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Genesis Global’s settlement with New York AG draws objection from DCG
By Sarah Lizee
Olympia, Wash., Feb. 23 – Genesis Global Holdco, LLC’s proposed settlement with the New York State Office of the Attorney General drew an objection from parent company Digital Currency Group, Inc. (DCG), according to documents filed with the U.S. Bankruptcy Court for the District of Delaware.
The settlement would resolve the $1.1 billion of asserted claims of the New York attorney general against the debtors.
DCG said the debtors are attempting to use the settlement to take value from lower classes and redistribute it to preferred creditors in violation of absolute priority.
The parent company argues that even if the attorney general were to prevail on every claim against the debtors and recover the full damages allowed by law, it still would not justify the settlement agreement’s distribution scheme, which “simply hands over” to the attorney general all residual value left in the estates after unsecured creditors are paid in full.
The official committee of unsecured creditors responded to the objection, calling it a “second desperate attempt” to extract equity value at the expense of providing its customers with a full recovery based on their contractual entitlements.
“Just as it did with the plan and the distribution principles, DCG again is objecting to a settlement to which the real parties in interest (here, other government units with a higher priority than DCG) do not object,” the committee said in the response.
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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