(Bloomberg) -- FTX Trading Ltd. cannot join confidential mediation sessions between bankrupt crypto lender Genesis Global Holdco and its parent company Digital Currency Group, a judge ruled Monday.
US Bankruptcy Judge Sean Lane declined to open the settlement talks to FTX, which is also in bankruptcy and claims that Genesis owes it $3.9 billion. Instead, Lane gave Genesis, a group of its biggest creditors and DCG more time to come up with a revised payout proposal. Any agreement would form the basis of a Chapter 11 bankruptcy plan to pay hundreds of thousands of Genesis creditors.
In doing so, Lane has overruled the objections of FTX and several Genesis customers. About two dozen individuals had emailed the judge, urging him to immediately end the settlement talks and order payouts to creditors. Some creditors complained that they hadn’t been given any information about what’s happening with their claims.
“There will be a certain amount of radio silence because mediation needs that to work,” Lane said. “Shortening the mediation does not shorten the case.”
Meanwhile, Genesis has said it’s planning to update its current reorganization plan. Once that plan is filed, creditors will be asked to vote on it. Lane will then take those votes into consideration when he decides whether to approve the proposal.
Genesis denies that it owes FTX anything — it filed last week to have FTX’s unliquidated claims estimated at zero — and has asked Lane to set up a months-long process to estimate the exact amount. Lane will consider at a hearing next week whether that process will kick off or not.
Since filing for bankruptcy last year, FTX has been trying to recover assets to pay the millions of potential creditors it owes money.
The case is Genesis Global Holdco, LLC, 23-10063, US Bankruptcy Court, Southern District of New York (Manhattan).
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