U.S. Trustee calls out Genesis for material changes to its bankruptcy plan

The U.S. government is not supportive of an updated bankruptcy plan filed by crypto lender Genesis last week that it says will liquidate assets instead of reorganizing them.

The crypto lender filed the updated Chapter 11 plan last week that prepares for liquidation instead of selling assets and reorganizing, according to a filing on Wednesday by U.S. Trustee William Harrington in the U.S. Bankruptcy Court in the Southern District of New York. 

"There could not be a starker example of a material change of a plan," the U.S. Trustee said.  "Yet, the Debtors have provided parties and the Court with little or no time – and certainly, insufficient time as set forth under the Bankruptcy Rules – to review the materially changed terms of the plan."

The amended disclosure also lacks "important relevant information about creditor recoveries," the U.S. Trustee said. 

Significant issues

That amended disclosure also cited "significant open issues" that are still pending and say matters are complicated following charges brought by New York Attorney General Letitia James last month. 

James sued DCG and its subsidiary, crypto lending firm Genesis, as well as former Genesis CEO Michael Moro and DCG CEO Barry Silbert last month for allegedly defrauding investors. James' office also sued crypto exchange Gemini for similar charges.

DCG did not respond to a request for comment about the U.S. Trustee's filing.

The next hearing is scheduled for Nov. 7 to discuss a disclosure statement that was filed in June.