Crypto lender Genesis Global Holdco LLC will either have a deal in days with creditors owed about $3 billion, or it will ask the judge overseeing its bankruptcy to appoint a mediator to lead negotiations, the company said in court Monday.
(Bloomberg) — Crypto lender Genesis Global Holdco LLC will either have a deal in days with creditors owed about $3 billion, or it will ask the judge overseeing its bankruptcy to appoint a mediator to lead negotiations, the company said in court Monday.
The talks have included Barry Silbert’s Digital Currency Group, which is Genesis’ parent and one of the company’s top borrowers, company attorney Sean O’Neal said during a court hearing held by video. Genesis holds more than $1.65 billion in claims against DCG, O’Neal said.
“In this case there are literally hundreds of thousands of individuals whose money is at stake,” said Chris Marcus of Kirkland & Ellis, who represents a group of creditors which includes Gemini Trust Co., the crypto firm run by Tyler and Cameron Winklevoss. They have pushed Silbert to make good on $900 million of its customers’ funds that have been trapped since Genesis ran into trouble in November. That creditor group is owed around $1.5 billion, Marcus said.
Genesis filed bankruptcy last week after collapsing under the force of a prolonged selloff in digital assets. For the last two months, DCG and two creditor groups owed about $3 billion have been negotiating a plan to repay debt holders by either reorganizing Genesis or selling the company.
The company will push to get a deal so it can implement a payout plan no later than May 19, bankruptcy filings show. Genesis will try to sell itself and distribute the proceeds to creditors, according to a statement. If a sale isn’t viable, creditors would receive stock in the restructured company.
Any plan would require approval from US Bankruptcy Judge Sean Lane in the Southern District of New York.
Creditors could also wind up collecting money from DCG. Genesis has hired a former federal prosecutor to investigate an $850 million loan the company made to DCG entities, Genesis board member Paul Aronzon said in a court filing. Under the company’s reorganization proposal, any money collected from lawsuits filed by Genesis would help repay creditors, Aronzon said.
An attorney for the US Trustee’s office signaled that the agency has questions about the company’s relationship with Digital Currency Group and Genesis’ attempt to investigate its parent company.
The case is Genesis Global Holdco LLC, 23-10063, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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