Lenders to bankrupt cryptocurrency lender Genesis aren’t happy with the latest settlement in principle reached with other parties, including Digital Currency Group (DCG).

Genesis Global Capital (GGC) Ad Hoc Group of Lenders Represented by Attorneys Brian Rosen and Jordan Sazant on August 29 responded The public bankruptcy plan was updated, saying the agreement in principle reached was “completely inadequate”.

A public update published a few hours ago stated that DCG had reached an agreement in principle with Genesis’s unsecured creditors (UCCs) and debtors, proposing a dollar equivalent recovery of 70%–90%. The update highlights that neither the Ad Hoc Group nor the Gemini exchange support in principle the transactions described in the planned update.

The update stated: “While the mediation has been terminated, constructive discussions with the Ad Hoc Group and Gemini have continued regarding the above agreed-in-principle agreement.”

In response, the ad hoc panel stressed that it did not support the proposed agreement in principle, saying DCG’s contribution was “completely insufficient” to meet the loan amount. The lenders argued that the debtors and UCCs were “unwilling to meet their fiduciary duties” to maximize recovery from creditors, arguing that they were instead trying to back themselves up. The document adds:

“The Ad Hoc Group, which includes dozens of creditors to whom these assets are vital, has no such luxury and cannot support the proposed terms of the planned renewal that would allow DCG to leave unaffected and, in fact, pay The amount is lower than the amount already committed.”.

The Genesis lenders also argued that DCG should not be entitled to a non-consensual third-party release, ie, the release of non-debtor parties from liability to other non-debtor parties without the consent of all potential claimants.

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The special panel argued that the debtors and UCC had agreed to “improperly release third-party claims against DCG and its affiliates.”

“DCG is paying only $275 million now and will pay another $328.8 million over the next 2 years, instead of receiving the $630 million it should have paid 3 months ago,” the lender said, adding:

“It is inconceivable that these contributions could be considered substantial contributions of assets sufficient to discharge estate claims, let alone claims by third party creditors.”

Genesis is one of the crypto lending companies affected by the 2022 crypto winter. The lender suspended withdrawals during a massive liquidity crisis in mid-November 2022 and filed for bankruptcy in January 2023. The company reportedly owes its top 50 creditors more than $3.5 billion, including companies like Gemini.

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