Bankrupt Crypto Lender Genesis: Creditors will Enter Mediation
(Bloomberg) — Bankrupt cryptocurrency lender Genesis Global Holdco LLC and a key creditor group have agreed to meet with a mediator in an effort to save a proposed bankruptcy exit plan backed by the company’s parent, Digital Currency Group.
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Genesis lawyer Sean O’Neal said Friday that the crypto lender has agreed to a 30-day mediation period including its committee of unsecured creditors, which has opposed the proposed restructuring deal. Genesis is hoping to hold two “substantive” mediation sessions before May 8, O’Neal said. The final terms of the agreement will be made public once mediation ends, O’Neal said.
Genesis and committee will still need to select a mediator, who will oversee discussions. O’Neal told Judge Sean Lane that they have started reaching out to a list of mediators and will submit an order to the court outlining the process once a mediator is picked.
The creditors committee is opposed to Genesis’s current restructuring proposal and is seeking better terms, Bloomberg News has reported. Philip Abelson, a lawyer representing the creditors committee, said his client’s position hasn’t changed “and we do not want our participation in the mediation to be misconstrued.”
Still, Judge Lane called news that the parties had agreed to mediation “significant progress.”
“Obviously folks are doing a lot of work, heavy lifting to get things moving along,” Lane said.
Genesis Global Holdco’s lawyers submitted a term sheet in February outlining a settlement with creditors that suggests DCG would shoulder a major burden in the bankrupt crypto lender’s restructuring. The agreement was initially supported by creditors who had more than two billion dollars in claims against Genesis. This included Gemini Trust Co.
Genesis’s lending arm filed Chapter 11 protection in January following the collapse of crypto exchange FTX, which prompted a wave of “unprecedented” withdrawals that prompted Genesis affiliates to pause lending and borrowing.
The next bankruptcy court appearance is on May 4, 2019.
Adds Lane’s quote in the sixth paragraph, and the court date in the final paragraph. The final paragraph of a previous version of this article was corrected to correctly spell Genesis.
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