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A creditor genesis revealed the proposed new restructuring plan between genesis, digital money group (dcg), and creditors will see creditors recover at least 80% of their funds.
On Feb. 6, Genesis Global announced it reached an "agreement in principle" with Digital Currency Group (DCG) and its creditors, which will eventually see its crypto trading and market-making arm sold as part of restructuring efforts.
Dcg would pay its share of capital into Genesis Global Trading—Genesis's brokerage arm—to create Global Holdco, the holding entity for Genesis.
The transaction would bring back all the entities associated with the genesis under the same holding.
The terms of the agreement will see DCG exchanging an existing $1.1 billion promissory note due in 2032 for convertible preferred stock. It will also refinance and pay out its existing 2023 $526 million term loans to its creditors.
The agreement will also see crypto exchange gemini contribute 100 million dollars for its gemini gain users who have frozen funds with the enterprise in bankruptcy.
Pending the conclusion of such transactions, which must be approved by the courts - genesis will seek to sell its original global business entity.
Update: dcg/genesis lenders have been informed to expect a return on capital of 80%.
**beyond that number depends on a convertible preferred equity note and “realized liquidation prices” based on DCG/Genesis assets.
— Andrew (@AP_Abacus) February 6, 2023
A Feb. 6 user update from the Genesis creditor and crypto yield platform Donut said the plan "has a recovery rate of approximately $0.80 per dollar deposited, with a path to $1.00" for Genesis creditors.
He added that the recoverable amount depends on "equity, liquidation prices realized and considers the unknown costs associated with such bankruptcy."
Related: Genesis Capital’s fall might transform crypto lending — not bury it
Genesis is currently restructuring as part of its Chapter 11 bankruptcy proceedings stemming from a liquidity crisis in November 2022 brought on by the bankruptcy of crypto exchange FTX.
Genesis global trading was not included in chapter 11 of the company's deposit at the time with genesis global holdco stating that the company would "pursue its customer trading activities."
At an initial bankruptcy hearing in January Genesis lawyers expressed the firm was looking for a quick resolution to its creditor disputes and were optimistic the company would come out of Chapter 11 proceedings by late May.
