Digital Currency Group Opposes Genesis Bankruptcy Plan
Digital Currency Group (DCG) has expressed its opposition to the bankruptcy plans put forth by its subsidiary Genesis, arguing that it violates the law and unfairly benefits a select group of creditors.
DCG’s Court Filing
In a court filing on February 5th, DCG urged the court not to approve Genesis’ Revised Plan due to several reasons, including its violation of the Bankruptcy Code and the prolonged nature of the process.
According to DCG, the plan would result in Genesis overpaying its creditors by hundreds of millions of dollars more than what was initially requested.
DCG stated that it would support a plan that pays all creditors in full, but since such a plan was not proposed, the debtors have developed a plan that favors certain creditors over others.
DCG Alleges Breach of Bankruptcy Code
Furthermore, DCG argues that the Revised Plan violates two key aspects of the Bankruptcy Code. Firstly, it states that senior classes cannot receive more than the full value of their claims, which disadvantages some creditors and equity holders. Secondly, the plan fails to comply with the absolute priority rule for distribution.
DCG also claims that its own rights as the parent company are impeded by the proposed plan, stripping it of economic and corporate governance rights and constituting a breach of fiduciary duties.
The Amended Plan was allegedly created through a clandestine process that excluded DCG from discussions between UCC and Ad Hoc Group, which goes against the rules and disenfranchises equity interests.
Genesis Bankruptcy Background
In 2023, Genesis filed for bankruptcy due to challenging market conditions that also led to the collapse of Terra Network and FTX, resulting in significant losses for the market.
On February 4th, Genesis requested court approval to sell $1.6 billion worth of assets, including shares of Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust.
Hot Take: DCG Stands Against Unfair Bankruptcy Plan
Digital Currency Group’s opposition to Genesis’ bankruptcy plan reflects its commitment to upholding the law and ensuring fairness in creditor payments. DCG argues that the proposed plan goes against the Bankruptcy Code and favors a select group of creditors at the expense of others.
As the parent company, DCG asserts its rights and highlights the breach of fiduciary duties caused by the plan’s implementation. The outcome of this legal battle will have significant implications for Genesis’ bankruptcy proceedings and the overall perception of fairness in the crypto industry.
By
By
By
