Genesis bankruptcy plan revised for orderly wind down and asset liquidation

Crypto lender Genesis Global Capital filed an amended Chapter 11 bankruptcy plan on Wednesday, Oct. 25, to resolve outstanding claims and interests of creditors.

The amended plan results from extensive negotiations between Genesis, the Official Committee of Unsecured Creditors, crypto exchange Gemini, and the Ad Hoc Group of Genesis Lenders. While substantial agreement has been reached on key issues, discussions remain ongoing, and all parties reserve their rights according to the filing.

Amended Genesis bankruptcy plan.

The amended plan categorizes creditor claims against Genesis Global Holdco into 10 classes, with 4 classes of crypto-denominated unsecured claims divided by currency. Fiat, Bitcoin, Ethereum, and alternative crypto-denominated unsecured claims would be impaired, entitling them to vote on the plan.

Meanwhile, subordinated claims, government penalty claims, and interests are deemed to reject the plan without voting rights. The differentiated treatment of crypto asset claims recognizes the diverging interests of Genesis creditors.

Under the proposed plan, Genesis entities would be wound down by newly established “Wind-Down Debtors” overseen by a Plan Administrator Officer, New Board, and Wind-Down Oversight Committee. Wind-down debtors would liquidate assets to distribute to creditors per agreed principles.

Segregated accounts would be set up for plan distributions, including claims, professional fees, litigation, and wind-down reserves. Intercompany claims between Genesis Global Capital and Genesis Asia Pacific would be settled to equalize creditor recoveries.

Corporate governance changes are also outlined, including replacing entity boards with the New Board. Causes of action would be preserved for potential pursuit by the Wind-Down Debtors.

The plan incorporates a settlement of intercompany claims between Genesis Global Capital and Genesis Global Holdco, granting proceeds from monetizing Genesis trading platform assets to the former.

Genesis Chapter 11 bankruptcy.

Genesis filed for Chapter 11 protection in Nov. 2022, citing extreme market dislocation and loss of industry confidence following the collapse of crypto exchange FTX. The proposed plan aims to resolve its bankruptcy in an orderly fashion.

Cryptocurrency lenders like Genesis experienced difficulties in 2022 as crypto market prices declined sharply. Fellow lender Celsius Network also filed for bankruptcy last year.

Genesis creditors have divergent interests based on whether claims are fiat, Bitcoin, or alternative cryptocurrency denominated. Ongoing discussions likely center on balancing these competing priorities.

The successful resolution of the Genesis bankruptcy has broader implications for the cryptocurrency industry. An organized wind-down resulting in reasonable creditor recoveries could help restore some lost confidence.

However, negotiations remain fluid, and final terms are still undecided. The amended plan represents progress but not a definitive agreement between the parties.

The Genesis bankruptcy filing and reorganization plan represent the fallout from the 2022 “crypto winter” that saw both prices and industry sentiment plummet.

Source