A lawyer representing Genesis is hopeful of settling problems with creditors by the end of the week. The company may emerge from bankruptcy procedures in around four months.
According to a report by Reuters, Genesis’ attorney Sean O’Neal made the statements at an initial hearing on January 23 in the U.S. Bankruptcy Court for the NY Southern District.
In addition, he said that Genesis had “some degree of confidence” that it would settle disagreements with creditors by the end of the week and that, if necessary, it would ask the court to appoint a mediator.
However, he stated:
“From where I am seated right now, I do not believe that we will need the services of a mediator. I like to remain positive on things.”
Genesis’ attorney Sean O’Neal
Genesis selling to counter troubled times
Genesis also announced that it would sell its assets via an auction to emerge from bankruptcy on May 19, less than four months from now.
It claimed assets and liabilities totaling slightly over $5 billion and at least $3.4 billion in debt owed to over 100,000 creditors. Users of a yield-bearing product managed by Genesis called “Earn” that was traded on the Gemini market were adversely affected by the withdrawal suspension that occurred the previous year.
The amount owing to Gemini, Genesis’ biggest creditor, is close to $766 million.
The business’s parent company, Digital Currency Group (DCG), was its biggest creditor. DCG owes Genesis around $1.65 billion total, which includes $575 million in loans that are due in May and a $1.1 billion promissory note that is due in ten years. These loans saw DCG engage in talks of selling its entity CoinDesk.
Even though DCG is experiencing financial difficulties, the company was not included in the bankruptcy. In a similar vein, the Genesis firms that handle derivatives, spot trading, broker-dealer activities, and custody are not a part of the proceedings and are, according to Genesis, continuing to operate normally.
What happened at Genesis
On Jan. 19, Genesis filed its bankruptcy petition under Chapter 11. At that time, it had already devised a plan for its reorganization and a strategy for pursuing a sale, capital raising, and an equitization transaction. The company was hoping it would emerge under new ownership.
The insolvency comes after almost two months, in November 2022, when Genesis temporarily halted withdrawals, claiming market instability induced by the collapse of the crypto exchange FTX.
Several “first-day” motions, which are common in bankruptcy proceedings, were granted to Genesis by Judge Sean Lane. One of these motions includes permission for the company to pay its workers and suppliers.
In addition, Genesis did not have to divulge the identities of its customers on the list of its creditors, according to Lane, who cited privacy concerns. Lane also advised that the lender warn consumers about being targeted by phishing schemes if the identities are ever made public.