Judge Sean Lane approved Genesis’s Chapter 11 repayment plan, allowing them to unfreeze and refund client funds held since November 2022.
The bankruptcy court has approved Genesis Global, a cryptocurrency lender, to repay its creditors using more than $3 billion in cash and cryptocurrency. Digital Currency Group (DCG), its parent company, will not be able to recover its losses due to this decision.
Genesis Chapter 11 Repayment Plan Approved
On May 17, Judge Sean Lane approved Genesis’s Chapter 11 repayment plan, allowing the company to proceed with unfreezing and refunding client funds that have been held since November 2022. During this period, Genesis halted withdrawals following a downturn in the cryptocurrency industry.
However, Judge Lane rejected Digital Currency Group’s (DCG) argument that Genesis should repay creditors and consumers based solely on the market value of the cryptocurrency assets held at the time of its bankruptcy filing in January 2023. Since then, the price of Bitcoin (BTC) has surged significantly, rising from approximately $24,000 to over $66,700 by May 17.
Judge Rejects DCG’s Appeal in Genesis Chapter 11 Case
In a detailed 135-page ruling, Judge Sean Lane dismissed Digital Currency Group’s (DCG) legal challenge, asserting that Genesis’s parent company lacked standing to dispute the Chapter 11 repayment plan. Lane emphasized that in the structure of Genesis’s Chapter 11 proceedings, creditor claims take precedence over DCG’s equity position.
Judge Lane concluded that DCG’s equity stake held no value, highlighting a significant deficit due to substantial creditor demands totaling several billion dollars. Despite DCG’s objections, Lane ruled that Genesis must prioritize payments to other creditors, including federal and state financial regulators, whose combined claims amount to $32 billion, before considering any distributions to DCG as an equity owner. This ruling stands even with the inclusion of capped consumer claims.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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