaration by Sam Bankman-Fried’s FTX was the final straw for Genesis, which was subsequently shaken by a number of redemption requests. Soon after its lending division stopped withdrawals, the business filed for bankruptcy.

The company stated in its bankruptcy filing that it owes its principal creditors $2.4 billion out of around $3.4 billion in obligations. The parent company and the company’s principal creditors approved the initial restructuring plan.

DCG statement read,

“More than two months after all parties agreed to a comprehensive settlement that was submitted by Genesis Capital to the bankruptcy court, a group of Genesis Capital’s creditors has reneged and raised all new demands. 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 DCG deal hit a snag, and the insolvent crypto lender is now looking for a mediator to help the parties involved come to an agreement. In a recent court document, the Debtors stated their opinion that “the mediation should be scheduled immediately” because “DCG owes GGC approximately $630 million pursuant to certain fixed term loans due during the second week of May.”

The Deal

An agreement between Genesis and its parent company, DCG, outlined the sale of Genesis’ bankrupt firms and the closure of the latter’s loan book.

Additionally, it stated that DCG would be tasked with refinancing its current 2023 term loans through a new, junior secured term loan, which would be paid back in two installments of about $500 million each to creditors.

Leave a Comment