key takeaways:
- Genesis and DCG strike preliminary Chapter 11 deal to alleviate financial strain.
- Plan offers unsecured creditors potential recovery of 70-90% in USD and 65-90% in digital assets, contingent on market conditions.
The Digital Currency Group (DCG) and Genesis creditors appear to have reached a resolution for their bankruptcy claims, with a preliminary agreement announced in a recent court filing.
This potential deal holds the promise of enabling unsecured creditors to recover between 70% and 90% of their claims in USD equivalent, along with 65% to 90% of their claims in-kind, contingent on the denomination of the digital assets.
These estimated recoveries are subject to market prices and final documentation. Upon court approval, DCG is anticipated to inject over a billion dollars in fresh debt facilities into the distressed crypto lending firm.
In return, DCG would secure specific financial concessions from both Genesis and its creditors. Under this arrangement, DCG aims to settle its current debts, which encompass approximately $630 million in unsecured loans due by May 2023, and a $1.1 billion promissory note expiring in 2032.
The repayment plan is divided into two components: $328 million due within two years and $830 million due within seven years, according to the filing. DCG expressed satisfaction in reaching an agreement in principle with Genesis and the Unsecured Creditors Committee.
This framework sets the stage for comprehensive claims resolution within the Genesis Chapter 11 Cases and offers a path for significant recovery for creditors.
The agreement will be formalized and submitted for final approval by the bankruptcy court as part of a chapter 11 plan.
While the deal is subject to court endorsement and final documentation, it represents a significant stride in the bankruptcy proceedings and could potentially facilitate Genesis’ exit from Chapter 11 in the near future.
This development bodes well not only for the involved parties but also for the broader crypto industry. It underscores the willingness to address bankruptcy matters and aid companies in their recovery, even amid a bearish market climate.
The agreement is particularly relieving for DCG, which has grappled with liquidity challenges, necessitating asset sales at notably reduced valuations.
Although the ultimate outcome of the agreement remains uncertain, the in-principle deal marks a pivotal moment in the Genesis bankruptcy case. It underscores positive prospects for both DCG and the creditors of Genesis.
