Last Updated: 20 January 2023
It had been in the air for a long time, but now the bullet has been fired. Lender Genesis filed for so-called Chapter 11 proceedings on Thursday. That is a kind of moratorium on payments. The restructuring process is set to begin.
In a press release, the Digital Currency Group (DCG) subsidiary writes the following: “A restructuring offers the most effective way to preserve assets and create the best possible outcome for all Genesis stakeholders.”
The company says it has more than $150 million in cash on hand. This would be “sufficient liquidity” to fund the restructuring.
BREAKING: Digital Currency Group's Genesis Global files for bankruptcy protection https://t.co/lED5ivhmRA
— The Block (@TheBlock__) January 20, 2023
The Chapter 11 petition has been filed in the Southern District of New York. It would involve Genesis Global (the holding company) and its two lending subsidiaries Genesis Global Capital and Genesis Asia Pacific. These two parties are well known in the market for its lending structures.
In the statement, Genesis writes that it was very much affected by the collapse of Three Arrows Capital and the malaise at FTX.
The documents list the major creditors. The bulk are unnamed and there are no known names among the named creditors. Yesterday, Bitvavo already reacted to today’s news. They previously refused a deal of some 70% of their assets. Bitvavo aims to recover not part, but the full 280 million euros from Genesis.
A spokesperson clarified that Genesis Global Trading and other subsidiaries will continue to operate as normal. So although the names are very similar, these are different entities.
Recently, parent company Digital Currency Group (DCG) clashed with Gemini and Dutch exchange Bitvavo over interest rate products. Thus, hundreds of millions of dollars fall short of repaying customer funds.
Gemini quit its Earn programme and wanted DCG’s CEO to step down, while Bitvavo turned down a €280 million proposal.