Creditors of Genesis allegedly walk away from previously agreed bankruptcy restructuring plan
As a result of Genesis’ restructuring plan being challenged by creditors, DCG has sought a mediator for the bankruptcy proceedings.
According to Digital Currency Group (DCG), more than two months after agreeing to a full settlement, Genesis Capital creditors have “reneged and raised” additional claims. Barry Silbert’s crypto conglomerate expects the latest rejection to prolong the bankruptcy case’s court proceedings, despite the fact that it appeared to be nearing a resolution.
Motion for Mediation filed by Genesis
Genesis, along with competitors such as Celsius Network and Vault, is one of a host of crypto firms impacted by last year’s market upheaval. The ensuing bankruptcy filing by Sam Bankman-Fried’s FTX proved to be the final straw for Genesis, which was shortly destabilized by a slew of redemption requests. Soon after its lending arm halted withdrawals, the company declared bankruptcy.
According to the firm’s bankruptcy filing, it owes $2.4 billion to its principal creditors out of almost $3.4 billion in obligations. It’s principal creditors and parent firm agreed to a preliminary restructuring plan.
DCG statement read,
“More than two months after the parties reached a thorough settlement that Genesis Capital submitted to the bankruptcy court, a number of Genesis Capital’s creditors have broken their word and made all new claims. The most recent move will delay the court procedure, albeit we do not know if the hundreds of thousands of individual creditors are aware of this development.”
As the DCG deal has struck a snag, the bankrupt crypto lender is now looking for a mediator to help the parties involved achieve an agreement. According to a new court filing, the Debtors feel 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 Agreement
According to CryptoPotato, Genesis and its parent company, DCG, signed an agreement outlining the closure of the former’s loan book and the sale of its bankrupt firms. It further stated that DCG will be charged with refinancing its current 2023 term loans by a new, junior secured term loan in two tranches payable to creditors totaling about $500 million.
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