Proposed Restructuring Plan to Ensure 80 Percent Recovery for Genesis Creditors

A creditor of Genesis has announced that the proposed restructuring plan between Genesis, Digital Currency Group, and creditors would result in creditors receiving at least 80% of their funds back.

On February 6th, Genesis Global reported reaching a preliminary agreement with Digital Currency Group and its creditors, which would result in the sale of its crypto trading and market-making arm as part of the restructuring process.

As part of the agreement, Digital Currency Group would contribute its share of equity in Genesis Global Trading, Genesis's brokerage subsidiary business, to Genesis Global Holdco, the holding company for Genesis. This transaction would consolidate all Genesis-related entities under the same holding company.

Digital Currency Group would exchange a $1.1 billion promissory note due in 2032 for convertible preferred stock and refinance its existing 2023 term loans worth $526 million, making them payable to creditors.

According to a user update from Genesis creditor Donut on February 6th, the new restructuring plan between Genesis, Digital Currency Group, and creditors, which requires court approval, will see creditors recover at least 80 cents per dollar deposited.

The recovery rate could potentially reach $1.00, however, this will depend on various factors such as the equity note, the prices at which assets are sold, and any additional costs associated with the remainder of the bankruptcy proceedings. In addition, crypto exchange Gemini will be contributing $100 million for its Gemini Earn users who have funds frozen with Genesis.

As part of the restructuring effort, Genesis Global Trading, Genesis's brokerage subsidiary business, is expected to be put up for sale after the completion of these transactions.

It is worth noting that Genesis is undergoing a reorganization as a result of its Chapter 11 bankruptcy case which was initiated due to a liquidity crisis caused by the failure of crypto exchange FTX in November.

The company's subsidiary, Genesis Global Trading, was not part of the initial Chapter 11 filing, with Genesis Global Holdco stating that client trading activities would continue.

During a bankruptcy hearing in January, Genesis's attorneys indicated that the firm aimed to swiftly resolve its creditor disputes and was hopeful to emerge from the Chapter 11 proceedings by the end of May.