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Genesis
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Genesis Global Holdco, LLC
Background
On January 20, 2023 Genesis Global Holdco, LLC and X affiliated companies filed for Chapter 11 relief under the U.S. Bankruptcy Code. Genesis Global Trading was a digital asset trading firm founded in 2013. As the business grew Genesis’ operations became divided into four categories: a spot market trading service, lending/borrowing, derivative contracts on digital assets, and a custodial service.The Debtors seeking protection are the companies involved with lending, borrowing, and certain trading services. The Debtors faced unprecedented withdrawals in the aftermath of the Luna collapse, Three Arrows Capital, Voyager, Celsius, and FTX insolvencies. Genesis lost $1.1B in the 3AC collapse and had exposure of $175M with FTX. Genesis filed with a plan identifying separate classes of creditors for the three different debtors: Genesis Global Holdco, Genesis Global Capital, Genesis Asia Pacific Ptd. At the petition date the Debtors had $180M in cash, $495M in digital assets, and $442M in shares in brokerage accounts. They also own $539M in loans with $584M of corresponding collateral in dollars or digital assets.
Genesis Global Holdco, LLC
Background
On January 20, 2023 Genesis Global Holdco, LLC and X affiliated companies filed for Chapter 11 relief under the U.S. Bankruptcy Code. Genesis Global Trading was a digital asset trading firm founded in 2013. As the business grew Genesis’ operations became divided into four categories: a spot market trading service, lending/borrowing, derivative contracts on digital assets, and a custodial service.The Debtors seeking protection are the companies involved with lending, borrowing, and certain trading services. The Debtors faced unprecedented withdrawals in the aftermath of the Luna collapse, Three Arrows Capital, Voyager, Celsius, and FTX insolvencies. Genesis lost $1.1B in the 3AC collapse and had exposure of $175M with FTX. Genesis filed with a plan identifying separate classes of creditors for the three different debtors: Genesis Global Holdco, Genesis Global Capital, Genesis Asia Pacific Ptd. At the petition date the Debtors had $180M in cash, $495M in digital assets, and $442M in shares in brokerage accounts. They also own $539M in loans with $584M of corresponding collateral in dollars or digital assets.
Pre-petition Capital Structure
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Proposed Treatment
On May 31, 2024 the Debtor’s reorganization plan was confirmed and on August 2, 2024 the confirmed plan went into effect. The proposed treatment of creditors in the bankruptcy plan involves distributing a combination of cash, digital assets, and Grayscale Bitcoin and Ethereum Trust shares. Creditors with allowed general unsecured claims will receive a pro rata Share of these assets, with the value of their claims converted into USD or stablecoins. Priority and secured claims are expected to be paid in full, while subordinated and government penalty claims are unlikely to receive any recovery. The disclosure statement outlines specific distribution principles that are designed to maximize in-kind recovery for claimants with different underlying crypto or fiat assets.
Estimated Recovery
The Debtor’s disclosure statement projects the following recovery for the claims of the different debtors. The Distribution Record Date for the plane was June 14, 2024. Currently the initial, post-effective distribution of $4B has been paid to creditors and such distributions were paid in kind according to the percentages below.
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The plan retained $70M, consisting of $26M in BTC, $13M in ETH, and $31M in USD for a litigation fund to pursue causes of action. Expressly identified retained causes of action include: claims against third-parties, claims against DCG entities and related parties, claims related to insurance policies, claims related to taxes and tax refunds, claims related to setoff and recoupment, AR/AP claims, contract and lease claims, and any other litigation claims.
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