Genesis Global Holdco, LLC says that it has reached an “agreement in principle” with Digital Currency Group (DCG) and the ad hoc groups of creditors of Genesis Global Capital, LLC, which holds or represents more than $2 billion in claims, according to a note from Genesis.
The agreement lays out a framework for a global resolution that is said to maximize value for all Genesis clients and stakeholders.
Under the terms of the agreement, DCG would exchange its existing $1.1 billion note due in 2032 for convertible preferred stock to be issued by DCG as part of Genesis’s Chapter 11 plan. DCG would also refinance its existing 2023 term loans through a new, junior secured term loan in two tranches made payable to creditors in the aggregate total value of approximately $500 million.
As part of the transactions, DCG will also contribute its equity interest in Genesis Global Trading to Genesis Global Holdco, bringing all Genesis entities under the same holding company.
As part of the agreement, Gemini has agreed to contribute up to $100 million in additional funds to Earn users as part of the Plan.
Pending the closing of these transactions, Genesis will launch a sale process for Genesis Global Trading and explore other value-maximizing transactions.
Everything is contingent on court approvals and documentation.
Cameron Winklevoss, co-founder of Gemini, Tweeted earlier today about the agreement calling it “a critical step forward towards a substantial recovery of assets for all Genesis creditors.” Winklevoss added they had been “working around the clock” hammering out a deal. Gemini had engaged in a very public dispute with DCG-Genesis regarding funds affiliated with its Earn service handled by Genesis.
Paul Aronzon, a member of the Special Committee of Genesis’s board of directors that has been spearheading the company’s restructuring efforts, called the agreement a positive step forward that provides a clear path to “a consensual resolution that maximizes value.”
Derar Islim, Interim CEO of Genesis, said he was grateful for the team at Genesis, adding that he is “excited about working together to build Genesis for the future.”
“I also want to express my deep appreciation to all of our clients for their continued patience and loyalty as we work through a resolution for our lending business.”
Last month, Genesis Global Holdco, LLC and two of its lending business subsidiaries, Genesis Global Capital, LLC and Genesis Asia Pacific Pte. Ltd., filed Chapter 11 petitions in the Bankruptcy Court for the Southern District of New York.
Genesis’s other subsidiaries involved in the derivatives and spot trading and custody businesses and GGT are not included in the filing and continue client trading operations.
Redemptions and new loan originations in the lending business remain suspended, and claims will be addressed through the Chapter 11 process.