A Genesis lawyer believes the company will be able to resolve creditor disagreements before the end of the week, and that it will be able to exit bankruptcy procedures in four months.
A lawyer for the insolvent crypto lending firm Genesis is optimistic that the company will be able to resolve its creditor disputes as soon as this week, and that it would be able to exit Chapter 11 proceedings by late May.
According to Reuters, Genesis’ lawyer Sean O’Neal made the remarks during an initial hearing in the United States Bankruptcy Court for the Southern District of New York on January 23.
He stated that Genesis had “some degree of confidence” that it would address disagreements with creditors by the end of the week and, if necessary, would seek the court’s appointment of a mediator, but added:
“Sitting here right now, I don’t think we’re going to need a mediator. I’m very much an optimist.”
Genesis declared Chapter 11 bankruptcy on January 19. It already had a restructuring plan in place, as well as a strategy for seeking a “sale, capital raise, and/or an equitization deal” so that it might potentially “emerge under new ownership.”
The insolvency comes nearly two months after Genesis banned withdrawals in November 2022, claiming market instability induced by FTX’s bankruptcy.
Judge Sean Lane granted Genesis a series of “first-day” requests, which are customary in bankruptcy cases, including the ability to pay employees and vendors.
Lane stated that, due to privacy considerations, Genesis did not need to share customer names on its creditor’s list. Lane even advised that if the names are later made public, the lender warn consumers about potential phishing attacks.
Genesis stated it will auction off its assets in order to emerge from bankruptcy in less than four months, on May 19.
It declared slightly over $5 billion in assets and liabilities and owes at least $3.4 billion to over 100,000 creditors. Last year, Genesis’ withdrawal suspension hurt consumers of a yield-bearing product named “Earn” from the Gemini market.
Genesis’ largest creditor, Gemini, is owed roughly $766 million.
Its largest creditor was its parent firm, Digital Currency Group (DCG), which owed Genesis approximately $1.65 billion, including $575 million in loans due in May and a $1.1 promissory note payable in ten years.
Despite the fact that DCG is experiencing financial difficulties, the bankruptcy did not involve DCG. Similarly, Genesis firms managing derivatives, spot trading, broker-dealer, and custody are not included in the proceedings and, according to Genesis, are continuing operations.
