DCG Claims Genesis Bankruptcy Plan Goes Overboard With Customer Payouts
DCG claims Genesis’ bankruptcy plan overcompensates creditors, paying them “hundreds of millions” beyond what’s legally required.
On February 5, DCG lodged a motion opposing the bankruptcy plan, asserting that Genesis, its subsidiary, intends to overpay customers beyond their legal entitlement.
“DCG would support a plan that pays creditors one hundred cents on the dollar, and the estates currently have sufficient assets to do so,” the court filing reads, adding that the debtors have not proposed such a plan.
Instead, DCG argued that the debtors, along with Genesis’ unsecured creditors and lenders, devised a “cramdown plan” that overcompensates unsecured creditors by “hundreds of millions of dollars” beyond their original petition claims.
DCG asserted that this plan unfairly benefits a select group of creditors, violating the Bankruptcy Code.
It also strips DCG of other valuable economic and corporate governance rights further violating the Bankruptcy Code and demonstrating a lack of good faith. DCG cannot support such a plan, and the court should not approve it.
In its efforts to liquidate $1.6 billion in assets, Genesis faced challenges, including unresolved disputes with DCG and its former partner, Gemini.
Genesis, like many crypto lending firms, faced hardships during the 2022 bear market. It filed for bankruptcy in Jan 2023 after a liquidity crisis and owed over $3.5 billion to top creditors, including Gemini.
On Jan 31, 2024, Genesis settled with the SEC for $21 million. Its legal team proposed a Feb 14 hearing to include this settlement in its bankruptcy proceedings.
In November 2023, Genesis announced a deal where DCG would settle its $324.5 million loans by April 2024, aiming to resolve a lawsuit seeking repayment of overdue loans worth approximately $620 million filed against DCG in September.
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