Two sources familiar with the issues at Genesis allege that the company’s global creditors have agreed to negotiate a prepackaged bankruptcy plan.
Genesis and its creditors are finalizing the bankruptcy plan
According to the sources, creditors such as the Winklevoss twins of Gemini will have to consent to a forbearance term in most payment plans, which should run between 1 and 2 years. In the agreement, creditors will be compensated with cash and shares of Genesis’s parent company, Digital Currency Group.
Late last year, Gemini had to form ad hoc committees with other creditors to fight for a quick and safe resolution after Genesis stopped withdrawals on its platform.
It is alleged that the creditors’ committee has been having secret talks with the troubled Genesis for the past few weeks. The two are discussing how to finalize the chapter 11 bankruptcy protection plan before filing for bankruptcy.
In recent weeks, people have witnessed verbal exchanges between Cameron Winklevoss, the co-founder of Gemini, and DCG CEO Barry Silbert. Cameron accuses Barry Silbert of commingling finances at the company and engaging in a bad-faith negotiation. He even wanted Barry Silbert to step down as a DCG chief executive officer.
What is a prepackaged bankruptcy filing?
The main goal of having a prepackaged bankruptcy filing is to accelerate the time of removing bankruptcy protection. In a pre-packaged filing, debtors negotiate the terms and ask creditors to approve before filing for bankruptcy.
Therefore, filing chapter 11 allows the business and its creditors time to come together and save the company if possible.
Genesis’s problems became apparent on Nov. 16th when they halted all withdrawals from their platform following the collapse of FTX.
At the time, they claimed that stopping withdrawals resulted from the high volumes of withdrawals in an uncertain market. Since then, there have been concerns about the platform going bankrupt.