Genesis Bankruptcy Commission Creates Body to Protect Rights of Unsecured Creditors

Genesis Global has a special committee that will represent the interests of creditors in court. The committee included seven of the twenty largest unsecured creditors.

In addition to private investors, the committee included representatives from Digital Finance Group, Bitvavo crypto exchange and Mirana Asset Management (the management company of Bybit crypto exchange). The Department of Justice trustee William Harrington, who is responsible for monitoring the case, has been entrusted with coordinating the joint work of the committee and the bankruptcy court.

Genesis Global, along with its lending subsidiaries, filed for bankruptcy on January 19, citing an inability to repay about $11 billion in debt. The companies filed in bankruptcy court for protection from creditor claims while the reorganization proceeds. The reason that forced Genesis to file an application was a liquidity problem that arose as a result of the collapse of the FTX crypto exchange. The withdrawal of funds from the Genesis Global Capital platform was suspended on November 16th.

The formation of a committee of unsecured creditors is an obligatory stage preceding the consideration of bankruptcy cases of companies on the merits. So this category of clients of the bankrupt company gets the right to participate in the development of the reorganization plan and the right to vote in making key decisions.

A group of creditors recently filed a class-action lawsuit against Genesis parent company Digital Currency Group and its CEO, Barry Silbert, alleging violations of federal securities laws. in a lawsuit approvedthat Genesis committed securities fraud by making false and misleading statements, intentionally misrepresenting its financial position.