Genesis wins court nod to return $3 billion to creditors
The post Genesis wins court nod to return $3 billion to creditors appeared on BitcoinEthereumNews.com.
Bankrupt crypto lending company Genesis Global Holdco received court permission to return approximately $3 billion in cash and crypto assets to its creditors as part of its bankruptcy liquidation process on Friday. US Bankruptcy Judge Sean Lane made the decision. In addition, Judge Sean Lane rejected Digital Currency Group’s (DCG), attempt to challenge the distribution plan for the debtors’ assets in the bankruptcy case. DCG objected to the distribution plan as it believes repayments should be capped at the crypto asset values of January 2023 (at the time of Genesis’ bankruptcy filing). Since then, the value of cryptos like Bitcoin has surged, with Bitcoin’s price jumping from around $21,000 to a current value of nearly $67,000. The firm also claimed that the plan provides too much return to creditors at DCG’s expense. Essentially, DCG feels that it is unfairly disadvantaged by how the returns are allocated. However, DCG’s arguments failed. Judge Sean Lane ruled that, as an equity holder, DCG’s financial interest isn’t directly impacted by how the assets are distributed. Equity holders only get paid after all creditors are satisfied. Additionally, given the insolvency and the massive creditor claims, DCG won’t receive any distribution under this plan. The total amount owed to creditors is billions of dollars higher than the debtors’ available assets. These claims have priority over equity holders like DCG, meaning they get paid first in line during bankruptcy. The ruling also considered the substantial $32 billion in claims from federal and state financial regulators, prioritizing them over DCG’s equity stake. Genesis had previously estimated that it could pay up to 77% of the value of customer claims, a figure subject to future market fluctuations. Hit hard by the collapse of Three Arrows Capital (3AC) and FTX, Genesis – along with other lending platforms – faced liquidity…
Filed under: News - @ May 19, 2024 2:16 am