Genesis creditor reveals new proposed restructuring plan that will see creditors getting back
Luisa Crawford Feb 08, 2023 10:42
DCG is giving its ownership investment in a Genesis trading firm to the insolvent crypto lender's worldwide parent company.
According to information provided by a Genesis creditor, the most recent suggested restructuring plan between Genesis, Digital Currency Group, and creditors would result in creditors receiving at least 80 percent of the monies they contributed.
The cryptocurrency trading and market-making arm of Genesis Global will eventually be sold as part of efforts to restructure the company, according to an announcement made by Genesis Global on February 6 stating that it had reached a "agreement in principle" with Digital Currency Group (DCG) and its creditors.
Genesis Global Holdco is the holding company for Genesis, and DCG would give its portion of stock in Genesis Global Trading, which is the brokerage subsidiary business of Genesis, to Genesis Global Holdco.
As a result of the acquisition, all Genesis-related firms would be consolidated under a single holding company.
Under the terms of the transaction, DCG will be exchanging an existing promissory note for convertible preferred shares. The note is for $1.1 billion and has a maturity date of 2032. It will also make its current 2023 term loans, which have a combined value of $526 million, due to creditors when it has refinanced them and increased their aggregate value.
As part of the arrangement, cryptocurrency exchange Gemini will also make a contribution of $100 million to help customers of its Gemini Earn service whose money are now locked with the insolvent company.
Genesis will attempt to put its then-owned Genesis Global Trading business up for sale in the event that it is able to do so prior to the completion of these transactions, which need the required clearance from the court.
The Genesis creditor and crypto yield platform Donut issued a user update on February 6 stating that the plan "has a recovery rate of about $0.80 every dollar invested, with a path to $1.00" for Genesis creditors.
It was also said that the amount that may be recovered is contingent on the "equity note, achieved liquidation prices, and takes into consideration the unknown expenditures connected with the continuation of this bankruptcy."
The collapse of the cryptocurrency exchange FTX in November caused a liquidity issue at Genesis, which is presently being resolved by the company via the implementation of a reorganisation plan as part of its Chapter 11 bankruptcy proceedings.
At the time of the firm's Chapter 11 filing, Genesis Global Trading was not mentioned in the paperwork, and Genesis Global Holdco said that the company will "maintain client trading activities."
During the original bankruptcy hearing that took place in January, attorneys for Genesis said that the business was seeking a speedy resolution to the disagreements that it had with its creditors and expressed optimism that the company would emerge from the Chapter 11 procedures by the end of May.
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