DCG and Genesis Agree Provisional Repayment Plan

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  • Digital Currency Group has tentatively agreed with Genesis creditors to settle bankruptcy claims
  • Genesis filed for bankruptcy in January, owing over $3.5 billion to various creditors
  • DCG revealed a repayment plan for Genesis’ outstanding obligations of $1.73 billion, pending approval

Digital Currency Group (DCG) has reached a preliminary agreement with Genesis creditors to settle the claims arising from Genesis’ bankruptcy situation. The proposed arrangement, filed Tuesday, has the potential to yield recoveries ranging from 70% to 90% in dollar equivalent for unsecured creditors and between 65% and 90% in terms of the digital asset denomination. While this is an important step forward for creditors, the offer must first be finalized and agreed upon by all parties, while the final valuation is dependent upon market prices.

Genesis Owes Creditors Over $3.5 Billion

Genesis Global suspended withdrawals following the collapse of FTX in November last year, which led to the company and its affiliated entities filing for bankruptcy protection in the Southern District of New York in January.

The bankruptcy filing revealed that Genesis owed upwards of $3.5 billion to its top 50 creditors, encompassing notable names like crypto exchange Gemini, trading powerhouse Cumberland, Mirana, MoonAlpha Finance, and VanEck’s New Finance Income Fund. The Gemini issue has proved particularly hard for DCG to deal with and has led to a hostile, and very public, legal battle between the two companies.

Staggered Payments the Way Forward

The two companies announced a tentative deal in February, and in a recent communication to shareholders DCG indicated that it was nearing a preliminary agreement to address the Genesis issue. To address its outstanding obligations – around $630 million in unsecured loans due by May 2023 and a further $1.1 billion under an unsecured promissory note maturing in 2032 – DCG and relevant parties have forged a new partial repayment arrangement.

This repayment scheme is divided into two portions: an initial $328.8 million repayment with a two-year term, followed by a subsequent $830 million repayment with a seven-year term.

Additionally, DCG will make four installment payments totaling $275 million subsequent to the partial repayment agreement, in relation to the May 2023 maturing debts ($630 million in unsecured loans).

Genesis’ creditors have not yet commented on the plan but it is hoped that they will be satisfied with the outcome, allowing everyone to move forward and reconcile the various complex issues at hand.