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Lawyers for Genesis and Its Creditors Are ‘Optimistic’ for a Quick Resolution to Bankruptcy Woes

At Monday’s First Day hearing, attorneys from both parties praised the brokerage’s “round-the-clock” efforts to address its disagreements with its creditors.

Genesis Global’s lawyers told a federal bankruptcy court in New York City on Monday that they’ve been working “around the clock” for the past two months with creditors’ representatives and the U.S. Trustee’s Office to reach a “consensual resolution” with the company’s creditors.

Genesis’ lending arm ceased withdrawals on November 18, 2022, following what its lawyers described as a “run on the bank” in the aftermath of FTX’s bankruptcy earlier that month. Genesis Global Holdco, the parent company of Genesis Global Capital, and two of its subsidiaries, Genesis Asia Pacific (GAP) and Genesis Global Capital (GGC), filed for Chapter 11 bankruptcy protection in New York two months later, on Jan. 19.

At a hearing on Monday, Genesis’ lawyers, from the New York-based law firm Cleary Gottleib, told bankruptcy court Judge Sean H. Lane that they intend to reach an arrangement with the creditors by the end of the week.

“We have a timeframe and a methodology to get this case over with as soon as feasible,” Genesis attorney Sean O’Neal told the judge. “We definitely want to avoid becoming involved in a long-running case with litigation that effectively eliminates assets that might otherwise be available to creditors.”

Jane VanLare, another Genesis lawyer, told the court that the crypto lender is considering selling itself to create funds to repay creditors.

“We intend to perform a marketing and sales procedure as well as raise extra funds,” VanLare stated. “If the procedure does not result in the sale of a business, the debtors’ creditors will receive the equity interest in GGH, which is the Holdco organization.”

According to a declaration filed by Genesis interim CEO Derar Islim, the company has more than $5 billion in liabilities – a sum far greater than its assets, which include approximately $150 million in unencumbered cash, $500 million in digital assets, $385 million in brokerage accounts, and $505 million in outstanding loans to third parties, according to a presentation to the court on Monday. Large sums owed by its parent business, Digital Currency Group (DCG), are also among the assets – a $575 million loan maturing in May and a $1.1 billion promissory note due in 2032.

DCG is also CoinDesk’s parent firm.

The next hearing is scheduled for mid-February.

 

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