The bankruptcy hearing for embattled crypto lender Genesis commences today at a New York Southern District court.
According to court filings, the first hearing for the bankruptcy case of crypto lender Genesis Capital will occur on January 23rd. The documents state that a judge of the US Bankruptcy Court for the Southern District of New York will preside over the case.
Genesis Hearing Breakdown
As the first step in Genesis’ bankruptcy hearing, the court will deliberate a number of decisions. These include whether to accept the requested Chapter 11 relief by Genesis Global Holdco and two of its lending business subsidiaries. These business subsidiaries, collectively known as Genesis Capital, are Genesis Global Capital and Genesis Asia Pacific.
The companies also requested a joint administration of the cases. Under the dictates of Chapter 11 bankruptcy, companies can propose reorganization plans to creditors while continuing business operations.
The United States Trustee would appoint a committee for unsecured creditors as part of the bankruptcy proceedings. This committee would also have the right to demand that the affected companies be consulted and apprised before making important decisions. In addition, the same due consultation process also applies to the said companies to participate in any reorganization plans. According to the court filings, the committee selection usually comprises twenty of the largest unsolicited creditors.
The Bankruptcy
Genesis filed for bankruptcy protection on January 19th, citing liabilities of up to $10 billion. The crypto lender’s insolvency came amid the latest FTX-fueled contagion in the crypto space. FTX went down in early November with around $175 million of Genesis’ crypto investment which hit the crypto lender hard. A few days after the Bahamian crypto exchange’s collapse, Genesis Global Capital suspended withdrawals on its platform. At the time, the company intimated the next steps it would take following the withdrawal suspension, saying:
“We have hired the best advisors in the industry to explore all possible options. Next week, we will deliver a plan for the lending business. We’re working tirelessly to identify the best solutions for the lending business, including, among other things, sourcing new liquidity.”
Despite its January 2023 bankruptcy filing, two of Genesis’ subsidiaries remained unaffected. Still operating, as usual, are Genesis’ outfit offering derivatives and custody services as well as its Global Trading division. Commenting on a likely headway for Genesis amid its insolvency crisis, Paul Aronzon, an independent director at the company, explained:
“We have crafted a deliberate process and roadmap through which we believe we can reach the best solution for clients and other stakeholders. We look forward to advancing our dialogue with DCG and our creditors’ advisors as we seek to implement a path to maximize value and provide the best opportunity for our business to emerge well-positioned for the future.”
Genesis also said that it expects to have adequate funds left to repay its unstructured creditors at the end of the restructuring process. Furthermore, the company’s Chapter 11 plan also seeks a global resolution of all claims. In addition, Genesis also looks to create a trust that will distribute assets to creditors.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
Source: https://www.coinspeaker.com/genesis-bankruptcy-first-hearing/