Digital Currency Group (DCG) & Genesis’ Significant Agreement
Digital Currency Group (DCG), a trailblazer in the cryptocurrency venture world, has outlined a potentially game-changing agreement with the creditors of its struggling subsidiary, Genesis.
Recoveries for Unsecured Creditors
A recent court filing, dated August 29, highlighted that unsecured creditors of Genesis might be looking at a recovery rate between 70% and 90%, pending approval of the newly amended plan. On an in-kind basis, this recovery rate could oscillate between 65% and 90%, contingent on the digital asset’s denomination.
The Way Forward for Debt Settlement
In an ambitious effort to clear its existing financial obligations, including a whopping $630 million in unsecured loans maturing in May 2023 and a staggering $1.1 billion under a promissory note due in 2032, DCG is eyeing new debt facilities and a structured partial repayment scheme. This strategy encompasses a first-lien facility worth $328.8 million with a maturity over two years and a second-lien facility of $830 million spread over seven years.
Moreover, DCG has expressed its intention to clear $275 million in installments ahead of the plan’s designated effective date.
Genesis’ Downward Spiral
Genesis, like several of its counterparts, fell victim to the formidable crypto bear market of 2022, eventually resorting to bankruptcy filing by January 2023. The magnitude of its debt can be gauged from the hefty $3.5 billion it owes to its top-tier creditors, including notable names like Gemini and the VanEck New Finance Income Fund.
In a preceding update, the embattled company had temporarily halted withdrawals in November 2022, attributing the move to the unpredicted market disruptions caused by the implosion of the FTX crypto exchange. This chain of events led Genesis to confront a surge in withdrawal requests, which severely outstripped its liquid assets.