Digital Currency Group Objects to Genesis’ Bankruptcy Plan
Digital Currency Group (DCG), the parent company of bankrupt crypto lender Genesis Capital, has filed an objection to Genesis’ bankruptcy plan, arguing that it violates the Bankruptcy Code. DCG’s objection revolves around Genesis’ proposal to pay customers more than they are legally entitled to, which DCG believes unfairly benefits a select group of creditors and strips DCG of valuable economic and corporate governance rights.
DCG Challenges Distribution of Funds
DCG’s objection, filed on February 5, argues that while it supports a plan that pays creditors the full value of their claims, the current proposal goes beyond that, resulting in unsecured creditors receiving “hundreds of millions of dollars” more than their initial claims. This violates the requirements set by the Bankruptcy Code for confirming a cramdown plan.
The objection also points out that the proposed plan allows certain unsecured claims to grow exponentially as the value of Genesis’ assets increases. DCG argues that this distribution scheme gives senior creditors exclusive benefits from any appreciation in asset value, which is unlawful and exceeds what the Bankruptcy Code permits.
Allegations of Preferential Treatment
In its objection, DCG alleges that Genesis’ bankruptcy plan was developed through a secretive process that excluded Digital Currency Group. DCG claims that the plan disenfranchises equity interests and favors general unsecured creditors, violating the Debtors’ fiduciary duties and lacking good faith.
The objection also highlights other advantages given to certain creditors, such as unrecognized post-petition interest rates and restrictions on DCG’s rights as an equity holder. These provisions diminish Digital Currency Group’s interests and contradict the Bankruptcy Code.
DCG Calls for Fair Resolution
DCG argues that Genesis’ proposed bankruptcy plan fails to comply with the Bankruptcy Code and was not proposed in good faith. It believes that equity holders and other stakeholders are disadvantaged while a small group of powerful creditors benefits disproportionately. DCG urges the court to reject the plan and demands a fair and equitable resolution that adheres to the requirements of the Bankruptcy Code.
Hot Take: Digital Currency Group Objects to Unfair Genesis Bankruptcy Plan
Digital Currency Group (DCG) has voiced its objection to Genesis Capital’s bankruptcy plan, claiming that it violates the Bankruptcy Code. DCG argues that the proposed plan provides preferential treatment to certain creditors, resulting in unsecured creditors receiving more than they are legally entitled to. Moreover, DCG alleges that the plan was developed through a secretive process that excluded them, further disadvantaging equity holders. DCG maintains that this distribution scheme is unlawful and fails to comply with the Bankruptcy Code. They urge the court to reject the plan and seek a fair and equitable resolution that upholds the legal requirements.
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