Commencement of voluntary Chapter 11 restructuring of lending operations to further advance ongoing stakeholder discussions and optimize outcomes for Genesis customers and Gemini Earn users
Overview Chapter 11 plans to consider potential sale and/or equity transaction to enable lending business to emerge under new ownership
Restructuring process led by an independent committee of the board of directors
Genesis’ derivatives and spot trading, broker-dealer and custody businesses are not part of Chapter 11 and continue customer trading business
Adequate liquidity of over $150 million to support operations and facilitate restructuring process
New York, January 20, 2023–(BUSINESS WIRE)–Genesis Global Holdco, LLC (“Genesis”, “GGH” or the “Company”), industry pioneer and digital currency prime broker, today announced strategic moves to enable global solutions that empower all Maximize the value of customers and stakeholders and strengthen their business for the future.
As previously announced, Genesis and its advisors have been engaged in ongoing, productive discussions with its creditors and with advisors to the company’s parent, Digital Currency Group (“DCG”), to assess the most effective way to protect assets and move the business forward. Genesis has now begun a court-supervised restructuring process to further advance these discussions and arrive at a holistic solution for its lending business, which, if realized, will provide the best possible outcome for Genesis customers and Gemini Earn users.
Genesis Global Holdco, LLC (“GGH”) and its two lending subsidiaries, Genesis Global Capital, LLC (“GGC”) and Genesis Asia Pacific Pte. The United States Bankruptcy Court for the Southern District (the “Court”) filed a voluntary petition. Other Genesis subsidiaries involved in derivatives and spot trading and custody business and Genesis Global Trading are not within the scope of filing, and continue to carry out customer trading business.
As part of its Chapter 11 filing, Genesis has proposed an exit roadmap that includes the Chapter 11 Plan (the “Plan”), which calls for a framework to resolve all claims through and create a trust to distribute assets to creditors . The plan contemplates a dual-track process for pursuing a sale, financing and/or securitization transaction that would allow the business to emerge under new ownership. The Company will initiate the marketing and sales process to monetize or otherwise raise funds for GGH’s assets, using the proceeds of the transaction to pay creditors fairly and equitably. If the marketing process does not result in a sale or financing, creditors will receive an ownership interest in the reorganized GGH.
All aspects of the restructuring process will be overseen by an independent special committee of the company’s board of directors.
“While we have made significant progress in refining our business plan to address liquidity issues caused by recent idiosyncratic challenges in our industry, including the default of Three Arrows Capital and the bankruptcy of FTX, in-court restructuring is the most effective route to protecting assets and To create the best possible outcome for all Genesis stakeholders,” said Derar Islim, Genesis Interim CEO. “We are grateful for our customers’ continued patience and partnership as we work towards a fair resolution.”
Derar Islim was appointed to his position in August 2022 as part of a series of leadership announcements to further strengthen the company’s governance and position it for the future.
“We have developed a thoughtful process and roadmap through which we believe we can find the best solution for our clients and other stakeholders,” said Paul Aronzon, Independent Director of Genesis. “We look forward to advancing our partnership with DCG and our dialogue with creditor advisors as we seek to implement a path that maximizes value and provides our business with the best opportunity to position itself for the future.”
Genesis has over $150 million in cash on hand, which will provide ample liquidity to support its ongoing business operations and facilitate the restructuring process. The company has filed a number of customary “day one” motions with the court to allow day-to-day operations to continue as normal. The court is expected to grant the requests in the coming days. Redemptions and new loan originations in the lending business remain suspended and claims will be processed through the Chapter 11 process. Genesis and its advisors will continue to evaluate options to advance progress towards a global resolution.
For more information on Chapter 11 filings, including access to court documents, visit https://restructuring.ra.kroll.com/genesis.
Moelis & Company acted as the company’s financial advisor. Cleary Gottlieb Steen & Hamilton LLP acted as legal counsel. Alvarez & Marsal acted as restructuring advisor.
Genesis is a full-service digital currency prime broker offering a single point of access to select qualified individual and global institutional investors. Combining unparalleled operational excellence, a seamless user experience and best-in-class customer service, Genesis provides global investors with the full suite of services they need to manage their digital asset portfolios.
The company provides experienced market participants with a fully integrated platform to trade, borrow, lend and custody digital assets, creating new income opportunities while improving counterparty capital efficiency.
For more information on Genesis, visit genesistrading.com.
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