The digital currency firm, Genesis Global Holdco, LLC after halting withdrawals on its lending arm in November 2022, has filed a “voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York.” The filing was done along with two of its affiliated debtors, which are two of its lending business subsidiaries (Genesis Global Capital and Genesis Asia Pacific Pte. Ltd.). The filing was done on January 19 2023.
Genesis’s other subsidiaries, Genesis Global Trading and custody business dealing with derivatives and spot trading would continue running their trading operations as the filing did not involve them. Contained in the Genesis Chapter 11 filing, is a proposed roadmap that involves an existing framework via the creation of a trust that will distribute assets to creditors leading to the resolution of global claims.
As stated in the plan, is a two-way process that could lead to new ownership of the business through the pursuit of a sale, capital raise and/or equitization transaction. The capital-raising process would follow a marketing and sale approach, monetizing GGH’s assets and proceeds used to pay creditors. However, if the marketing process does not end in a fund/capital raise or sales, creditors will be paid interest in “Reorganized GGH.”
The above plan is a court-supervised process for the restructuring of the firm and to advance the discussions between Genesis and its parent company (DCG) advisors. The discussion revolves around effective ways to push the Genesis lending business forward and preserve the assets.
An independent special committee from the company’s board will oversee the restructuring process.
The Genesis interim CEO, Derar Islim, said the in-court restructuring would proffer the best possible outcome for Genesis stakeholders. He cited the challenges faced by the firm including the default of 3AC and FTX’s bankruptcy and said Genesis is making progress to remedy liquidity issues.
Further comments on the restructuring process were from an independent director at Genesis, Paul Aronzon. “We have crafted a deliberate process and roadmap through which we believe we can reach the best solution for clients and other stakeholders,” he said. More dialogue will be had with DCG and Genesis creditors’ advisors “to provide the best opportunity for our business to emerge well-positioned for the future,” he added.
Moreover, a date is yet to be set for the hearing of the Debtor’s First Day Motions.
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