Crypto Lender Genesis Files For Chapter 11 Bankruptcy In US - Company

Digital currency prime brokerage Genesis Global Holdco, LLC and two of its lending subsidiaries have filed for Chapter 11 bankruptcy in New York, according to a release on Friday

WASHINGTON (UrduPoint News / Sputnik - 20th January, 2023) Digital Currency prime brokerage Genesis Global Holdco, LLC and two of its lending subsidiaries have filed for Chapter 11 bankruptcy in New York, according to a release on Friday.

The company's liquidity issues were caused by "the recent extraordinary challenges" in the industry, including the default of Three Arrows Capital and the bankruptcy of crypto exchange FTX, Genesis Interim CEO Derar Islim said in the release.

"Genesis Global Holdco, LLC and two of its lending business subsidiaries, Genesis Global Capital, LLC and Genesis Asia Pacific Pte. Ltd., filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York," the release stated.

It added that "Genesis's other subsidiaries involved in the derivatives and spot trading and custody businesses and Genesis Global Trading are not included in the filing and continue client trading operations."

As part of its Chapter 11 filing, Genesis has proposed a plan for a global resolution of all claims through the creation of a trust that will distribute assets to creditors.

The plan suggests a dual track process in pursuit of a sale, capital raise, and/or equitization transaction that would enable the business to emerge under new ownership.

The company will initiate a marketing and sale process to monetize GGH's assets or otherwise raise capital, using the transaction proceeds to pay creditors. If the marketing process does not result in a sale or capital raise, creditors will receive ownership interests in Reorganized GGH.

All aspects of the restructuring process will be overseen by an independent special committee of the company's board of directors.

Genesis has more than $150 million in cash on hand to support its ongoing business operations and facilitate the restructuring process. The company has filed a number of customary "first day" motions with the court to enable day-to-day operations to continue in the normal course. Court approval for these requests is expected in the coming days.

Redemptions and new loan originations in the lending business remain suspended, and claims will be addressed through the Chapter 11 process.