According to court documents, the first hearing in the Genesis Capital bankruptcy case is scheduled for January 23 at 2 p.m. Eastern Time.
Judge Sean H. Lane, appointed by the United States Bankruptcy Court for the Southern District of New York, will decide whether to accept the Chapter 11 relief requested by Genesis and its lending subsidiaries as the first step in the bankruptcy proceedings. Genesis Global Holdco, Genesis Global Capital, and Genesis Asia Pacific have also filed for joint administration of the case.
Under Chapter 11, companies can continue to operate while proposing a restructuring plan to creditors. In addition, an unsecured creditors committee is appointed by the United States Trustee, which has the right to participate in the reorganization plan and consult with the companies before making any major decisions or changes. The committee is generally composed of 20 of the largest unsecured creditors.
Genesis filed for bankruptcy protection in New York on January 19, stressing the liabilities of $1 billion to $10 billion, with assets within the same range. The decision was made after the company announced its $175 million exposure to collapsed crypto exchange FTX two months earlier. The withdrawals have been suspended from the Genesis lending platform since November 16.
Related: Gemini is struggling to unlock its Earn program
Recently, Genesis’ parent company, Digital Currency Group (DCG), denied the rumors of being involved in bankruptcy proceedings:
Genesis has its own independent management team, legal counsel, and financial advisors, and appointed a special committee of independent directors, who are in charge of the Genesis Capital restructuring, and who recommended and decided that Genesis Capital file chapter 11. Neither DCG nor any of its employees, including those who sit on the Genesis board of directors, were involved in the decision to file for bankruptcy.
Furthermore, this is not the only legal dispute Genesis is currently involved in. Last week, the SEC charged Genesis and Gemini with an unregistered offering of securities through the Gemini Earn product.
Related: SEC charges Gemini and Genesis with offering unregistered securities
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