Digital Currency Group will pay $1.4 billion under the agreement with Genesis, up to 90% of the funds
Date: 2023-08-29 Author: Karina Ziganova Categories: BUSINESS, IN WORLD
Genesis Global and subsidiaries reached an agreement as part of a bankruptcy reorganization plan approved by creditors on Tuesday. According to the court, this was announced this morning.
The cryptocurrency lender announced its intention to exit Chapter 11 protection in May to resolve disputes over a reorganization plan. Genesis notified the court that their mediation had ended after an agreement was reached with an official committee of unsecured creditors and its parent company, Digital Currency Group (DC G).
DCG will provide approximately $1.4 billion in new financing to pay creditors under the deal. This includes a loan of $328.8 million and a second lien loan of $830 million with installments of up to $275 million. DCG's existing unsecured debt will be replaced with new loans.
In addition, DCG will receive an exemption from liability. The committee of creditors has decided not to file claims against the parent company related to losses from crypto-hedge fund Three Arrows Capital related to Genesis losses.
The preliminary agreement is intended to provide a possible recovery of 70% to 90% of the dollar for unsecured creditors. Despite this, the parties are still working on the final terms and final documentation for the amended chapter 11 plan to include the settlement.
In early January, Genesis filed for bankruptcy amid a severe liquidity crunch and a larger cryptocurrency market crash this year. Due to the fact that the company ruined its loans to customers and crypto-hedge companies, it had to suspend their repayments.
Under the reorganization plan outlined on Tuesday, creditors will have the option of early repayment of some of their claims in cash. Under other conditions, other distributions will be made over time as the assets become monetized.
The deal is yet to receive support from the Genesis Special Creditor Group and the Gemini crypto exchange, which are involved in the mediation. Genesis announced its intention to continue negotiations with the dissenters and to strive for a fully agreed upon plan.
