The lenders of bankrupt cryptocurrency lender Genesis are expressing dissatisfaction with the latest settlement agreement reached with Digital Currency Group (DCG) and other parties. In an in-principle agreement, DCG proposed U.S. dollar recoveries of 70% to 90% for Genesis’ unsecured creditors and debtors. However, the lenders, represented by Brian Rosen and Jordan Sazant, responded by stating that the agreement is “wholly insufficient.”
The ad hoc group of Genesis Global Capital (GGC) lenders made their response to a public bankruptcy plan update on August 29th. They emphasized that neither the group nor the Gemini exchange supports the in-principle deal described in the update. The update itself indicated that although the mediation had ended, constructive discussions with the ad hoc group and Gemini were still ongoing regarding the agreed-upon deal in principle.
In their response, the lenders stressed that they do not support the proposed agreement, arguing that DCG’s contribution falls short of satisfying the loan amounts. They accused the debtors and unsecured creditors of being unwilling to fulfill their fiduciary obligations to maximize creditor recoveries, suggesting that they are simply trying to move past the issue. The lenders stated:
“The Ad Hoc Group, which includes dozens of creditors for whom these assets are critical, does not have such luxury and cannot support the proposed terms of the plan update which permit DCG to walk away untouched and, in fact, paying less than already committed.”
Furthermore, the lenders contended that DCG should not receive non-consensual third-party releases, which release non-debtor parties from liability without the consent of all potential claimholders. They accused the debtors and unsecured creditors of improperly causing the release of third-party claims against DCG and its related parties.
In terms of the proposed agreement, the lenders expressed dissatisfaction with the contribution from DCG, stating that it does not constitute a substantial contribution of assets deserving of releases from the estate claims or third-party creditor claims. The lenders highlighted that instead of receiving the $630 million that was due three months ago, DCG will only be paying $275 million now and will pay the remaining $328.8 million in two years.
Genesis, along with other cryptocurrency lending firms, has been severely affected by the crypto winter experienced in 2022. The company filed for bankruptcy in January 2023 after suspending withdrawals during a liquidity crisis in November 2022. Genesis reportedly owed over $3.5 billion to its top 50 creditors, including Gemini.
It remains to be seen how the disagreement between the lenders and DCG will be resolved, but it is clear that the lenders are not satisfied with the proposed agreement. They believe that the proposed terms do not adequately address their claims and obligations and are pushing for a better resolution that maximizes creditor recoveries.
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