Haseeb Qureshi, the Managing Companion at Dragonfly Capital, mentioned the potential penalties of Genesis going into liquidation on a latest episode of Unchained’s “The Chopping Block.”
1/ On a latest episode of Unchained’s The Chopping Block, @hosseeb makes a shocking remark concerning the $1.1 billion DCG-Genesis promissory notice.
He says the ten yr notice could have been structured as “callable” within the occasion of a Genesis liquidation.
This is what that will imply:
— Ryan Selkis 🥷 (@twobitidiot) December 11, 2022
Mentioned on the Dec. 3 episode of Unchained’s ‘The Chopping Block,’ Qureshi mentioned:
“It appears like there was loads of humorous busy within the accounting at genesis very very excessive degree”
In accordance with Qureshi, the Digital Forex Group’s (DCG) $1.1 billion promissory notice to Genesis could possibly be “callable” within the occasion of liquidation, requiring DCG to pay the entire worth of the notice instantly.
Qureshi additionally mentioned DCG’s buy-out of Genesis’s “dangerous debt” in Three Arrows Capital (3AC), reported to be round $2.1 billion.
Nevertheless, Qureshi famous that:
“DCG doesn’t have $2.1B in money to pay the worth of the promissory notice”
3/ It might additionally do two different issues:
+ considerably scale back DCG’s potential to restrict legal responsibility from a Genesis chapter. a callable promissory notice would mainly be a “you break it, you purchase it” scenario
+ scale back Genesis’s urgency to file chapter as they “have the property”— Ryan Selkis 🥷 (@twobitidiot) December 11, 2022
Qureshi mentioned two potential eventualities within the occasion of Genesis going into liquidation.
The primary state of affairs is that “Genesis information [for bankruptcy] after which pulls DCG into chapter 11,” getting into a posh chapter process.
The second state of affairs is that “Genesis goes beneath, after which the notice is itself auctioned off at a price lower than par,” however someway, DCG is prevented from going beneath.
Qureshi concluded by explaining that “it appears very, very doubtless” that genesis must file for chapter or undergo a restructuring the place collectors must agree to scale back claims at Genesis to keep away from chapter.
“The chapter could be so deleterious to collectors to Genesis”
Robert Leshner, founding father of Compound and creditor to Genesis, mentioned Genesis being pushed into chapter 11 involuntarily.
Leshner highlighted the potential penalties and implications of such a state of affairs and detailed his expectations of Genesis submitting for chapter:
“Any variety of collectors may push them into chapter 11 […] I feel the percentages are excessive, like 80 %”
