3 - 5 minute read
Crypto lender Genesis and its key creditor group have agreed to a 30-day mediation process in an attempt to move forward with a final restructuring plan, though one company is expressing “frustration” over the pace of progress. The proposed bankruptcy exit plan was submitted in February and expected creditors to recover 80% of lost funds. However, the plan is backed by DCG, Genesis’ parent company, while the Unsecured Creditors Committee (UCC) opposed the restructuring deal wanting better terms.
Gemini, another company involved in the mediation process, announced on Twitter that it is “supportive” of mediation and working with the parties to reach a resolution as soon as possible. However, it also expressed frustration regarding “the pace of progress among the parties and the need for urgency.”
Genesis filed for Chapter 11 bankruptcy in a New York District Court in January, estimating its liabilities were between $1 billion and $10 billion with assets in the same range. The crypto lender was one of several firms hit by liquidity issues in the wake of the collapse of FTX.
1/ Earn update: This past week, Genesis, Digital Currency Group (DCG), the Unsecured Creditors Committee (UCC), the Creditor Committee, and Gemini agreed to start a 30-day mediation process to drive to a final resolution as soon as possible.
— Gemini (@Gemini) April 30, 2023
According to Sean O’Neal, a lawyer for Genesis, the company hopes to have two mediation sessions before May 8 with the deal’s final terms made public after the mediation period. A mediator will need to be selected by Genesis and the UCC. Potential mediators have started to be contacted, and the process will be outlined to the court once one is selected.
DCG, Genesis’ parent company, expressed its thoughts on the matter when Genesis filed its motion for mediation. The crypto conglomerate said the settlement would “prolong the court process” due to renewed demands and added it was “difficult to understand the rationale” of Genesis creditors as they had given “limited engagement” since the plan proposed in February.
DCG Statement on Genesis filing Motion for Mediation: pic.twitter.com/pRluUnL49C
— Digital Currency Group (@DCGco) April 25, 2023
The mediation process is significant for the crypto market as it will determine the future of Genesis and its creditors. Traders should keep an eye on the progress of the mediation process as it may impact the price of cryptocurrencies. Moreover, if the mediation process results in a favorable outcome for creditors, it may positively impact the overall crypto market sentiment.
The Bottom Line
The 30-day mediation process between Genesis, its parent company DCG, the UCC, and Gemini is an important development for the crypto market. The proposed bankruptcy exit plan, which expected creditors to recover 80% of lost funds, has been opposed by the UCC, while DCG has backed the plan. Traders should keep an eye on the progress of the mediation process as it may impact the price of cryptocurrencies and the overall market sentiment.
