Key takeaways:
- The FTX debtors claimed that the claim was filed “without any advance notice” and that they could not attend the mediation.
- Furthermore, FTX argued that Genesis didn’t include it in conversations about its recovery strategy.
Just one month after asking for $4 billion from the similarly bankrupt cryptocurrency lender Genesis, the bankrupt cryptocurrency exchange FTX is now disputing the assertion that it is not entitled to anything.
Genesis estimated in an estimating processes motion filed on June 1 that FTX debtors are entitled to claims totaling “$0.00,” but according to a June 2 court filing in the United States Bankruptcy Court for the Southern District of New York, FTX debtors have objected to that estimate.
The FTX debtors claimed they were excluded from the mediation process and did not get “any advance notice” prior to the motion being filed. Even FTX debtors disputed a Genesis claim that they were kept informed of the proceedings:
“The FTX Debtors have not been invited to participate in the mediation despite the Genesis Debtors’ representation in the Estimation Procedures Motion that they are working expeditiously with all parties in interest to formulate a plan structure. “
It was stated once more that the Genesis debtors considered the nil claim estimation “critical” to avoid any delays and swiftly proceed with the “confirmation of a Chapter 11 plan.”
Additionally, it was asserted in the filing that the FTX debtors “are by far the largest unsecured creditors in the Genesis Debtors’ Chapter 11 cases” and that it is essential that they take part in the mediation:
“The mediation is a waste of estate resources without the inclusion of the FTX Debtors and should not continue without the FTX Debtors’ involvement.”
As recently as May 3, attorneys for FTX were requesting over $4 billion from Genesis in order to recover “avoidable transfers” that took place within 90 days prior to a corporation filing for bankruptcy, as allowed by bankruptcy statutes.
The automatic suspension of legal procedures against Genesis that occurs when a company files for bankruptcy has been requested to be lifted by FTX debtors in a plea for relief from the stay. The court is scheduled to hear the motion on June 15.
This comes after Genesis’ parent company, the Digital Currency Group (DCG), stated that it was unable to find a way to resolve its “outstanding intercompany obligations” in a way that would allow creditors to be paid back. In response to demands from creditors, DCG was involved in a mediation process with Genesis during this time.
After Genesis filed for Chapter 11 bankruptcy, the firm had proposed a settlement proposal in February, estimating that creditors would obtain an 80% recovery of their money.
