Digital Currency Group (DCG) and Genesis Creditors Reach Preliminary Agreement to Settle Bankruptcy Claims

Digital Currency Group (DCG) and Genesis Creditors Reach Preliminary Agreement to Settle Bankruptcy Claims

Digital Currency Group (DCG) and Genesis Creditors Reach Preliminary Agreement to Settle Bankruptcy Claims

Digital Currency Group (DCG) has reportedly reached an in-principle agreement with the creditors of Genesis Global Holdco, LLC, aimed at resolving the claims raised during the bankruptcy proceedings of Genesis. According to a court filing on Tuesday, this agreement has the potential to lead to recoveries ranging from 70% to 90% in terms of USD equivalent for unsecured creditors. Similarly, recovery on an in-kind basis could range from 65% to 90%, contingent on the specific denomination of the involved digital assets. However, these recovery estimates are subject to market pricing and the finalization of formal documentation.

The lending division of Genesis had ceased withdrawals in November of the previous year, following the collapse of FTX. Subsequently, in early 2023, Genesis filed for bankruptcy protection. A letter addressed to DCG shareholders last month hinted at an impending in-principle agreement with the aim of resolving the claims associated with the bankruptcy case.

It’s worth noting that DCG also functions as the parent company of CoinDesk.

To address DCG’s outstanding obligations, which encompass approximately $630 million in unsecured loans due in May 2023 and $1.1 billion under an unsecured promissory note due in 2032, a new partial repayment arrangement was negotiated. This arrangement would entail a two-tranche repayment structure: the initial tranche of approximately $328.8 million would have a maturity period of two years, followed by a second tranche of $830 million with a maturity period of seven years.

Additionally, as part of the agreement, DCG would make four installment payments totaling $275 million subsequent to the date of the partial repayment agreement, in connection with the May 2023 maturities (pertaining to the $630 million in unsecured loans).

In January 2023, Genesis Global Holdco, LLC, and its subsidiaries filed for bankruptcy with the U.S. Bankruptcy Court for the Southern District of New York. The bankruptcy filings revealed that Genesis owed more than $3.5 billion to its top 50 creditors, including prominent entities like crypto exchange Gemini, trading giant Cumberland, Mirana, MoonAlpha Finance, and VanEck’s New Finance Income Fund.

UPDATE (Aug. 29, 06:25 UTC): The headline and image have been updated, along with the inclusion of contextual information in the final paragraph.

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