Genesis Global Holdco Reaches Deal with Creditors to Settle Claims
Digital Currency Group (DCG), the parent company of bankrupt trading firm Genesis Global Holdco, has reached an in-principle deal with Genesis creditors to settle their claims, according to a recent court filing. Here are the key points:
– Genesis, which filed for Chapter 11 bankruptcy protection in January, currently holds liabilities including $630 million in unsecured loans due in May 2023 and a $1.1 billion unsecured promissory note due in 2032.
– In the in-principle deal, DCG plans to take up new debt facilities and a repayment agreement, including a $328.8 million first-lien facility with a 2-year maturity and a $830 million second-lien facility with a 7-year maturity.
– DCG also intends to make four installment payments totaling $275 million.
– If consummated, the plan could result in estimated recoveries of about 70% to 90% for unsecured creditors in U.S. dollar equivalent and a 65% to 90% recovery on an in-kind basis depending on the denomination of the digital asset.
– Genesis filed for bankruptcy after suffering financial losses due to the collapses of crypto hedge fund Three Arrows Capital and FTX.
Hot Take
The in-principle deal between Digital Currency Group and Genesis creditors is a positive development for both parties involved. It provides a potential resolution for the outstanding claims and offers a chance for unsecured creditors to recover a significant portion of their investments. This settlement could serve as a precedent for future bankruptcy cases within the crypto industry, highlighting the importance of responsible financial management and risk assessment in this rapidly evolving market.
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