Creditor Genesis has announced a new restructuring plan proposed between Genesis, Digital Currency Group (DCG), and creditors will see creditors return at least 80% of their funds.
On February 6, Genesis Global announced it had 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 a restructuring effort.
DCG will contribute equity in Genesis Global Trading – the business of Genesis’ brokerage subsidiary – to Genesis Global Holdco, the parent entity for Genesis.
The transaction will bring all Genesis-related entities under the same holding company.
The terms of the agreement will see DCG exchange $1.1 billion of promissory notes due 2032 for convertible preferred stock. It will also refinance existing 2023 term loans with an aggregate value of $526 million and will be payable to creditors.
The agreement will also see crypto exchange Gemini donate $100 million to Gemini Earn users who have frozen funds with the bankrupt company.
Pending the closing of the transaction, which requires the necessary court approvals – Genesis will seek to sell the Genesis Global Trading entity it owns.
UPDATE: Creditors DCG / Genesis have been told to expect an 80% return on capital.
** beyond that number depending on the convertible option equity notes and the “realized liquidation price” based on DCG / Genesis assets.
— Andrew (@AP_Abacus) February 6, 2023
A February 6 user update from Genesis lender and crypto-yielding platform Donut said the plan “has a recovery rate of approximately $0.80 per dollar deposited, with a path to $1.00” for Genesis lenders.
It adds that the amount that can be recovered depends on “the equity record, the liquidation price realized and considering the unknown costs related to the remainder of this bankruptcy.”
Related: The collapse of Genesis Capital could change crypto credit – not bury it
Genesis is currently undergoing restructuring as part of the Chapter 11 bankruptcy process stemming from the November 2022 liquidity crisis caused by the bankruptcy of crypto exchange FTX.
Genesis Global Trading is not included in the company’s Chapter 11 filing at the time with Genesis Global Holdco said the business will “continue the client’s trading operations.”
At the initial bankruptcy hearing in January, Genesis lawyers wrote that the firm is looking for a quick resolution to the dispute and is optimistic that the company will exit the Chapter 11 process by the end of May.