DCG sells Genesis as part of bankruptcy reorganization plan

DCG and Genesis have reached an agreement with creditors to sell the crypto trading and lending units. The sale is expected to return up to 80% of funds to Genesis clients.

Genesis revealed the pact with DCG and key creditors on Feb 6. According to the agreement in principle, DCG will contribute its stake in Genesis Global Trading, a subsidiary that handles trading, to Genesis Global Holdco, Genesis’ parent company. After that, trading and lending businesses will be sold as a package.

Related: First hearing scheduled in Genesis bankruptcy case

Genesis counsel, Sean O’Neil, said:

Under the settlement, DCG would contribute that entity, [Genesis Global Trading], to [Genesis Global Holdco] … that will happen on the effective date. In the meantime, during these cases, we will actually be marketing and trying to sell not only the debtors’ assets, but also GGT’s because they form a nice package, and we believe that by packaging them together, we can maximize the recoveries to the estate.

To pay down its Genesis debt, including $575 million due in May and $1.1 billion due in 2032, DCG will restructure the debt. For the $575 million, it’ll issue a new loan maturing in June 2024. This loan will be repaid in both U.S. dollars, with an interest rate of 11.5%, and bitcoin, with an interest rate of 5%.

In addition, Genesis will pay back up to $100 million to Gemini Earn users:

Related: Gemini sends a letter to DCG

This plan is a critical step forward towards a substantial recovery of assets for all Genesis creditors. In addition, Gemini will be contributing up to $100 million more for Earn users as part of the plan, further demonstrating Gemini’s continued commitment to helping Earn users achieve a full recovery. 

The plan must still be approved by the bankruptcy court. According to Donut, the likelihood of it going through is high because all parties involved agree.

This plan has a recovery rate of approximately $0.80 per dollar deposited, with a path to $1.00. The range depends on a convertible preferred equity note, realized liquidation prices, and considers the unknown costs associated with the remainder of this bankruptcy.