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Genesis Hires Restructuring Expert to Avoid Bankruptcy

  • Moelis & Company is hired by Genesis to avoid chances of bankruptcy.

  • Genesis and many other companies might become the next victims of the contagion.

23-Nov-2022 By: Shailja Joshi
Genesis Hires Restru

Genesis Global Capital, a cryptocurrency lending company,

reportedly hired a restructuring adviser to consider all options, including but not restricted to a potential bankruptcy.

As per a Nov. 22 report, the firm has hired investment bank, Moelis & Company, to consider alternatives, while people familiar with the situation have stressed that no financial decisions have been made and that the company can still avoid bankruptcy.

Interestingly, Moelis & Company was one of the firms hired by Voyager Digital after it suspended withdrawals and deposits on July 1 to investigate "strategic alternatives."

Voyager Digital filed for Chapter 11 bankruptcy in the Southern District of New York a few days later as part of a reorganisation plan that would eventually "return value to customers."

Following a Nov. 21 report, a Genesis spokesperson recently told local media outlets that the company had no "imminent" plans to file for bankruptcy.

“We have no immediate plans to declare bankruptcy. Our goal is to resolve the current situation amicably, without the need for bankruptcy. Genesis is continuing to have positive conversations with creditors,” said the spokesperson.

It is believed that Genesis is seeking between $500 million and $1 billion from investors to cover a shortfall caused by "unprecedented market turmoil" and the collapse of crypto exchange FTX.

Based on a November 22 report, the troubled lending firm has $2.8 billion in outstanding loans on its balance sheet, with approximately 30% of its lending made to "related parties" such as its parent company Digital Currency Group and its affiliate and lending unit, Genesis Global Trading.

A recently circulating letter from Digital Currency Group CEO Barry Silbert, the company owes Genesis Global Capital $575 million, which is due in May 2023.

Since FTX's collapse on November 11, all eyes have been on Genesis, Grayscale Investments, and their parent company Digital Currency Group, with fears that they will become the next victims of the contagion.

Read also: Crypto Exchange BIT announces $1 million World Cup prize pool

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