The U.S. government filed an objection on Monday to crypto lender Genesis Global’s chapter 11 plan, saying it effectively provides a legal shield to the company and a myriad of related parties, WSJ Pro Bankruptcy reported. The U.S. Trustee, the Justice Department’s bankruptcy monitor, said in a filing with the U.S. Bankruptcy Court in White Plains, N.Y., that the plan fails to meet certain requirements needed for confirmation under bankruptcy code. The plan also contains a provision that, in effect, serves as a “hidden third-party release,” the DOJ said. The crypto lender, which filed for bankruptcy in January of last year, is aiming to get its chapter 11 liquidation plan confirmed in mid-February. Genesis said it had more than 100,000 creditors and owed roughly $5.1 billion a few months before its bankruptcy filing. Lawyers for the company didn’t immediately respond to a request for comment. In its filing, the DOJ said the plan’s release provision is overly broad, appearing to effectively impose a “nonconsensual release on every person and every entity existing in the world.” The provision binds even those who didn’t check the opt-in box in the ballot, the DOJ said. In addition, the Genesis plan seeks to give the parties legal cover for actions taken before and after the bankruptcy filing, including Genesis’s out-of-court restructuring efforts, the filing said. “The court simply is not at the vantage point to make that judgment,” the DOJ said in the filing.
