DCG claims the settlement was made with the assumption that NYAG would win in court, and it does not observe the parent company’s rights.
Venture capitalists Digital Currency Group (DCG) filed an objection on Feb. 21 to the settlement reached by its bankrupt subsidiary, crypto lender Genesis, with the New York Attorney General’s (NYAG) Office.
According to the objection, which is available only in redacted form, the NYAG settlement bases payments to unsecured creditors on asset valuation as of the distribution date, rather than providing them with payment based on the petition date, as required by the Bankruptcy Code. The United States Supreme Court has ruled that a court cannot allow a settlement to violate the Bankruptcy Code, the objection stated.
Furthermore, the settlement “simply hands over to the NYAG (and ultimately unsecured creditors) all residual value left in the Debtors’ estates after unsecured creditors are paid,” which “would rob DCG, a creditor and equity holder, of a fair opportunity to participate in the waterfall under the Debtors’ plan” by “literally directing the disposition of the Debtors’ residual assets after satisfaction of the unsecured creditors’ claims.”
