Genesis and its parent company reach an agreement with their creditors

Digital Currency Group (DCG) is a conglomerate of crypto entities that includes bankrupt lender Genesis. We learned that the parties have reached an agreement in principle on a number of points. The most significant being the reduction of the Genesis loan portfolio and the sale of bankrupt entities.

CoinDesk retweeting the message that Genesis and DCG have reached an agreement in principle with their major creditors.

What is the deal between Genesis, DCG and their creditors?

On January 20, Genesis declared bankruptcy, yet it owes at least $3.4 billion to its creditors. Since then, several solutions have been sought to pay off this debt. We learned from Reuters that a restructuring plan has been concluded between the main parties involved. These include Digital Currency Group or DCG, the parent company of Genesis and Gemini, the main creditor.

Genesis attorney Sean O’Neail told a bankruptcy judge that the deal was based on two crucial points. The first being the sale of the company and the second the handing over of its equity to creditors. But certain preconditions have been set for the adoption of the new plan. First, DCG needs to refinance outstanding loans that amount to $500 million in cash and approximately $100 million in bitcoin (BTC) to Genesis.

In total, the group of creditors who took part in this negotiation is claiming $2.4 billion from Genesis. The group is represented by the firms Proskauer and Kirkland. They are also backed by restructuring banker Houlihan Lokey.

An agreement to save small investors?

Gemini had a partnership with Genesis on its Gemini Earn program. Over 340,000 users had already deposited up to $900 million before Genesis froze withdrawals. It happened last November and right away Gemini came into conflict with DCG. However, nothing helped, because Genesis was already in very bad shape.

Now, Gemini is forced to participate up to $100 million in the new deal. The money will be used to compensate Gemini Earn users whose assets are frozen.

Genesis’s troubles began shortly after FTX’s bankruptcy. Could this lender be one of the companies whose assets were owned by FTX ? Because it should be noted that in the meantime, the other companies controlled by DCG are doing very well.

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