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DCG Nearing Vital Agreement with Genesis Creditors, Potential Recovery Up to 90%

Aug 29, 2023 at 03:11 pm

DCG Progresses Toward Significant Accord with Genesis Creditors, Setting the Stage for Potential Recoveries Ranging from 70% to 90%

Digital Currency Group (DCG) is on the cusp of a notable breakthrough as it reaches an initial agreement with Genesis creditors, a move that carries substantial implications for resolving the bankruptcy concerns brought to light by Genesis. This development was outlined in a court filing presented on Tuesday.

The proposed strategy holds the promise of generating recoveries that span from 70% to 90% in terms of USD equivalent for unsecured creditors. Additionally, there exists a recovery scope of 65% to 90% based on in-kind arrangements, with the actual outcome influenced by the nature of the digital asset denomination. It's vital to acknowledge that these anticipated recoveries remain subject to the ebb and flow of the market and the finalization of official documentation.

In the wake of the collapse of FTX, Genesis took the decision to suspend withdrawal activities through its lending arm in November of the prior year. As a subsequent step, the company pursued legal protection by initiating bankruptcy proceedings at the onset of 2023. In correspondence addressed to shareholders last month, DCG expressed its close proximity to reaching an initial consensus to address the pending claims.

As stated by DCG, "The agreement in principle will be documented and submitted to the Bankruptcy Court for final approval in connection with confirmation of a chapter 11 plan. We look forward to executing on this important milestone and for Genesis to begin its distributions to creditors."

To meet its current financial obligations, which involve unsecured loans amounting to approximately $630 million that are due in May 2023, as well as an unsecured promissory note of $1.1 billion slated for 2032, DCG has initiated a novel partial repayment arrangement. This approach encompasses a two-part repayment strategy: around $328.8 million with a maturity period of two years, and an additional $830 million with a maturity spanning seven years.

Further adding to this, DCG has made commitments to disburse $275 million over the course of four installments, post the initiation of the partial repayment agreement. This arrangement serves the purpose of addressing the May 2023 maturities.

Back in January 2023, Genesis Global Holdco, LLC, along with its associated subsidiaries, commenced bankruptcy proceedings via the U.S. Bankruptcy Court for the Southern District of New York. The bankruptcy documents brought to light that Genesis carried a debt exceeding $3.5 billion owed to its top 50 creditors. Among these creditors were entities such as cryptocurrency exchange Gemini, trading powerhouse Cumberland, Mirana, MoonAlpha Finance, and VanEck's New Finance Income Fund.

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