Digital Currency Group (DCG) confirms entering an in-principle agreement to enable Genesis Global to honor the creditor’s claims. The claims arose following the latter’s plunge into bankruptcy following the crypto lender’s exposure to FTX’s sudden implosion.
The agreement filed on Monday, August 28, to New York’s Southern District court handling the bankruptcy proceedings signals the potential for fair recovery of claims lodged by creditors.
DCG and Genesis Optimistic Agreement to End Feud with Gemini
The filing, though yet to secure approval of Genesis partner Gemini, aims to expedite the conclusion of the voluntary bankruptcy petitions filed by Genesis Global Holdco in January 2023 alongside its lending business subsidiaries.
The filings submitted to the bankruptcy court indicate that Genesis owes the top fifty ranked creditors an aggregate claim exceeding $3.5 billion. Among the creditors identified in the submissions is the Winklevoss twins’ exchange Gemini. The exchange saw the Winklevoss twins embroiled in endless public mudsling with DCG chief executive Barry Silbert.
Winklevoss brothers accused DCG’s Silbert of dishonesty in the Gemini-Genesis partnership and that users could loan digital assets in exchange for interest. The crypto lender would offer the users interest under the now-terminated Genesis Earn program.
The DCG-Genesis agreement illustrates the potential of resolving the pending issues while guaranteeing creditors fair recovery in their claims. The deal could enable the unsecured creditors to recover between 70% to 90% in the US dollar equivalent. Nonetheless, the recovery could range from 65% to 90% on an in-kind basis. The exact recoverable could vary relative to the denomination of crypto assets involved.
Agreement Proposes Installment Repayment Plan
The agreement primarily targets resolving the $630 million DCG’s liabilities in unsecured loans that became due in May 2023. Also, the in-principle agreement centers on the $1.1 billion labeled as unsecured promissory notes with a 2032 due date.
The agreement proposes a double-tranched repayment, with the initial round featuring $328.8 million and carrying a twenty-four-month maturity. The subsequent compensation will involve $830 million, taking a seven-year maturity.
The Silbert-led DCG commits in the Monday submission to pay $275 million it projects to disburse in four installments. The intends to make the payments following the date of the partial repayment agreement. Doing so would resolve the maturing obligations attributed to the unsecured loans that became due in May 2023.
DCG issued a statement that expressed pleasure in reaching the in-principle agreement with the Unsecured Creditors Committee besides Genesis. The statement portrayed the deal as a framework delivering the comprehensive resolution to the claims outlined within the Genesis Chapter 11 Cases. Its submission for approval would constitute an assured pathway guaranteeing significant recovery for the creditors.
DCG-Genesis In-principle Agreement Awaits Approval
DCG’s statement indicated that the in-principle agreement would undergo documentation and submission to the Bankruptcy Court. The filing awaits its approval relative to the confirmation of the Chapter 11 plan. DCG expressed optimism to execute the essential milestone to allow Genesis to distribute the payment to the claimants.
DCG-Genesis agreement is insufficient to resolve the underlying challenges. The deal awaits approval from Gemini and the Ad Hoc Group of Genesis lenders. While mediation is over, the agreement faces a detailed review in the ongoing discussions DCG and Genesis hold with the Ad Hoc Group and Gemini.
The filing cites the existence of constructive discussions with the remaining two parties. The parties have expressed their commitment to sustain the conversations guided by the objective of realizing a fully consensual plan.
DCG Filing Hinged on Several Conditions
The filing portrays an exciting development in the Genesis bankruptcy proceeding, considering that the Winklevoss twins filed a lawsuit in July alleging DCG and Silbert orchestrated fraud, misleading, and false representations to Gemini.
The document Monday filing admits that DCG and Genesis cannot assure that the Official Committee of Unsecured Creditors will embrace the agreement, particularly on the definitive documents. Also, it admits uncertainty that other parties claiming interest in the ongoing Chapter 11 cases can back the deal in principle.
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