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Genesis bankruptcy case set for first hearing

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According to court filings, the first hearing in Genesis Capital's bankruptcy case will be scheduled on January 23.

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According to court filings, the first hearing in Genesis Capital's bankruptcy case will be on January 23 at 2:00 p.m. Eastern Time. The case will be heard by Judge Sean H. Lane of the United States Bankruptcy Court for the Southern District of New York.

Companies in Chapter 11 bankruptcy can submit a restructuring plan to creditors while continuing to operate, according to Mark Pfeiffer, a bankruptcy attorney at the law firm Buchanan Ingersoll & Rooney.

The court will decide whether to grant the relief sought by Genesis Global Holdco and two of its lending business subsidiaries, Genesis Global Capital and Genesis Asia Pacific, collectively known as Genesis Capital, under Chapter 11 as the first step in the bankruptcy proceedings. The companies also asked for a combined administration of the cases.

The United States Trustee will also appoint a committee for unsecured creditors as part of the proceedings. The committee will have the authority to request a consultation with the companies before making significant decisions or modifications and to take part in the restructuring plan. The court filings state that the committee usually consists of twenty of the biggest unsecured creditors.

On January 19, more than two months after revealing a $175 million exposure to FTX and liquidity issues brought on by the collapse of the crypto exchange, the companies filed for bankruptcy protection, stating liabilities up to $10 billion. Since November 16, withdrawals from the Genesis Global Capital platform have been stopped.

According to a news release, the Genesis Chapter 11 plan asks for a complete settlement of all claims and the establishment of a trust that will distribute assets to creditors. The companies will pursue the "sale, capital raise, and/or an equitization transaction" that would purportedly allow their business "to emerge under new ownership" as part of a "dual track process."

Digital Currency Group (DCG), Genesis Capital's parent company, reportedly refused to take part in the bankruptcy filing, alleging that a special committee of independent directors had recommended and agreed to file for Chapter 11 bankruptcy protection. Only the lending organizations for Genesis have requested bankruptcy protection. Genesis Global Trading and Genesis' spot and derivatives trading entities will continue to operate.

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