Subset of Genesis creditors disagrees with bankruptcy deal, says DCG
A subset of Genesis Capital creditors is disagreeing with the initial bankruptcy agreement, the company's parent, Digital Currency Group, asserted in a statement Tuesday.
Why it matters: Tuesday's developments will probably lengthen the time it takes to reach a real resolution.
What they're saying: "A group of Genesis Capital's creditors have reneged and raised all new demands," a DCG spokesperson wrote in the statement released via Twitter. "Our understanding is that a subset of creditors have decided to walk away from the prior agreement."
Between the lines: The creditors have the right to disagree with the plan, as it was a nonbinding agreement.
- "The prior agreement ... remained subject to further negotiation and the execution of formal settlement documents," Alan Rosenberg, a partner at law firm Markowitz Ringel Trusty & Hartog, wrote in an email.
- "As a result, I believe the creditor groups are entitled to deviate from the terms outlined in the term sheet — particularly if they are concerned about the overall direction of the case or the viability of the proposed plan."
Details: In February, Genesis reached a preliminary agreement that would, among things, issue DCG stock to creditors.
- Along with Tuesday's statement, Genesis Global filed a motion for the appointment of a mediator with the U.S. Bankrutpcy Court in the Southern District of New York, calling for said mediator to help with resolving the issue.
- In particular, Genesis says it faces pushback on the "amount, form, timing and other terms and conditions of DCG’s contribution to the debtors’ reorganization plan."
Of note: That initial, nonbinding agreement would have pushed out the maturity of DCG's May 2023 obligations to Genesis Capital (totaling about $600 million) to June 2024. That earlier deadline is now looming.
- "We remain committed to doing the deal that all parties agreed to, and DCG will continue to honor its commitments on any outstanding obligations," a DCG spokesperson wrote in a statement.