An attorney at bankrupt crypto lending firm Genesis is optimistic the firm can settle disputes with creditors already this week and that it can exit Chapter 11 proceedings by the end of May.
As reported by Reuters, Sean O’Nealattorney for Genesis, made these statements during the January 23 initial hearing in the United States Bankruptcy Court for the Southern District of New York.
The lawyer added that Genesis has “some confidence” in the ability to resolve disputes with creditors by the end of the week and, if necessary, ask the judge to appoint a mediator:
“Sitting here right now, I don’t think we’re going to need a mediator. I’m very optimistic.”
On January 19, Genesis filed for Chapter 11 bankruptcy. At the time, it already had a restructuring plan and a recovery path. “sale, capital raising and/or equity transaction” to be able to potentially “return under new ownership”.
The bankruptcy came nearly two months after Genesis suspended withdrawals in November 2022, citing market turmoil caused by the bankruptcy of crypto exchange FTX.
Judge Sean Lane granted Genesis a number of motions “of the first day”standard in bankruptcy proceedings, which include the ability to pay employees and suppliers.
Lane added that Genesis is not required to disclose the names of customers on its list of creditors, for privacy reasons. Lane also suggested that the lender warn users of possible phishing scams if the names were made public.
Genesis said it will sell its assets at auction with the aim of exiting bankruptcy in just under four months, on May 19.
The company said it has just over $5 billion in assets and liabilities and owes over 100,000 creditors about $3.4 billion. Genesis’ suspension of withdrawals last year affected users of a yield-bearing product called “Earn”operated by the exchange Gemini.
Gemini is Genesis’ largest creditor and is owed nearly $766 million.
Its largest debtor is its parent company, Digital Currency Group (DCG), which owes Genesis about $1.65 billionincluding $575 million in May loans and $1.1 in 10-year bills.
Even though DCG is dealing with its own financial problems — the bankruptcy hasn’t affected it. Similarly, Genesis entities handling derivatives, spot trading, broker-dealer and custody are not part of the proceedings and, according to Genesis, continue to operate.
