The crypto lender is seeking arbitration over a two-day period before May 9, and before a mid-May due date on $630mln of debt owed to Genesis by Digital Currency Group

Bankrupt crypto lender Genesis Global Holdco LLC (GGH) asked the judge looking after its restructuring to designate an arbitrator in order to save the outline of a deal with its parent, Digital Currency Group (DCG).

The crypto lender is seeking arbitration over a two-day period before May 9, and before a mid-May due date on $630mln of debt owed to Genesis by Digital Currency Group.

While these talks were initially aimed at settling issues left unresolved in the restructuring term sheet, more recent talks have made it clear that a mediator is required to help the mediation parties in coming to a conclusion, Genesis stated in a bankruptcy filing. Especially, the unsecured creditor committee is against the restructuring suggestion in its present state and is looking for better terms, as per two persons familiar with the matter, who asked not to be identified discussing private information.

Meanwhile, Digital Currency Group in a tweet stated that “a subset of creditors have decided to walk away” from a settlement agreement that was submitted to the court. Digital Currency Group remains committed to getting to a fair result and while we expect a productive mediation process, we will have to contemplate any new demands against the concessions we have earlier made.

Given that Digital Currency Group owes Genesis Global Holdco nearly $630mln in accordance with specific fixed term loans due in the second week of May, the Debtors believe that the mediation should be arranged right away, the filing stated.

In February, lawyers of GGH submitted a term sheet outlining a settlement with creditors that indicates Digital Currency Group would bear the burden in the crypto lender’s reorganisation. The arrangement had initially been supported by creditors representing over $2bln of claims against Genesis, including Gemini Trust Co.

The proposal called for Digital Currency Group` to reorganise around $1.7bln of debt and other obligations owed to Genesis — including a $1.1bln promissory note assumed by Digital Currency Group — by issuing fresh loans and stock to the creditors of Genesis. It would have also seen Digital Currency Group forfeit its ownership in GGT, its non-bankrupt crypto brokerage.

Genesis is one of those companies that were wiped out by 2022’s bear market in crypto currencies, together with lending competitors such as Celsius Network and Vault. When crypto exchange FTX filed for bankruptcy in November, Genesis was disrupted by a series of redemption demands and was compelled to stop withdrawals at the lending division.