Digital Currency Group (DCG) And Genesis Reach Initial Deal With Creditors

  • The Digital Currency Group (DCG) and Genesis have reached an in-principle agreement with the conglomerate’s main creditors. 
  • The deal involves the sale of bankrupt Genesis entities and winding down its loan book. 
  • DCG’s controversial $1.1 billion promissory note to Genesis to cover its exposure to 3AC will be equitized as per the agreement. 
  • Genesis’ outstanding loans to its parent firm will be refinanced as per the deal. 

The Digital Currency Group (DCG) and its bankrupt Genesis subsidiaries have reportedly agreed to an in-principle deal regarding the terms of a restructuring plan. According to a report by CoinDesk, a person familiar with the matter revealed that the crypto conglomerate and its distressed subsidiaries reached an agreement with a group of the company’s main creditors. 

Genesis to wind down its loan book as per DCG’s deal

DCG’s deal with its main creditors will wind down Genesis’ loan book. The agreement also entails selling off Genesis’ bankrupt entities. The subsidiary’s bad debts were a contributing factor in the chapter 11 bankruptcy filing of its lending unit last month. 

As per the in-principle agreement, Genesis’ $500 million cash loan and the $100 million worth of BTC to its parent firm will be refinanced. The deal will also involve the “equitization of the infamous 10-year promissory note that DCG gave Genesis in return for failed hedge fund 3AC claims”. The billion promissory note was issued by DCG to its subsidiary to cover its $1.1 billion exposure to defunct crypto hedge fund Three Arrows Capital (3AC). The 10-year promissory note will be due in June 2032. 

The creditor group likely consists of crypto exchange Gemini, who formed an ad-hoc committee with other creditors last year after Genesis suspended withdrawals. The Creditor Committee had roped in Kirkland & Ellis for legal representation in December 2022. This was followed by hiring Houlihan Lokey as the Financial Advisor of the Creditor Committee. As per CoinDesk’s report, both these firms represent the creditor group that is part of the latest agreement. 

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