DCG Attains Vital Preliminary Agreement With Genesis Creditors, Potential Recoveries Approach 90%

CoinDesk reported that Digital Currency Group (DCG) has preliminarily settled the claims arising from Genesis' bankruptcy by reaching an agreement with Genesis creditors, as disclosed in a court filing on Tuesday.

Under the proposed plan, unsecured creditors could potentially recover between 70% and 90% of their claims in USD equivalent, while recoveries on an in-kind basis could range from 65% to 90%, depending on the denomination of the digital asset. It's important to note that these estimated recoveries are subject to market prices and formal documentation.

Genesis' lending division had suspended withdrawals in November of the previous year following FTX's collapse, subsequently seeking bankruptcy protection at the outset of 2023.

DCG further emphasized that the in-principle accord will be formalized and submitted to the Bankruptcy Court for ultimate approval, coinciding with the confirmation of a chapter 11 plan. DCG conveyed its eagerness to execute this significant step, leading to distributions to creditors of Genesis.

To settle DCG's existing obligations, including around $630 million in unsecured loans maturing in May 2023 and $1.1 billion under an unsecured promissory note maturing in 2032, a new partial repayment arrangement has been established. This repayment structure involves two tranches: approximately $328.8 million with a two-year term and $830 million with a seven-year term.

Additionally, DCG has committed to pay $275 million across four installments subsequent to the date of the partial repayment agreement to address the May 2023 maturity obligations. Genesis Global Holdco, LLC and its subsidiaries filed for bankruptcy in January 2023, submitting their claims to the U.S. Bankruptcy Court for the Southern District of New York. The filings unveiled Genesis' debt of over $3.5 billion to its leading 50 creditors.

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