Genesis bankruptcy case scheduled for first hearing
The first hearing in Genesis Capital's bankruptcy case will be held on January 23 at 2:00 pm (EST), according to court filings. United States Bankruptcy Court for the Southern District of New York Judge Sean H. Lane is hearing the case.
Under Chapter 11, known as the reorganization chapter, companies can propose a reorganization plan to creditors, while allowed to continue operating its business, told Cointelegraph Mark Pfeiffer, bankruptcy attorney at law firm Buchanan Ingersoll & Rooney.
As the first step in the bankruptcy proceedings, the court will decide whether to accept the relief requested under Chapter 11 by Genesis Global Holdco and two of its lending business subsidiaries, Genesis Global Capital and Genesis Asia Pacific - collectively known as Genesis Capital. A joint administration of the cases was also requested by the companies.
A committee for unsecured creditors will also be appointed by the United States Trustee as part of the proceedings. The committee will have the right to demand from the companies to be consulted before making major decisions or changes, and to participate in the reorganization plan. Twenty of the largest unsecured creditors are usually selected for the committee, court filings reveal.
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With liabilities up to $10 billion, the companies filed for bankruptcy protection on Jan. 19, more than two months after disclosing a $175 million exposure to FTX, along with liquidity issues caused by the crypto exchange collapse. Withdrawals have been suspended from Genesis Global Capital's platform since Nov. 16 2022.
Genesis Chapter 11 plan calls for a global resolution of all claims through, and the creation of a trust that will distribute assets to creditors, according to a press release. Under a “dual track process”, the companies will pursue the “sale, capital raise, and/or an equitization transaction" that would apparently enable its business "to emerge under new ownership.”
Genesis Capital’s parent company, Digital Currency Group (DCG), recently denied involvement in the bankruptcy filing, claiming that a special committee of independent directors recommended and decided to file for Chapter 11 bankruptcy protection. Only Genesis’ lending entities have filed for bankruptcy protection. Genesis Global Trading and Genesis’ spot and derivatives trading entity will remain operational.