The first hearing in Genesis Capital’s bankruptcy case will be held on January 23 at 2:00 pm Eastern Time, according to court filings. Judge Sean H. Lane of the United States Bankruptcy Court for the Southern District of New York will hear the case.
In Chapter 11 bankruptcy, a company can propose a reorganization plan to creditors while continuing business operations, Mark Pfeiffer, a bankruptcy attorney at the law firm Buchanan Ingersoll & Rooney, told Cointelegraph.
As the first step in the bankruptcy process, the court will decide whether to grant relief requested in Chapter 11 by Genesis Global Holdco and its two credit subsidiaries, Genesis Global Capital and Genesis Asia Pacific – collectively known as Genesis Capital. The joint administration of the case was also requested by the company.
A committee for unsecured creditors will also be appointed by the United States Trustee as part of the process. The committee will have the right to request company consultation before making major decisions or changes and participating in reorganization plans. Twenty of the largest unsecured creditors are usually selected for the committee, according to court filings.
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Citing liabilities of up to $10 billion, the company filed for bankruptcy protection on January 19, more than two months after announcing a $175 million exposure to FTX and liquidity problems caused by the collapse of the crypto exchange. Withdrawals have been issued from the Genesis Global Capital platform since November 16.
The Genesis Chapter 11 plan calls for a global resolution of all claims and the creation of a trust that will distribute assets to creditors, according to a press release. In the “dual track process”, the company will seek to “sell, raise capital, and / or equity transactions” that will allow the business to “emerge under new ownership.”
Genesis Capital’s parent company, Digital Currency Group (DCG), recently denied involvement in the bankruptcy filing, claiming that a special committee of independent directors recommended and decided to file for Chapter 11 bankruptcy protection. Only Genesis’ lending entity filed for bankruptcy protection. Genesis Global Trading and Genesis’ spot and derivatives trading entities will remain operational.