In a pivotal moment that could recalibrate the financial future of the crypto sector, Digital Currency Group (DCG) has inked an in-principle deal with Genesis creditors.
According to court documents filed last Tuesday, this groundbreaking agreement answers many of the complex legal questions surrounding Genesis’ insolvency.
Digital Currency Group and Genesis Reach Agreement
DCG’s plan outlines a broad repayment spectrum. Unsecured creditors stand to recover between 70% and 90% of their claims in USD equivalent. In-kind recoveries could range from 65% to 90%, depending on the asset denomination.
However, it’s critical to note that these estimates are contingent on market conditions and the final terms of the agreement.
Genesis found itself in financial turmoil when it ceased withdrawals last November following the collapse of FTX. Opting for bankruptcy protection early this year, the company’s tribulations set off alarms across the digital asset industry.
DCG, in its correspondence to shareholders last month, hinted at being on the brink of settling the convoluted claims. The urgency was fueled by DCG’s impending liabilities.
It had roughly $630 million in unsecured loans maturing in May 2023 and an outstanding $1.1 billion under an unsecured promissory note due in 2032.
The Repayment Plan
The repayment structure agreed upon seeks to meet these obligations efficiently. The plan splits the $1.1 billion into two tranches. It will comprise a $328.8 million payment with a two-year maturity and an $830 million portion with a seven-year maturity.
Furthermore, DCG will dispatch four additional installments totaling $275 million to settle the looming May 2023 maturities.
Genesis Global Holdco and its subsidiaries entered the bankruptcy fray by filing in the US Bankruptcy Court for the Southern District of New York earlier this year. Official documentation disclosed that Genesis owed a staggering $3.5 billion to its top 50 creditors.
This included entities like crypto exchange Gemini, trading behemoth Cumberland, and financial innovators Mirana, MoonAlpha Finance, and VanEck’s New Finance Income Fund.
This accord represents not just a lifeline for DCG and Genesis but potentially a stabilizing factor for a volatile crypto market that has been rife with uncertainties.
This case is interesting, and the outcome could set new precedents for digital asset regulation and recovery.
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