Genesis expects to resolve creditor issues and exits bankruptcy in May

by Jan 24, 2023CryptoNews0 comments

A Genesis lawyer believes the company will be able to resolve creditor disagreements before the end of the week and that it will be able to leave bankruptcy procedures in four months.

A lawyer for the insolvent crypto lending firm Genesis is confident that the company will be able to resolve its creditor issues as soon as this week and that it will be able to exit Chapter 11 proceedings by late May. According to Reuters, Genesis’ lawyer Sean O’Neal made the remarks at a Jan. 23 first hearing in the United States Bankruptcy Court for the Southern District of New York.

He stated that Genesis had “some degree of confidence” that it would address disagreements with creditors by the end of the week and, if necessary, would seek the court’s appointment of a mediator, but added:

“Sitting here right now, I don’t think we’re going to need a mediator. I’m very much an optimist.”

Genesis declared Chapter 11 bankruptcy on Jan. 19. It already had a restructuring plan in place and a strategy for seeking a “sale, capital raising, and an equitization deal” so that it might potentially “emerge under new ownership.”

The insolvency comes nearly two months after Genesis banned withdrawals in November 2022, claiming market instability induced by FTX’s bankruptcy.

Judge Sean Lane granted Genesis various “first-day” requests, which are customary in bankruptcy cases, including the ability to pay workers and vendors.

Lane stated that, due to privacy considerations, Genesis did not need to share customer names on its creditor’s list. Lane also advised that if the names are eventually made public, the lender alerts consumers about potential phishing attacks.

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Genesis claimed it would auction off its assets in order to leave bankruptcy in less than four months.

It declared slightly over $5 billion in assets and liabilities and owed at least $3.4 billion to over 100,000 creditors. Last year, Genesis’ withdrawal ban hurt consumers of a yield-bearing product named “Earn” from the Gemini market.

Genesis’ largest creditor, Gemini, is due roughly $766 million.

Its largest creditor was its parent firm, Digital Currency Group (DCG), which owed Genesis around $1.65 billion, including $575 million in loans due in May and a $1.1 promissory note payable in ten years.

Despite the fact that DCG is experiencing financial difficulties, the bankruptcy did not involve DCG. Similarly, Genesis firms managing derivatives, spot trading, broker-dealer, and custody are not included in the proceedings and, according to Genesis, are continuing operations.

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