Steven Church
A $2 billion dispute between crypto lender Genesis Global Holdco and FTX Trading Ltd. will likely delay court consideration of a payout plan for Genesis creditors, a judge said Thursday.
Both firms are bankrupt and trying to collect money for creditors while under court supervision. Genesis is further along in that process and has asked the judge overseeing its insolvency case to consider approving a payout plan next month.
That schedule “is looking awfully optimistic,” US Bankruptcy Judge Sean Lane said at a court hearing held by video on Thursday. “My understanding is these deadlines were likely to slip.”
FTX claims that Genesis, which is owned by Digital Currency Group, owes it about $2 billion. At the hearing, Genesis and FTX proposed dueling procedures for resolving the claim. Genesis wants Lane to set a hearing to decide whether the alleged debt is legitimate and if so, how big it is. FTX wants Lane to let it sue Genesis in Wilmington, Delaware, where the company’s bankruptcy case is being overseen by a different federal judge.
Lane, who is based in Manhattan, declined to grant either request and instead ordered both sides to exchange information about the dispute. Eventually, he may schedule an “estimation” hearing, as requested by Genesis, to rule on FTX’s claim. He did not make a final ruling on whether FTX can sue Genesis.
FTX had originally said Genesis owes it $3.9 billion, but in a letter to Lane this week, reduced that amount to about $2 billion.
Genesis, a group of its biggest creditors and DCG are working with a court-appointed mediator trying to come up with a revised payout proposal. Any agreement would form the basis of a Chapter 11 bankruptcy plan to pay hundreds of thousands of Genesis creditors.
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Later this month, Lane will consider giving Genesis permission to hold a vote of creditors on its payout plan. Lane will then take those votes into consideration when he decides whether to approve the proposal.
Genesis denies that it owes FTX anything — it Lane to estimate FTX’s claim estimated at zero.
Since filing for bankruptcy last year, FTX has been trying to recover assets to pay the millions of potential creditors it owes money.
The case is Genesis Global Holdco, LLC, 23-10063, US Bankruptcy Court, Southern District of New York (Manhattan).
