Key Takeaways:
- Genesis creditors were anticipated to collect 80% of the money they had lost as a result of the bankruptcy under the initial repayment agreement.
- According to a tweet from DCG, the creditors “have reneged and raised all new demands.”
According to a tweet from Genesis Capital‘s parent business, Digital Currency Group (DCG), a number of its creditors have “reneged” on a bankruptcy settlement agreement reached in February.
The mediation application asks a bankruptcy judge who is now presiding over the case to mediate in order to “resolve and narrow the open issues” and “avoid additional cost and delay” that might develop.
According to reports, the contract included recommendations to divest the company’s insolvent subsidiaries and wind down the Genesis loan book. The top 50 creditors of Genesis are owed more than $3.6 billion, including claims from the Winklevoss twins’ exchange, Gemini.
Genesis declared in February that it has come to a preliminary agreement with its principal creditors and parent business Digital Currency Group. The transaction was pending court approval.
In accordance with the suggested restructuring plan, Genesis creditors would be compensated for 80% of the money they lost as a result of the bankruptcy. Expected 80% recovery of money lost as a result of the business’s demise.
DCG stated that it is still dedicated to achieving a fair settlement agreement for all parties and that it will have to weigh any new requests against prior compromises. The conglomerate said:
“The most recent move will delay the court procedure, however we do not know if the hundreds of thousands of individual creditors are aware of this development.”
It was previously reported that as part of a restructuring plan to pay creditors, Digital Currency Group intends to sell the crypto trading company and loan arm of its subsidiary Genesis. A $500 million cash loan and a $100 million Bitcoin loan that DCG had taken out from the faltering cryptocurrency brokerage were also refinanced as part of the agreement.
Initial talks with various parties, including the official committee of unsecured creditors, according to the petition, sought to settle issues mentioned in the restructuring term sheet. Recent discussions, however, have shown the necessity of a mediator to assist in addressing an important matter in the Chapter 11 hearings.
