Bankrupt cryptocurrency lender Genesis Global Holdco LLC sued its parent, Digital Currency Group, seeking to recover about $620 million in outstanding loans despite ongoing settlement talks.
(Bloomberg) — Bankrupt cryptocurrency lender Genesis Global Holdco LLC sued its parent, Digital Currency Group, seeking to recover about $620 million in outstanding loans despite ongoing settlement talks.
Genesis sued Barry Silbert’s DCG and DCG International Investments Ltd. on Wednesday in New York bankruptcy court but asserted that the companies will keep discussing a potential deal that could end the dispute. The lawsuits were filed after Genesis unveiled a $1.4 billion debt repayment plan backed by some of its customers but which isn’t supported by other key creditors.
“Genesis has agreed to stay the turnover action so that we can move forward with documenting the deal in principle that was reached with Genesis, the UCC, and DCG,” a spokesperson for DCG said in an emailed statement.
DCG will begin repaying the loans after a standstill agreement is filed with the bankruptcy court, the spokesperson said.
The lawsuits concern loans to DCG that Genesis says matured in May. The outstanding debt includes a $500 million loan to DCG and loan to DCGI comprised of about 4,550 Bitcoin, according to the lawsuits. Genesis is also seeking to recover accrued interest and late fees.
The complaint comes after months of court-ordered mediation involving Genesis, its key creditors and DCG. Gemini filed Chapter 11 in January, following several other large crypto firms into bankruptcy.
Last month, Genesis unveiled a proposed restructuring deal that could result in its unsecured creditors recovering as much as 90%. But before Genesis can proceed with the proposal, it will likely need to gain support from key holdouts including crypto firm Gemini Trust Co.
DCG said at the time the restructuring deal provides a framework to resolve outstanding claims in Genesis’ Chapter 11 case and would provide its creditors with a significant recovery.
The bankruptcy is Genesis Global Holdco, LLC, 23-10063, US Bankruptcy Court, Southern District of New York (Manhattan).
–With assistance from Steven Church.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.