- The Digital Currency Group (DCG) and Genesis have reached an Agreement in principle with their key creditors.
- The agreement involves equitizing DCG’s infamous $1.2 billion promissory note to Genesis.
- Genesis’ bankrupt units will be sold off as part of the deal.
The Digital Currency Group (DCG) and Genesis announced recently that they had secured an in-principle agreement with the subsidiary’s key creditors, regarding the terms of a restructuring plan. The group of creditors holds or represents more than $2 billion in asserted claims against Genesis Global Capital, the largest being crypto exchange Gemini’s $800 million exposure.
As per Genesis’ press release, the agreement outlines the framework for a global resolution that will maximize value for all Genesis clients and stakeholders. The deal will involve refinancing DCG’s existing 2023 term loans from Genesis with an aggregate value of $526 million. This will subsequently be made available for payment to the creditors.
Furthermore, the parent firm will equitize the infamous $1.2 billion promissory note that was issued to Genesis to cover the latter’s billion-dollar exposure to Three Arrows Capital after its collapse in June last year. The note, which will mature in June 2032, will be exchanged for convertible preferred stock issued by DCG as part of Genesis’ chapter 11 plan.
The agreement will see all Genesis entities be brought under the same holding company, i.e., Genesis Global Holdco. The parent company will contribute its equity interest in Genesis Global Trading for the same. Additionally, Genesis, bankrupt entities, namely its crypto trading arm and its lending unit, will be sold as part of the deal.
According to Gemini President Cameron Winklevoss, the crypto exchange will contribute up to $100 million for its Earn users as part of the agreement in a bid to help them achieve a full recovery. Gemini formed the ad hoc creditors committee with Genesis’ creditors in December last year.
Donut, a crypto yield platform that also happens to be one of Genesis’ creditors, revealed in a tweet recently that the creditors were told to expect capital returns of 80%. “Beyond that number depends on a convertible preferred equity note and ‘realized liquidation prices’ based on DCG/Genesis assets,” the firm said.
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