Genesis Global is taking legal action against its parent company, Digital Currency Group (DCG), seeking to reclaim $620 million in outstanding loans amid ongoing bankruptcy negotiations and settlement discussions. The legal complaint was submitted to a bankruptcy court in New York on Wednesday, September 6.
The focus of Genesis’ legal action is on debts they argue became due in May. This outstanding debt consists of a $500 million loan to DCG and another loan to DCG International Investments Ltd., valued at approximately 4,550 Bitcoin (BTC). In addition to the principal amounts, the lawsuit aims to reclaim accumulated interest and penalties for late payment.
An agreement to temporarily halt any further legal action has been informally reached between Genesis, the Unsecured Creditors Committee (UCC), and DCG, pending formal documentation.
A DCG spokesperson informed Bloomberg that repayment of the loans is planned once an official standstill agreement is legally drafted and submitted to the bankruptcy court.
Earlier this year, Genesis Global sought Chapter 11 bankruptcy protection, becoming one of several cryptocurrency companies grappling with insolvency issues. In August, the company presented a $1.4 billion debt settlement plan that received support from a portion of its customers, though some key creditors continue to object. The plan proposed by Genesis could allow unsecured creditors to recover up to 90% of their invested funds but requires approval from key opposing stakeholders, including crypto firm Gemini Trust Co.
DCG commented that the proposed debt restructuring plan provides a foundation for resolving ongoing issues in Genesis’ Chapter 11 case, and would significantly help their creditors by enabling substantial recoveries.