Genesis Creditors Allegedly ‘Walk Away’ From Previously Agreed Bankruptcy Restructuring Plan
Digital Currency Group (DCG) alleged that a group of Genesis Capital creditors has “reneged and raised” new demands more than two months after agreeing to a comprehensive settlement.
The bankruptcy case seemed to be on its way to being resolved, but the latest rejection is expected to prolong the court process, according to the Barry Silbert-led crypto conglomerate.
Genesis Filing Motion for Mediation
Genesis is among a slew of crypto companies that were hit by last year’s turmoil in the market, along with rivals such as Celsius Network and Vault. The subsequent bankruptcy filing by Sam Bankman-Fried’s FTX was the final straw for Genesis, which was soon destabilized by a series of redemption requests. The company filed for bankruptcy soon after its lending arm paused withdrawals.
It owes $2.4 billion to its main creditors out of nearly $3.4 billion in liabilities, the firm mentioned in its bankruptcy filing. Its main creditors and parent company agreed to an initial restructuring plan.
DCG statement read,
“More than two months after all parties agreed to a comprehensive settlement that was submitted by Genesis Capital to the bankruptcy court, a group of Genesis Capital’s creditors has reneged and raised all new demands. We do not know if the hundreds of thousands of individual creditors are aware of this development, but the latest maneuver will prolong the court process.”
The bankrupt crypto lender is now seeking a mediator to assist the involved parties in reaching a resolution as the DCG deal hit a roadblock. A new court filing stated that the Debtors believe “the mediation should be scheduled immediately” since “DCG owes GGC approximately $630 million pursuant to certain fixed term loans due during the second week of May.”
The Deal
As reported by CryptoPotato, Genesis and its parent firm, DCG, reached an agreement that detailed shutting down the former’s loan book and the sale of its bankrupt entities.
It also mentioned that DCG would be tasked with refinancing its existing 2023 term loans through a new, junior secured term loan in two tranches made payable to creditors in the aggregate total value of approximately $500 million.
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