The crypto sphere may soon breathe a financial sigh of release as DCG and its creditors have agreed to a deal which could see as much as 90% recovery for Genesis creditors. Genesis, a crypto lending firm owned by DCG, filed for bankruptcy in the wake of the bear market of 2022. Less than savory market conditions triggered an extraordinary amount of withdrawals surpassing where Genesis could maintain liquidity, the circumstances integral to their bankruptcy declaration.
This recent agreement reached in principle involves the settlement of existing liabilities encompassing a hefty sum of over $1.7 billion. These liabilities include $630 million due in May 2023 and $1.1 billion allocated under an unsecured promissory note with a due date of 2032. Satisfying these obligations would require DCG to engage with new debt facilities and a partial repayment agreement. The former involves a $328.8 million first-lien facility with a two-year maturity and an $830 million second-lien facility lasting seven years.
The deal doesn’t exist in a vacuum – its amendments are expected to yield 65% – 90% recovery based on the digital asset’s denomination. On the flip side, the agreed repayment scheme will see DCG part with $275 million pre-plan implementation.
Genesis isn’t the only casualty of the tumultuous conditions of late. Many crypto lending companies went belly up when 2022’s bear market hit the industry hard. They had to navigate significant turmoil linked with the crash of the FTX crypto exchange, an event that drove a spike in withdrawals.
Nonetheless, regulations encompass a significant facet of this arrangement, ensuring it’s even-steven. Unsecured creditors will receive 70% – 90% payments on the US dollar’s equivalent – a viable plan, but with pending approval. For DCG, the auction block remains a necessary pit stop en route to financial health. With creditors like the Gemini and VanEck’s New Finance Income Fund looking to recover their dues, DCG’s road to recovery might be paved with relief, optimism but also trepidation. After all, the financial world is anything but predictable. Still, it highlights the intriguing resistance and resilience blockchain technology and the wider crypto-sphere can demonstrate even in the face of market adversity.
Source: Cointelegraph
