Genesis Global Holdco LLC Seeks Quick Bankruptcy Exit with Restructuring Plan
Genesis Global Holdco LLC, a crypto lender, wants to get out of bankruptcy court as quickly as possible after going bankrupt because of a long selloff of digital assets.
Late Thursday night in New York, the business filed for Chapter 11 bankruptcy. It was backed by Barry Silbert’s Digital Currency Group.
According to bankruptcy papers, it asked the court for protection and made a plan to get back on its feet by May 19.
Genesis Restructuring Plan: Sell the Company And Pay Creditors
A statement says that Genesis will try to sell itself and then split the money with its creditors.
If it is not possible to sell, the creditors will get shares in the restructured company.
The proposal is not final yet, and it needs the approval of a federal court as well as the help of any creditors who will be affected.
Gemini Trust Company, a cryptocurrency company started by Tyler and Cameron Winklevoss, told Silbert to give back $900 million of his client’s money that had been stuck since Genesis ran into problems in November.
If it works, the four-month reorganization would be much faster than what failed crypto lenders like Voyager Digital Ltd. and Celsius Network LLC had to go through.
Court documents show that Origin is looking for bids on all of its assets by April 14.
Creditors can also get their money back from DCG.
In a court filing, Paul Aronzon, a member of Genesis’s board of directors, said that Genesis had hired a former federal prosecutor to investigate $850 million in loans to DCG businesses.
Aronzon said that the company’s reorganization plan says that any money that is recovered from Genesis litigation will be used to pay back creditors.
Genesis Global’s Financial Struggles Before Bankruptcy
Since Three Arrows Capital went out of business suddenly a year ago, DCG has been having trouble making ends meet.
A few months later, FTX, where Genesis kept some of its cash, began to burst, and Genesis was hit by a wave of claims to get out of debt.
In court documents, Derar Islam, the temporary CEO of Genesis, said, “As the FTX businesses started to go downhill, the company got requests for loans totaling about $827 million.”
He also said that the “almost bank run” had a big effect on the company’s cash on hand.
The Genesis lending arm stopped letting people take money out in November, not long after FTX filed for bankruptcy.
According to the statement, the origination has stopped making new loans and taking back loans.
Genesis Global Trading and other companies that help it with derivatives, spot trading, and custody are not included in the bankruptcy case.
As of November 30, including intercompany balances, the Chapter 11 corporations owed more than $5 billion, according to documents from the court.
Genesis will have to talk to its creditors, such as Winklevoss’s Gemini Trust, to reorganize.
With a $150 million claim, Babel Finance is the third biggest creditor of Genesis.
Silbert is in a fight with Cameron Winklevoss of Gemini, whose clients have lost access to the cash they had stored with Origin. This fight is getting worse.
After filing for bankruptcy, the Winklevoss twins tweeted, “Until Barry and DCG wake up and give creditors a fair solution, we will sue Barry and DCG right away.”
The warning comes after Winklevoss said earlier this month that Silbert often gave false information about Genesis’s finances and asked that Silbert be replaced as CEO.
The DCG has said that Winklevoss’s claims are just an attempt to get attention and that the accusations of wrongdoing are not true.
“DCG will keep talking with Origin and its creditors in a positive way to find a solution that works for everyone,” the company said in an email on Friday.
The case number is 23-10063 and it is between Genesis Global Holdco LLC and the United States Bankruptcy Court for the Southern District of New York (Manhattan).