Crypto exchange Gemini is considering forbearance against its debtor Digital Currency Group (DCG) after the latter defaulted on a $630M debt payment.
Gemini is contemplating a forbearance option against Digital Currency Group (DCG), which missed a $630 million repayment payment last week.
When a lender grants forbearance, the consumer can temporarily reduce or suspend mortgage payments. The creditor must pay the reduced or stopped payments in the future.
In its revised response, Gemini asserted that the forbearance consideration would partly depend on whether DCG will negotiate a consensual agreement in good faith.
Gemini intends to collaborate with DCG-owned Genesis Capital to propose terms for an amended plan of reorganization that could be advanced without DCG’s consent if an agreement cannot be reached among the involved parties.
On May 19, Genesis also filed a motion with the bankruptcy court requesting an extension of its exclusive period to propose such a plan.
The Gemini-DCG repayment saga began on January 19, when Genesis filed for Chapter 11 bankruptcy. Cameron Winklevoss, the co-founder of Gemini, threatened to sue DCG and its CEO Barry Silbert in February over a $900 million loan repayment.
According to a court filing, Genesis owes over $3.5 billion to its top 50 creditors, including Gemini, Cumberland, Mirana, MoonAlpha Finance, and VanEck’s New Finance Income Fund. Since its inception, the Genesis settlement process has been marred by controversy.
Genesis and DCG reached an “agreement in principle” with creditors, and in February, Genesis submitted a comprehensive settlement to the bankruptcy court.
Under the initial resolution agreement, creditors were to recover 80% of the funds they had lost due to the bankruptcy.
A few months later, creditors of Genesis increased their demands, derailing the initial settlement plans.
Gemini has drafted a new “Gemini Master Claim,” which the exchange intends to submit by May 22.
Genesis has failed to return over $1.1 billion in digital assets to approximately 232,000 Gemini Earn users who had active loans as of January 19, 2023, according to the new master plan.
