Just a month after bankrupt cryptocurrency exchange FTX was seeking $4 billion from the also bankrupt crypto lender Genesis, it is now contesting a claim that it is entitled to nothing.
According to a June 2 court filing in a New York Bankruptcy Court, the FTX debtors have raised an objection to Genesis’ estimation that they are entitled to claims totalling ‘$0.00’ – as stated by Genesis in an estimation procedures motion filed on June 1.
The FTX debtors alleged they were not “invited to participate” in the mediation and the motion was filed “without any advance notice to the FTX debtors,” refuting a statement made by Genesis debtors that they worked with “all parties” of interest to create a plan structure.
It was reiterated in the filing that the zero-dollar claim estimation, as outlined in the motion, was deemed “critical” by the Genesis debtors to prevent any delays, and promptly move forward with the “confirmation of a Chapter 11 plan.”
It was argued that the FTX debtors “are by far the largest unsecured creditors in the Genesis Debtors’ Chapter 11 cases” and crucial that they participate in the mediation, noting:
“The mediation is a waste of estate resources without the inclusion of the FTX Debtors and should not continue without the FTX Debtors’ involvement.”
It was only on May 3 that lawyers for FTX were seeking almost $4 billion from Genesis in a New York Bankruptcy Court, under bankruptcy laws which allow it to recoup “avoidable transfers” that occur in a 90-day period before a company declares bankruptcy.
The FTX debtors have filed a motion for relief from the stay – requesting that the court lift the automatic stay, pausing legal proceedings against Genesis, when it filed for bankruptcy.
It was requested that the motion is set to be heart by the court on June 15.
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The most recent update regarding the reimbursement of creditors, came from Digital Currency Group (DCG), the parent company of crypto firm Genesis Capital.
It had reported no solution to its “outstanding intercompany obligations” that could help reimburse creditors.
During this period, DCG was engaged in a mediation period with Genesis in response to demands made by creditors.
Back in February, the firm had put forward a settlement plan, anticipating that Genesis creditors would receive an 80% recovery of funds after the company filed for Chapter 11 bankruptcy.
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