In a major development in the ongoing saga surrounding the bankruptcy of Genesis Global Holdco, LLC, Digital Currency Group (DCG) appears to be approaching a settlement with the creditors of its subsidiary Genesis. A recent court filing detailed an agreement in principle that could potentially bring relief to both unsecured and in-kind creditors. Here are the latest developments regarding the bankrupt cryptocurrency company…
A deal is reached for a crypto company
Experiencing financial turbulence following the collapse of the FTX exchange, Genesis faced a series of setbacks that led to it filing for bankruptcy protection in January 2023. The bankruptcy filings showed that Genesis owed substantial sums to various creditors, including key players like crypto exchange Gemini, trading giant Cumberland, Mirana, MoonAlpha Finance and VanEck’s New Finance Income Fund. The gist of the matter lies in the Digital Currency Group’s efforts to address these growing demands. The proposed resolution plan is expected to result in recoveries ranging from 70% to 90% in USD equivalent for unsecured creditors.
Additionally, estimated in-kind recovery rates are expected to be between 65% and 90%, depending on the value of the cryptoassets involved. It should be noted that all anticipated recoveries are subject to market pricing and final documentation. Genesis’ financial woes were exacerbated when it stopped credit line withdrawals in November of the previous year following the collapse of the FTX exchange. This event served as the catalyst for a series of challenges that resulted in the company filing for bankruptcy. The proposed solution strategy has a comprehensive structure.
DCG is in the process of a partial refund.
A partial repayment arrangement was negotiated to meet DCG’s current liabilities, which included approximately $630 million of unsecured loans due in May 2023 and $1.1 billion under an unsecured note with a maturity of 2032. This arrangement will consist of two slices. The maturity of the first tranche of approximately $328.8 million will be two years, while the second tranche of $830 million will have a maturity of seven years. Additionally, as part of the settlement, DCG has committed to make four installments of $275 million after the partial repayment agreement goes into effect.
This payment structure aims to cover $630 million of unsecured loans due in May 2023. This development comes after DCG implied in a letter to shareholders last month that it was close to an agreement in principle. Industry watchers eagerly await further updates as the situation unfolds, especially given its potential impact on the industry. The settlement that emerged between DCG and Genesis’ creditors is poised to shed light on the complex web of financial interdependence in the cryptocurrency space. As the market evolves and adapts to new challenges, this serves as a stark reminder of the natural volatility and complexities in the crypto space.
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