Lawyers for Genesis Global told a federal bankruptcy court in New York City on Monday that they’ve been working with creditors’ representatives and the U.S. Trustee’s Office “around the clock” for the past two months in order to reach a “consensual resolution” with the embattled company’s creditors.
Genesis’ lending arm halted withdrawals on Nov. 18, 2022, after what its lawyers described as “a run on the bank” in the wake of FTX’s collapse earlier that month. Two months later, on Jan. 19, Genesis Global Holdco – the holding company of Genesis Global Capital – and two of its subsidiaries, Genesis Asia Pacific (GAP) and Genesis Global Capital (GGC), filed for Chapter 11 bankruptcy protection in New York.
Genesis’ lawyers – from the New York-based law firm Cleary Gottleib – told bankruptcy court Judge Sean H. Lane at a hearing on Monday they expect to reach an agreement with the creditors by the end of the week.
“We have a timeline and an approach to get through this case as quickly as possible,” Genesis attorney Sean O’Neal told the judge. “We really want to avoid getting involved in a prolonged case with litigation that effectively destroys value that would otherwise be available for the creditors.”
Another lawyer for Genesis, Jane VanLare, told the court that one thing the crypto lender is considering is a sale of itself to generate funds to pay back creditors.
“We do intend to conduct a marketing and sale process and/or raise additional capital,” VanLare said. “If the process does not result in the sale of a business, the equity interest in GGH, which is the Holdco entity, will be distributed to the debtors’ creditors.”
According to a declaration filed by Genesis interim CEO Derar Islim, the company has more than $5 billion in liabilities – a sum considerably larger than its assets which, according to a presentation to the court on Monday, include approximately $150 million in unencumbered cash, $500 million in digital assets, $385 million in brokerage accounts and $505 million in outstanding loans to third parties. Also among the assets are large sums owed by its parent company, Digital Currency Group (DCG) – a $575 million loan maturing in May and a $1.1 billion promissory note due in 2032.
DCG is also the parent company of CoinDesk.
The next hearing will be held in mid-February.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.