DCG Finalizes Agreement with Genesis Creditors, Projected Recovery up to 90%

Summary

• DCG has reached an in-principle deal with creditors of Genesis Global Holdco.
• The deal includes new debt facilities and a structured repayment agreement.
• Agreement involves a 2-year, $328.8 million first-lien facility and a 7-year, $830 million second-lien facility - a proposed strategy that could yield recoveries ranging from 70% to 90% for unsecured creditors.

Digital Currency Group (DCG) has successfully brokered an in-principle deal with creditors associated with the troubled trading firm, Genesis Global Holdco, according to official court documents filed on Tuesday.

Genesis, which sought Chapter 11 bankruptcy protection earlier this year, disclosed its outstanding liabilities amounting to approximately $630 million in unsecured loans, set to mature in May 2023, as well as an unsecured promissory note worth $1.1 billion, due by 2032.

The framework of the agreement envisions DCG's adoption of new debt facilities and a structured repayment agreement. Among these provisions are a 2-year, $328.8 million first-lien facility, and a 7-year, $830 million second-lien facility. DCG has also committed to pay $275 million across four installments, as per the filing.

Pending successful execution, the proposed strategy could yield recoveries ranging from 70% to 90% for unsecured creditors in U.S. dollar equivalent, with in-kind recoveries spanning from 65% to 90% depending on the denomination of the digital asset, according to the same filing.

Backdrop of Genesis Woes 

The backdrop to Genesis' financial turmoil traces back to its exposure to the collapses of cryptocurrency hedge fund Three Arrows Capital and FTX in the previous year. As a consequence, Genesis initiated Chapter 11 bankruptcy proceedings in the U.S. federal bankruptcy court in New York earlier in 2023.

Genesis currently owes a substantial sum of $3.6 billion to its leading 50 creditors, including claims from the Winklevoss twins' crypto exchange, Gemini.