Digital Currency Group (DCG) missed a $630 million payment that was due May 9, 10, and 11 to its subsidiary, bankrupt Genesis Capital, according to a court filing.
In a disclosure statement within the bankruptcy hearing for Genesis, it was disclosed that the firm delivered a “notice of default for non-payment of approximately $627 million in DCG Loans” on May 12.
Following Genesis’ bankruptcy, the problematic crypto company has frequently been at the heart of legal disputes between DCG and Gemini. DCG and Genesis apparently owed approximately $900 million to Gemini’s clients who had their Earn funds frozen – Genesis operated the scheme in collaboration with Gemini.
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Genesis, Gemini, and other creditor organizations, notably the Unsecured Creditor Committee (UCC) and the Ad Hoc Group of Creditors (AHG), are presently debating whether to grant DCG forbearance in order to avert a default.
Gemini first revealed in May that DCG defaulted in its payment.
Genesis is said to be in ongoing discussions with the UCC and the AHG to address the nonpayment, “including potential forbearance options and exercising rights and remedies under the loan agreements.”
This comes after DCG has revealed it has no solution to its “outstanding intercompany obligations” that could help reimburse creditors.
After a “subset of creditors” walked away from a restructuring plan signed in February, Genesis’ creditors agreed earlier this month to a request for a 30-day mediation period and a court-appointed mediator.
In February, the firm offered a settlement proposal in which Genesis creditors were projected to obtain an 80% recovery of funds after the firm filed for Chapter 11 bankruptcy.
The UCC allegedly presented new terms after analyzing different intercompany loans made between Genesis businesses and DCG prior to Genesis’s withdrawal freeze last year.
Genesis owes nearly $3.5 billion to its top 50 creditors, which include Gemini, Cumberland, Mirana, MoonAlpha Finance, and VanEck’s New Finance Income Fund, according to a January court filing.
Information for this briefing was found via the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
