Genesis reaches preliminary restructuring agreement with creditors, reports say

The DCG holding company and its bankrupt Genesis subsidiaries have reached a preliminary agreement on the terms of a restructuring plan with major creditors. CoinDesk reports.

According to the publication’s sources, the arrangements envisage a gradual write-down of Genesis’s loan book and the sale of insolvent entities.

The package also contemplates refinancing the outstanding loans DCG extended to its subsidiary, amounting to roughly $500 million in fiat and about $100 million in Bitcoin.

The agreement includes the recognition of a 10-year, $1.1 billion note issued by the Genesis parent company as equity. Financial support for the group’s lending business became necessary following the June 2022 bankruptcy of the cryptocurrency Three Arrows Capital hedge fund.

A creditors’ group representing both corporate and individual creditors has been negotiating on behalf of those claimants, with total claims of around $2.4 billion.

The proposed deal will be presented to other creditors, including hundreds of thousands of Gemini Earn product clients, a CoinDesk source said.

On November 16, 2022, the crypto-lending platform Genesis Global Capital froze withdrawals and the issuance of new loans. The firm cited an upswing in client requests after the collapse of FTX.

In January, Genesis Global Holdco and its subsidiaries Genesis Asia Pacific and Genesis Global Capital filed for bankruptcy. Reports suggest their liabilities exceed $3 billion.

Earlier it emerged that DCG is considering selling its stake in CoinDesk amid financial problems at other group entities.