Attorneys for bankrupt crypto lending company Genesis are optimistic that the company can resolve its disputes with creditors as early as this week, and the company may emerge from Chapter 11 proceedings by the end of May.
Genesis attorney Sean O’Neal made the remarks at a preliminary hearing on January 23 in the US Bankruptcy Court for the Southern District of New York, according to a Reuters report.
He added that Genesis had “a measure of confidence” that it would resolve disputes with creditors by the end of the week. If necessary, he will go to the judge to appoint a mediator, he said, adding:
“Sitting here now, I don’t think we’ll need a mediator. I’m very hopeful.”
Genesis filed for Chapter 11 bankruptcy on January 19th. At the time, it already had a restructuring plan in place along with a path of “sale, capital increase and/or share transaction” so that it could “emerge under new ownership”.
The bankruptcy comes nearly two months after Genesis suspended withdrawals in November, citing market turmoil caused by the bankruptcy of cryptocurrency exchange FTX.
A series of “day one” motions, the standard in bankruptcy proceedings, were granted by Judge Shawn Lin, including allowing the company to pay employees and suppliers.
Lane added that Genesis did not need to disclose the names of customers on its list of creditors, citing privacy concerns. Lane even suggested that the lender warn users of potential scams if the names are later revealed.
Genesis said it will sell its assets at auction with a plan to emerge from bankruptcy in just under four months, on May 19.
It said it had just over $5 billion in assets and liabilities and had more than 100,000 creditors, including at least $3.4 billion. The Genesis withdrawal suspension last year affected users of a revenue-generating product called “Earn” from the Gemini exchange.
Gemini is Genesis’ largest creditor and owes approximately $766 million.
Its biggest debtor was its parent company, Digital Currency Group (DCG), which owes Genesis about $1.65 billion – $575 million in loans due in May and a $1.1 billion promissory note with a maturity in 10 years.
Although DCG is having its own financial problems, the bankruptcy did not involve DCG. Similarly, Genesis entities dealing with derivatives, spot trading, brokerage and custody are not part of the operation and continue to operate, according to Genesis.