Genesis Reaches Restructuring Deal to Maximize Recoveries for Creditors
Summary of Article:
- Genesis Global Trading has reached a restructuring agreement with its key creditors.
- The deal includes a second lien term loan facility maturing in June 2024.
- Gemini will contribute up to $100 million more for the recovery of Earn users affected by Genesis’ collapse.
Restructuring Agreement Reached with Key Creditors
Genesis, a subsidiary of Digital Currency Group, has reached a restructuring agreement with key creditors according to statements by Cleary Gottlieb attorney Sean O’Neal, representing Genesis. It would see the sale of Genesis Global Trading, amongst other moves designed to “maximize the recoveries to the estate.”
Second Lien Term Loan Facility
Also included in the deal will be restructurings of the debt that Digital Currency Group, who owns Genesis and its entities, owes to Genesis Holdco, which was one of the legal entities that previously filed for Chapter 11 protection. These terms include a second lien term loan facility with a maturation date of June 2024. According to O’Neal, within the plan there will be two tranches, one dominated in U.S. dollars that will pay 11.5% interest and another denominated in bitcoin that will pay 5% interest. O’Neal also detailed that DCG has agreed to issue a type of convertible preferred stock, however the specifics of this issuance are still being determined.
Freezing Withdrawals Due To Contagion From FTX Collapse
The lending arm of Genesis was forced to halt withdrawals in November 2022 after the contagion from the collapse of crypto exchange FTX earlier that same month. The company filed for bankruptcy last month, with its lawyers stating then that they anticipate reaching a deal with creditors by the end of January 2023.