Genesis Files for Bankruptcy as it Seeks Protection From its Creditors – Which DCG Unit is Next to Fail?
After months of struggling, crypto lending and trading firm Genesis has filed for bankruptcy - but it's not the end of its troubles.
Genesis, a unit of the Digital Currency Group (DCG), said in a press release that Genesis Global Holdco, LLC and two of its lending business subsidiaries, Genesis Global Capital, LLC and Genesis Asia Pacific Pte. Ltd., filed voluntary petitions under Chapter 11 on Thursday in the Southern District of New York, USA.
Genesis’s other subsidiaries and other units that are involved in derivatives and spot trading as well as custody businesses are not part of the bankruptcy filing. These will continue operating.
The announcement said that,
"Genesis has proposed a roadmap to an exit including a Chapter 11 plan (the “plan”) that calls for a framework for a global resolution of all claims through, and the creation of, a trust that will distribute assets to creditors. The plan contemplates a dual track process in pursuit of a sale, capital raise and/or equitization transaction that would enable the business to emerge under new ownership."
It will start a process of marketing and sale to monetize Genesis Global Holdco, it said, and it will start repaying the creditors. If there is no sale or capital raised, creditors will receive ownership interests in a reorganized Genesis Global Holdco.
Per Bloomberg,
"Genesis Global Capital listed the same range, $1 billion to $10 billion, for both assets and liabilities as well as over 100,000 creditors — the top 50 unsecured claims amount to about $3.4 billion."
The company also plans to use $150 million of cash to fund the company in bankruptcy. It is still allowed by Chapter 11 to continue operating as it's trying to repay creditors.
There have been reports about
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