Digital Currency Group (DCG) has reached an agreement with the creditors of its cryptocurrency lending firm, Genesis. As per court documents submitted on August 29, 2023, if the court approves the agreement, unsecured creditors could expect to recover between 70% and 90% of the owed amount in terms of USD.
Under this agreement, DCG will acquire a new debt facility with a partial repayment plan to fulfil its existing obligations to creditors. These obligations comprise $630 million in unsecured loans that were supposed to be repaid by May 2023 and an unsecured promissory note of $1.1 billion due in 2032. The new debt facilities consist of a first-lien facility of $328.8 million with a two-year term and a second-lien facility of $830 million with a maturity period of seven years.
The agreement also outlines potential recovery percentages ranging from 65% to 90%, depending on the specific type of digital asset and its denomination.
Genesis was one of many crypto lending firms affected by the severe downturn of the 2022 bear market, which ultimately led to its declaration of bankruptcy. The lender halted withdrawals in November 2022, citing market turbulence caused by the collapse of the FTX crypto exchange. The company explained that this incident resulted in an unusually high number of withdrawal requests, exceeding its available funds.
With debts surpassing $3.5 billion owed to its top 50 creditors, well-known names on the list included firms like Gemini and VanEck’s New Finance Income Fund.
In May 2023, Gemini considered granting forbearance to DCG after they missed a repayment of $630 million. This agreement aimed to temporarily ease the situation by either reducing or pausing mortgage payments, contingent on DCG’s commitment to negotiating an agreeable plan.
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