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Genesis’ disclosure statement draws objection from crypto creditors
By Sarah Lizee
Olympia, Wash., Nov. 28 – Genesis Global Holdco, LLC’s disclosure statement for its Chapter 11 plan drew an objection from an informal group of Bitcoin and Ethereum crypto creditors, according to documents filed Monday with the U.S. Bankruptcy Court for the District of Delaware.
“Crypto creditor claims are being marginalized in these Chapter 11 cases,” the group said in the objection.
The objectors said that by valuing crypto claims using petition date pricing, they stand to lose hundreds of millions of dollars in value to fiat and stablecoin creditors.
The group argued that “dollarizing” crypto claims in this way runs afoul of bankruptcy code section 562.
“The contracts between Bitcoin (BTC) and Ethereum (ETH) creditors, on the one hand, and the debtors, on the other, are ‘safe harbored’ contracts under bankruptcy code section 562,” the group said.
“This means that BTC and ETH claims cannot be valued using petition date pricing under bankruptcy code section 502, but instead must be valued at a later date.”
The group noted that BTC and ETH have increased more than 75% and 30%, respectively, since the petition date.
“The debtors’ attempts to handicap BTC and ETH recoveries continues their pattern of behavior that has harmed BTC and ETH creditors dating back to mid-2022,” the objectors said.
The group said that since it will argue for BTC and ETH valuation dates later than the petition date, the debtors’ current disclosure statement fails to provide adequate information about distributions.
If the court ultimately sustains an objection on these grounds, projected creditor recoveries will be materially different than what is shown in the plan, the objectors said.
The disclosure statement hearing had been scheduled for Nov. 28.
Genesis Global is a New York-based cryptocurrency lender that filed bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York on Jan. 19, 2023 under Chapter 11 case number 23-10063.
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