New York, NY, Tuesday, February 13, 2024 – Digital Currency Group (DCG), the parent company of cryptocurrency lender Genesis, formally objected to its subsidiary’s bankruptcy plan on Thursday, alleging it unfairly favors a small group of creditors. The plan, submitted by Genesis to the bankruptcy court, has drawn scrutiny from several parties, including DCG. 1
In a court filing, DCG claims the proposed plan would allow certain unsecured creditors to be paid in full, while equity holders, including DCG itself, would receive nothing. This, according to DCG, violates the “absolute priority rule” within bankruptcy law, which dictates that senior classes of creditors must be paid in full before lower-ranking classes receive any distributions.
Furthermore, DCG argues that the plan disadvantages some unsecured creditors in favor of others, with certain groups receiving premiums beyond their initial claims. They call this selective prioritization unfair and detrimental to other stakeholders.
This objection underscores the intricate challenges presented by bankruptcy proceedings involving cryptocurrency firms. Legal frameworks grapple with adapting traditional bankruptcy principles to the unique characteristics of digital assets and their associated financial instruments.
The court is expected to consider the various objections and arguments before ruling on the proposed plan.
- Genesis Bankruptcy Plan: https://cryptonews.com/news/dcg-opposes-genesis-bankruptcy-plan-cites-favoritism-to-small-group-of-creditors.htm[↩]
