In a recent court filing, the Digital Currency Group (DCG) unveiled a provisional agreement with Genesis creditors. It comes in the wake of the claims stemming from Genesis’ bankruptcy. According to this preliminary deal, unsecured creditors might retrieve between 70%-90% of their claims in USD. Meanwhile, in-kind recoveries could range from 65%-90%, contingent on the digital asset’s denomination. However, it’s pivotal to note that these estimations remain anchored to market rates and final documentation.
Backdrop: The Digital Currency Group Conundrum
Genesis confronted a financial gridlock when its lending division suspended withdrawals last November. This decision was influenced heavily by the FTX’s subsequent downfall. Consequently, at 2023’s outset, Genesis sought bankruptcy protection. In a shareholder communication last month, DCG alluded to nearing an agreement to address these claims.
DCG’s financial commitments are substantial. They’re on the hook for around $630 million in unsecured loans set for May 2023 and an imposing $1.1 billion via an unsecured promissory note due by 2032. Both parties have concurred on a fresh partial repayment scheme to address these looming debts. The breakdown is as follows:
- Short-Term Maturity: An immediate payment of roughly $328.8 million, slated for a two-year maturity.
- Long-Term Maturity: $830 million, structured with a 7-year maturity.
In addition to the above, DCG has pledged to disburse $275 million in four subsequent payments. These installments are specifically to cover the May 2023 dues.
Genesis Bankruptcy: The Larger Picture
Genesis Global Holdco, LLC, including its subsidiary entities, declared bankruptcy. This announcement was officially registered with the U.S. Bankruptcy Court in the Southern District of New York in January 2023. The documentation exposed a staggering debt. Genesis owes more than $3.5 billion to its primary 50 creditors. Noteworthy names are crypto-trading platform Gemini, trading powerhouse Cumberland, and investment entities like Mirana, MoonAlpha Finance, and VanEck’s New Finance Income Fund.
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