Bankrupt Genesis put forth a new plan to repay creditors

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Key Takeaways

  • DCG will turn its equity in Genesis Global Trading over to Genesis Global Holdco to sell both companies
  • Genesis and Gemini had also reached a $100 Million agreement over the Earn program

Bankrupt crypto lender Genesis Global Holdco has announced its plan to help repay back its creditors. As part of the proposed plan, Digital Currency Group-Genesis’s parent company will turn its equity in Genesis Global Trading over to Genesis Global Holdco to sell both companies and also restructure an existing loan.

“‘Equitization’ means, if the Sale Process does not result in the sale of all or substantially all of the assets of Genesis, a restructuring under the Amended Plan pursuant to which the GGC Creditors will receive, among other things, 100% of the equity in reorganized GGH, subject to dilution by a management incentive program that may be implemented with the approval of the Bankruptcy Court, upon notice and hearing,” the proposed plan reads.

Earlier this week, Genesis and Gemini had reached a $100 Million agreement over the Earn program. Under the agreement, Gemini will contribute up to $100 million more for Earn users. Genesis was the primary partner for Gemini’s Earn program. The settlement agreement also includes DCG exchanging its existing $1.1 billion note for convertible preferred stock and refinancing its existing 2023 term loans in 2 tranches made payable to creditors with an aggregate total value of $500 million.

Genesis’s troubles started soon after the crypto hedge fund Three Arrows Capital’s implosion, which Geneiss had exposure to. Following FTX collapse, genesis halted withdrawals in November 2022, leading users and Gemini’s Winklevoss twins to threaten legal action against the company and DCG founder Barry Silbert, arguing that Genesis offers a plan for repaying the $900 million loan Gemini made to the now-insolvent Genesis Global.

Last month, the crypto brokerage firm filed for chapter 11 bankruptcy, citing significant exposure to Three Arrow Capital and FTX as reasons. Genesis had revealed that at the time that it had approximately $175 million in exposure to FTX. Reportedly, Genesis also tried to raise a $1 billion loan from investors to avoid a “liquidity crunch” triggered by the fallout from FTX’s collapse.

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Saniya Raahath
Saniya Raahath

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