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Digital Currency Group (DCG), a prominent venture capital firm within the cryptocurrency sector, has reached a preliminary agreement with the creditors of its crypto lending subsidiary, Genesis.
A court document released on Aug. 29 indicates that the anticipated recoveries in U.S. dollar terms could range from 70% to 90% for unsecured creditors, contingent upon the approval of the revised plan.
The revised plan may lead to a recovery of 65% to 90% on an in-kind basis, depending on the type of digital asset, as noted in the filing.
Overview of the preliminary agreement between DCG, debtors, and creditors. Source: Kroll.com
"DCG is satisfied to have reached a preliminary agreement with Genesis and the Unsecured Creditors Committee, which will establish a framework for a thorough resolution of the claims in the Genesis Chapter 11 Cases and a route to substantial recovery for creditors," the firm stated in a communication to Cointelegraph. The preliminary agreement will be formalized and presented to the bankruptcy court for final approval in relation to the confirmation of a chapter 11 plan, the statement added.
To address its current obligations to debtors — which include $630 million in unsecured loans due in May 2023 and $1.1 billion under an unsecured promissory note maturing in 2032 — DCG will also engage in new debt facilities and a partial repayment agreement. The debts consist of a $328.8 million first-lien facility with a two-year term and an $830 million second-lien facility with a seven-year term.
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DCG will also disburse $275 million in installments prior to the effective date of the plan under the partial repayment agreement, as noted in the filing.
Genesis is among several crypto lending companies impacted by the significant bear market of 2022, filing for bankruptcy in January 2023. The firm owed over $3.5 billion to its top 50 creditors, including companies such as Gemini and VanEck’s New Finance Income Fund.
As previously reported, Genesis halted withdrawals in mid-November 2022, citing unprecedented market instability linked to the collapse of the FTX crypto exchange. The company asserted that this incident prompted an “abnormal” volume of withdrawals that surpassed its liquidity.
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