Genesis Lawyers Hopeful Of Swift Resolution In Bankruptcy Process

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Genesis Global Capital has been the latest casualty of the effects of the crypto bear market. The crypto lender recently filed for Chapter 11 bankruptcy. The company’s lawyers have informed a bankruptcy court in New York of working “around the clock” to settle with creditors.

Genesis hopes for a swift resolution in bankruptcy

The lawyers noted that they have been working with the representatives of creditors and the US Trustee Office for the last two months to reach a consensus. The lending unit of Genesis halted withdrawals on November 18 last year because of exposure to FTX. Genesis had funds in FTX before the exchange’s bankruptcy.

Two months after halting withdrawals, Genesis filed for bankruptcy. The bankruptcy filing included two of the lender’s subsidiaries: Genesis Asia Pacific and Genesis Global Capital. Lawyers from the Cleary Gottleib law firm, which is representing Genesis in the bankruptcy proceedings, informed the bankruptcy court judge that they plan to settle by the end of the week.

According to attorney Sean O’Neal, Genesis had come up with a timeline and an approach to assist the lender in getting through the bankruptcy case. O’Neal added that the company did not want prolonged litigation that would impact the value available to the creditors.

Another attorney representing Genesis, Jane VanLare, said the firm was also exploring a potential sale to raise funds needed to repay creditors. She added that if the sale is unsuccessful, the company will explore equity interest in the holding company. This equity would be distributed to support creditors.

The financial woes facing Genesis were triggered by the fall of the crypto hedge fund Three Arrows Capital, to which the lender had loaned funds. The interim CEO of Genesis. Derar Islim estimates that the lender has liabilities of over $5 million.

The company’s liabilities are significantly higher than its assets. Some of the assets that the attorneys mentioned in the Monday court presentation include $150M in cash, $500M in digital assets, $385M in brokerage accounts, and $505M in outstanding loans. Digital Currency Group also owes Genesis a $575M loan that matures in May and a $1.1B promissory note due in nine years.

Genesis woes spill to other crypto firms

The woes facing the Genesis exchange have been witnessed in other crypto firms exposed to the lender. The parent company of Genesis, Digital Currency Group, has announced suspending dividends to save money by reducing expenses.

DCG is also the parent company of CoinDesk. The crypto news site is exploring a partial or full sale of its business. CoinDesk has already hired Lazard investment bankers to explore this sale

Gemini likely had the highest exposure to Genesis because of the Gemini Earn program launched through a partnership between the two companies. Genesis owes Gemini Earn users around $900 million. Gemini recently announced plans to lay off 10% of its workforce. Genesis and Gemini are facing a lawsuit by the US Securities and Exchange Commission (SEC).

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Source: https://insidebitcoins.com/news/genesis-lawyers-hopeful-of-swift-resolution-in-bankruptcy-process