In a caller development, Digital Currency Group (DCG), the genitor institution of bankrupt crypto lender Genesis Capital, has objected to Genesis’ bankruptcy plan, arguing that it violates the Bankruptcy Code.
DCG’s objection centers astir Genesis’ connection to wage customers much than they are legally entitled to, a determination that DCG believes “unfairly” favors a prime radical of creditors and strips DCG of invaluable economical and firm governance rights.
Digital Currency Group Challenges Genesis Bankruptcy Plan
DCG’s objection, filed connected February 5, argues that portion it would enactment a program that pays creditors the afloat worth of their claims, the existent connection goes beyond that, resulting successful unsecured creditors receiving “hundreds of millions of dollars” much than their petition day claims.
According to DCG, this is simply a wide usurpation of the Bankruptcy Code’s requirements for confirming a cramdown plan, which states that elder classes should not person much than the afloat worth of their claims, and distributions indispensable comply with the implicit precedence rule.
The objection further points retired that the projected program allows definite unsecured claims to turn exponentially arsenic the worth of Genesis’ assets increases, peculiarly successful the lawsuit of cryptocurrencies.
DCG argues that this distribution scheme, referred to arsenic the Distribution Principles, allows elder creditors to beryllium the sole beneficiaries of immoderate appreciation successful the worth of the assets. DCG maintains that specified a organisation conception is unlawful and exceeds what the Bankruptcy Code permits.
Preferential Treatment Of Unsecured Creditors?
In the question filed connected Monday, DCG further alleges that Genesis’ bankruptcy program was developed done a “clandestine process” that excluded Digital Currency Group.
The objection claims that the UCC (Unsecured Creditors Committee) and Ad Hoc Group, successful collaboration with Genesis, devised a program that “disenfranchises” equity interests and favors wide unsecured creditors. DCG contends that this process violates the Debtors’ fiduciary duties and demonstrates a “lack of bully faith.”
DCG’s objection besides highlights different advantages granted to definite creditors, including post-petition involvement rates not recognized by the tribunal and restrictions connected DCG’s rights arsenic the equity holder.
The objection asserts that these provisions further diminish Digital Currency Group’s interests and contradict the Bankruptcy Code.
DCG maintains that Genesis’ projected bankruptcy plan fails to comply with the Bankruptcy Code and was not projected successful bully faith.
DCG argues that equity holders and different stakeholders are disadvantaged portion a tiny radical of almighty creditors payment disproportionately. As a result, DCG urges the tribunal to cull the program and demands a just and equitable solution that adheres to the requirements of the Bankruptcy Code.
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