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Genesis Bankruptcy Case Scheduled for First Hearing

According to court papers, the first hearing in Genesis Capital’s bankruptcy case will be conducted on January 23.

According to court papers, the first hearing in Genesis Capital’s bankruptcy case will be held on January 23 at 2:00 p.m. Eastern Time. The case will be heard by Judge Sean H. Lane of the United States Bankruptcy Court for the Southern District of New York.

Companies in Chapter 11 bankruptcy can offer a restructuring plan to creditors while continuing company operations, according to Mark Pfeiffer, a bankruptcy attorney with law firm Buchanan Ingersoll & Rooney.

The court will decide whether to accept the Chapter 11 relief requested by Genesis Global Holdco and two of its lending business subsidiaries, Genesis Global Capital and Genesis Asia Pacific — collectively known as Genesis Capital — as the first step in the bankruptcy proceedings. The firms also demanded cooperative administration of the proceedings.

As part of the procedures, the United States Trustee will appoint a committee for unsecured creditors. The committee will have the authority to require consultation with the companies before making major decisions or adjustments, as well as to participate in the restructuring plan. According to court papers, the committee is normally composed of twenty of the largest unsecured creditors.

The companies filed for bankruptcy on Jan. 19, citing liabilities of up to $10 billion, more than two months after declaring a $175 million exposure to FTX and liquidity concerns triggered by the crypto exchange’s collapse. Withdrawals from Genesis Global Capital’s platform have been halted since November 16.

According to a news release, the Genesis Chapter 11 plan calls for a global resolution of all claims and the establishment of a trust to distribute assets to creditors. The companies will pursue a “sale, capital raise, and/or an equitization transaction” as part of a “dual track procedure,” allowing their business to “emerge under new ownership.”

Digital Currency Group (DCG), Genesis Capital’s parent company, reportedly denied involvement in the bankruptcy filing, alleging that a special committee of independent directors recommended and agreed to file for Chapter 11 bankruptcy protection. Only Genesis’ loan firms have declared bankruptcy. Genesis Global Trading, as well as Genesis’ spot and derivatives trading company, will continue to operate.

 

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