Haseeb Qureshi, the Managing Accomplice at Dragonfly Capital, mentioned the potential penalties of Genesis going into liquidation on a current episode of Unchained’s “The Chopping Block.”
1/ On a current episode of Unchained’s The Chopping Block, @hosseeb makes a stunning remark in regards to the $1.1 billion DCG-Genesis promissory notice.
He says the ten yr notice might have been structured as “callable” within the occasion of a Genesis liquidation.
Here 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 seems to be like there was a whole lot of humorous busy within the accounting at genesis very very excessive stage”
In response to 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 full worth of the notice instantly.
Qureshi additionally mentioned DCG’s buy-out of Genesis’s “unhealthy debt” in Three Arrows Capital (3AC), reported to be round $2.1 billion.
Nonetheless, Qureshi famous that:
“DCG doesn’t have $2.1B in money to pay the worth of the promissory notice”
3/ It will additionally do two different issues:
+ considerably cut back DCG’s means to restrict legal responsibility from a Genesis chapter. a callable promissory notice would mainly be a “you break it, you purchase it” state of affairs+ cut back Genesis’s urgency to file chapter as they “have the belongings”
— Ryan Selkis 🥷 (@twobitidiot) December 11, 2022
Qureshi mentioned two potential situations within the occasion of Genesis going into liquidation.
The primary situation is that “Genesis recordsdata [for bankruptcy] after which pulls DCG into chapter 11,” coming into a fancy chapter process.
The second situation 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 seems to be very, very probably” that genesis must file for chapter or undergo a restructuring the place collectors must agree to cut 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 situation and detailed his expectations of Genesis submitting for chapter:
“Any variety of collectors might push them into chapter 11 […] I feel the percentages are excessive, like 80 p.c”
