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Digital Currency Group (DCG) has achieved a significant financial milestone by paying off its short-term loans from its bankrupt subsidiary, Genesis. This move marks a major step in the company’s efforts to stabilize its financial position amidst the ongoing challenges in the crypto market.
Substantial Debt Repayment By DCG
pic.twitter.com/dUEi8j7nHo — Digital Currency Group (@DCGco) January 5, 2024
The company disclosed on Friday that its total debt payoff to creditors now exceeds $1 billion, with almost $700 million of that amount paid to Genesis alone. This development follows a lawsuit filed by Genesis in September, seeking to recover an outstanding loan balance of more than $610 million that matured in May 2023. The court filings from September revealed that the firm owed over $1.7 billion to Genesis and other creditors.
Genesis’ Separate Complaint Against DCG
In a separate complaint, Genesis also sought to recover approximately 4,550 BTC, valued at around $199 million as of Friday. The crypto lender reached an agreement with DCG in November, under which it agreed to pay $200 million over the subsequent weeks, as stated by a lawyer for Genesis.
Plan for Remaining Loan Balance
I’m happy to share that @DCGco completed a full pay down of the money borrowed from Genesis We have now repaid over $1 bn of debt, including this ~$700 mm, despite the headwinds faced by the industry I'm excited about the industry's next chapter and DCG’s leadership role in it https://t.co/Jlbu3Zs7Xl — Barry Silbert (@BarrySilbert) January 5, 2024
The remaining loan balance is due to Genesis by Apr. 1, according to the plan approved in federal bankruptcy court. This plan is part of the broader strategy to manage Genesis’ bankruptcy proceedings, during which the company is not permitted to make any changes in its ownership. Specifically, the venture capital firm’s stake in Genesis must remain above 80% until the lender’s Chapter 11 plan is approved or converted into a Chapter 7 proceeding.
This arrangement is crucial for Genesis to remain protected under DCG’s tax consolidated group. This protection could be vital for preserving the potential value of the federal net operating loss carryforwards (NOLs), a tax benefit allowing Genesis to deduct losses from future profits. Genesis stands to retain benefits on $700 million in NOLs.
DCG’s Optimistic Outlook
The company expressed optimism about the future, stating, “With this milestone behind us, we’re looking forward to the next chapter of the venture capital firm and the future growth of our industry. And as always, we will continue to honor our financial commitments.”
This repayment marks a significant step in resolving the financial complexities faced by DCG and Genesis, indicating a possible stabilization in the tumultuous crypto market landscape.
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