Genesis Global’s Chapter 11 plan draws objection from U.S. trustee

By Sarah Lizee

Olympia, Wash., Jan. 30 – Genesis Global Holdco, LLC’s Chapter 11 plan drew an objection from Region 2 U.S. trustee William K. Harrington, according to documents filed Monday with the U.S. Bankruptcy Court for the District of Delaware.

Harrington said the plan provides that on the effective date the debtors are required to pay the legal fees of non-statutory creditor groups without the group filing an administrative expense motion or seeking any court approval. The debtors have deemed those legal fees to be an allowed administrative expense.

The plan also exculpates conduct that is yet to occur and outside the supervision of the court and exculpates entities and individuals whose duties will not start until after the effective date.

The people or entities who are exculpated and the causes of action which are exculpated are overbroad, the U.S. trustee added.

Also, the plan’s injunction provision operates as an impermissible backdoor third-party release in that it enjoins any person and any entity from suing parties exculpated or released under the plan, even if the person or entity has rejected the plan in the voting process, Harrington said.

The U.S. trustee said these provisions are not permitted under the bankruptcy code, and as such, the current plan shouldn’t be confirmed.

The plan confirmation hearing is scheduled for Feb. 14.

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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