In a legal document filed on February 6, 2024, cryptocurrency giant Digital Currency Group (DCG) expressed opposition to Genesis’ revised bankruptcy strategy due to several concerns. DCG claims the plan unfairly favors certain creditors over others, and the company’s legal team accuses Genesis of breaching its fiduciary responsibility and making the proposal in bad faith.
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DCG raises legal concerns over Genesis bankruptcy strategy, seeks rejection of plan
Attorneys at Weil, Gotshal and Manges LLP representing Digital Currency Group (DCG) have filed a formal objection to Genesis’ updated bankruptcy plan, claiming it violates Section 1129 of the Bankruptcy Code. DCG argues that the scheme constitutes an impermissible “crackdown” that does not meet the statutory criteria for insolvency and allows creditors to seek damages in excess of their assessed value at the date of filing, among other breaches. Adding to the complexity, Genesis operates under the umbrella of DCG.
DCG also argues that the scheme’s allocation rules are overly complex and confusing and therefore violate certain established norms of bankruptcy law. The companies argue that these rules disproportionately benefit some groups of creditors at the expense of others, effectively stripping DCG of important financial and management powers. The legal team believes that it is illegal to give preferential treatment to certain creditors through offset provisions and changes to DCG’s equity holder rights.
“The amended plan also seeks to disenfranchise DCG in a variety of other ways, including essentially stripping DCG of all rights as an equity holder without statutory authority,” the court said. I have submitted my details. “In short, the revised plan makes DCG a nominal equity holder. “The blatant seizure of shareholder rights in direct violation of law and public policy is the very definition of bad faith.”
The DCG lawyer added:
The amendment was not proposed in good faith and is largely against the principles of the law, so it should be rejected.
DCG’s opposition comes shortly after Genesis sought approval for a $1.4 billion sale of Grayscale’s Bitcoin Trust (GBTC). New York-based Gemini was quick to praise the move, calling it an “important step” toward settling down. In court documents filed Tuesday, DCG expressed opposition to the process used to draw up the revised plan and criticized it as the result of secret talks that excluded DCG and unfairly favored certain creditors to DCG’s detriment. I did.
What do you think about DCG’s opposition to Genesis’ bankruptcy amendment? Share your thoughts and opinions on this topic in the comments section below.
Source: Bitcoin.com