DCG Reaches Crucial In-Principle Deal With Genesis Creditors, Recoveries Could Be Up to 90%

The plan could result in recoveries of 70% to 90% in USD equivalent for unsecured creditors and 65% to 90% recovery on an in-kind basis.

AccessTimeIconAug 29, 2023 at 6:15 a.m. UTC
Updated Aug 29, 2023 at 5:18 p.m. UTC

Digital Currency Group (DCG) has reached an in-principle deal with Genesis creditors to resolve the claims brought up in Genesis' bankruptcy, according to a court filing on Tuesday.

The plan could result in the recoveries of 70%-90% in USD equivalent for unsecured creditors and 65%-90% recovery on an in-kind basis depending on the denomination of the digital asset. All the estimated recoveries are subject to market pricing and definitive documentation.

The lending arm of Genesis halted withdrawals in November of last year in the wake of FTX's collapse, and filed for bankruptcy protection at the start of 2023. Last month, DCG said in a letter to shareholders it was close to reaching an in-principle agreement to resolve the claims.

DCG is also the parent company of CoinDesk.

"The agreement in principle will be documented and submitted to the Bankruptcy Court for final approval in connection with confirmation of a chapter 11 plan. We look forward to executing on this important milestone and for Genesis to begin its distributions to creditors," DCG said in a statement.

To satisfy DCG's existing liabilities of approximately $630 million in unsecured loans due in May 2023 and $1.1 billion under an unsecured promissory note due in 2032, a new partial repayment agreement was agreed on. The repayment would be done in two tranches – approximately $328.8 million with a two-year maturity and $830 million with a 7-year maturity.

DCG would also pay $275 million in four installments after the date of the partial repayment agreement on account of the May 2023 maturities.

Genesis Global Holdco, LLC and its subsidiaries filed for bankruptcy with the U.S. Bankruptcy Court for the Southern District of New York in January 2023. The filings revealed Genesis owed over $3.5 billion to its top 50 creditors, including crypto exchange Gemini, trading giant Cumberland, Mirana, MoonAlpha Finance and VanEck’s New Finance Income Fund.

UPDATE (Aug. 29, 06:25 UTC): Updates headline and image. Adds context in the last paragraph.

UPDATE (Aug. 29, 11:15 UTC): Adds statement from DCG.

Edited by Parikshit Mishra.


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Amitoj Singh

Amitoj Singh is a CoinDesk reporter.