Bankrupt Genesis Global Receives Court Approval for $3,000,000,000 Payout to Customers
A US bankruptcy court has just greenlighted the liquidation plan of crypto lender Genesis Global to return about $3 billion to its creditors.
In a memorandum decision, Judge Sean Lane says that Genesis’ Chapter 11 liquidation plan is reasonable and has been proposed in good faith.
“The Court finds that the Plan should be confirmed because it satisfies all requirements of applicable law. Broadly speaking, the Plan provides for all of the Debtors’ limited assets to be paid to its unsecured creditors.”
But the decision is not favorable to Genesis parent company Digital Currency Group (DCG), which argued in a motion filed in February that the bankruptcy plan will give greater distribution to certain creditors and leave equity holders with nothing.
In his decision, Lane says that DCG objected to a plan in which it has no economic stake. He says there are “nowhere near enough assets” to allow the venture capital firm to recover from the bankruptcy.
“In overruling DCG’s objection, the Court ultimately concludes that its objection is a result-oriented one based on DCG’s lack of recovery as an equity holder under the Plan. But as discussed below, there are nowhere near enough assets to provide any recovery to DCG in these cases.
The record here clearly establishes that there is not sufficient value in the Debtors’ estates to provide DCG a recovery as equity holder after unsecured creditors are paid. In short, the Debtors are insolvent. Given the size of the creditor claims, DCG is out of the money as an equity holder by billions of dollars, even if the Court valued creditor claims using the method DCG proposes.”
Genesis customer funds have been frozen since November 2022 when the now-bankrupt crypto lender halted withdrawals due to liquidity problems caused by the collapse of crypto hedge fund Three Arrows Capital.
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The post Bankrupt Genesis Global Receives Court Approval for $3,000,000,000 Payout to Customers appeared first on The Daily Hodl.
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Author: Rhodilee Jean Dolor
