Genesis, its parent company Digital Currency Group (DCG), and crypto exchange Gemini have reached an agreement on an initial term sheet to settle issues that have left progress on Genesis’ bankruptcy repayment plan at a standstill for the past two weeks.
According to a source familiar with the matter, the term sheet includes “a compromise and settlement of inter-company claims between Genesis and DCG, as well as issues revolving around Gemini.”
“I’m pleased to say today that we have reached an agreement,” Sean O’Neal a lawyer representing Genesis said later Monday afternoon, confirming the development.
As laid out in previous court documents, the plan include efforts to market Genesis assets and raise additional capital if those assets cannot be sold.
However, the latest plan also will include selling sister company, Genesis Global Trading as well as a “backup” equitization plan. The settlement will also restructure the debt DCG owes Genesis including $575 million in loans due in May (“BCG loans”) and the $1.1 billion promissory note due in 2032 (“DCG note”).
For the $575 million, DCG will issue a second lien term credit facility that will mature in June 2024. Under this facility, payouts will come in U.S. dollars, paying a 11.5% interest and bitcoin, paying a 5% interest.
The total loan amount is equal to $500 million according to O’Neal.
For the promissory note, DCG will issue a class of convertible preferred stock that can be converted into common equity for DCG or one of its subsidiaries, if mutually agreed upon.
O’Neal added that while details for the note disbursement are still being ironed out, if DCG fails to meet its listing requirement by June 2025, creditors will be entitled to cash dividends at a rate of 10.5%.
DCG will also contribute the first $25 million in recoveries