Genesis hires a bankruptcy avoidance specialist
Recent reports say that Genesis Global Capital has hired a restructuring counsel to look into all of the possible outcomes, including but not limited to the possibility of filing for bankruptcy.
According to a report that was published by the New York Times on November 22, it is known that the company has recruited the investment banking firm Moelis & Company to investigate potential courses of action. However, people who are familiar with the situation have emphasized that no financial decisions have been made and that it is still possible for the company to avoid filing for bankruptcy.
It's interesting to note that Moelis & Company was also one of the companies hired by Voyager Digital after the company temporarily halted withdrawals and deposits on July 1 in order to investigate "alternatives in terms of strategy."
A few days later, Voyager Digital filed for bankruptcy under Chapter 11 with the Southern District of New York. This was part of a plan to restructure the company so that clients would get their money back.
But a Genesis spokeswoman said not too long ago that the company had no "imminent" plans to file for bankruptcy, even though a November 21 story from Bloomberg said otherwise.
"Genesis maintains a positive and productive dialogue with its creditors," the representative said.
People say that Genesis is trying to get anywhere from $500 million to $1 billion from investors to fill a gap caused by "unprecedented market turmoil" and the failure of the cryptocurrency exchange FTX.
According to a report that was published by Bloomberg on November 22, the financially troubled lending company has outstanding loans totaling $2.8 billion on its balance sheet. Approximately thirty percent of the company's lending has been done to "related parties," which includes both its parent company, Digital Currency Group, and its affiliate and lending unit, Genesis Global Trading.
In a letter that has been going around lately, the CEO of Digital Currency Group, Barry Silbert, claims that the company owes Genesis Global Capital $575 million, and that payment is due in May 2023.
Since FTX's exchange was shut down on November 11, all attention has been focused on Genesis, Grayscale Investments, and their parent business, Digital Currency Group. People are afraid that these companies could be the next exchanges to fail because of the spread.
Over the last week, all three corporations have made efforts to allay the concerns of their investors.
In a tweet sent out on November 17, Grayscale Investments aimed to reassure investors by stating that "the safety and security of the holdings underlying Grayscale digital asset products are unaffected." The tweet was in reference to the withdrawal halt implemented by Genesis Global Trading, and it added that the company's products are still functioning normally.
In the meantime, Digital Currency Group CEO Barry Silbert's most recent letter to investors eased investors' worries by telling them that the company is on track to make $800 million in sales in 2022.