Genesis bankruptcy trustee objection delays process

Key Points:

• The Genesis bankruptcy trustee objection asserts that the amended disclosure statement substantially changes the previously submitted plan and fails to provide creditors with the most essential information.
• The trustee emphasizes that the amended disclosure statement fails to disclose what distributions creditors can anticipate under the plan and when they are likely to receive those distributions.

The Genesis bankruptcy trustee objection, filed by the US trustee, challenges the updated disclosure statement for failing to provide adequate information to creditors and for significantly altering the previously submitted plan.

Genesis Bankruptcy Trustee Objection Could Delay Vote on Updated Disclosure Statement

William Harrington, the US trustee under the Department of Justice, argues that the new statement significantly alters the previously submitted plan by the Debtors. The most substantial change relates to the sales plan, as the release language has been eliminated and the Debtors have announced they are no longer pursuing the sale of their assets.

The trustee contends that the revised disclosure statement essentially constitutes a new statement, requiring a longer notice period of 28 days. Harrington asserts that the debtors did not seek court permission for a shorter notice period. It is crucial to provide creditors with an extended timeframe to review and cast their votes on the updated disclosure.

Genesis Bankruptcy Trustee Objection Highlights Lack of Information for Creditors

Harrington further emphasizes that despite its length, the Amended Disclosure Statement does not provide the most pertinent information to creditors: what distributions they can anticipate under the Plan and when they are likely to receive those distributions. Genesis initiated its bankruptcy proceedings in January following the downfall of FTX.

In August, Genesis and Gemini reached a preliminary agreement on a Chapter 11 deal, projected to return 70-90% to unsecured creditors potentially. Recently, Gemini filed a complaint against Genesis, accusing them of owing $1.6 billion in Grayscale Bitcoin Trust (GBTC) shares pledged as collateral for the Gemini Earn program. Legal disputes involving Gemini, Genesis, and Genesis’s parent company, Digital Currency Group, have persisted. These entities were also implicated in a lawsuit by the New York Attorney General in October, alleging that the Gemini Earn program constituted an investment contract.

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