Three Arrows Capital founder has $1 billion in assets frozen as legal battle looms
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Three Arrows Capital founder has $1 billion in assets frozen as legal battle looms
3AC filed for bankruptcy last year after suffering heavy losses from massive sell-offs of the assets it had invested in.
Navigating Web3 tides with focused insightsSource: Bitcoinist
Compiled by: Blockchain Knight
There's a new development in the collapse of hedge fund Three Arrows Capital (3AC): a court has issued a global asset freeze order worth $1.14 billion against the fund's co-founders.
The order, issued by a court in the British Virgin Islands, is part of the liquidators’ efforts to recover fund assets and provide returns to creditors.
According to Barron’s, the freeze affects co-founders Su Zhu and Kyle Davies, as well as Kelly Chen, Davies’ wife.
3AC filed for bankruptcy last year after massive sell-offs of its investments triggered a sharp decline in crypto asset prices, resulting in severe losses.
The unfortunate downfall of 3AC also triggered a series of related legal proceedings, leading the court to appoint liquidators to oversee its bankruptcy process.
Liquidator Teneo announced that the British Virgin Islands court has issued an asset freeze order against the co-founders of 3AC. The order prohibits them from dealing with assets valued up to $1.144 billion, including transferring or selling them.
The purpose of this freeze is to safeguard assets and send a clear message to counterparties and associated parties about their legal obligations and related risks.
Including Kelly Chen, Kyle Davies’ wife, in the asset freeze marks an expansion of the liquidators’ efforts to recover the fund’s assets.
By extending the freeze to assets held by Davies’ wife, the liquidators aim to increase the chances of recovering funds owed to creditors.
The liquidators have faced challenges in attempting to recover 3AC’s assets. They accuse Su Zhu and Kyle Davies of non-cooperation and failure to voluntarily provide crucial information.
Su Zhu was arrested in late September while attempting to leave Singapore and was released on Wednesday after completing his sentence.
Meanwhile, Teneo’s joint liquidators Crumpler and Farmer estimate that creditors could receive 45.74% of their claims from the bankruptcy estate. A first distribution is planned for the first quarter of next year, marking progress in the liquidation process.
According to The Block, as of December 18, 3AC’s assets were valued at $1.16 billion, with an estimated $2.7 billion in claims expected to be confirmed for distribution.
Teneo emphasized that settlements with several parties, including DCG, Genesis, and BlockFi, have contributed an estimated $292 million to reported assets. However, the settlement with BlockFi is still pending approval.
A total of 154 claims have been filed against 3AC’s estate, amounting to $3.4 billion.
Notably, $200 million in claims were not accepted for distribution, and $322 million in claims were rejected or are expected to be rejected.
In addition, $76 million in claims remain disputed, adding complexity to the liquidation process.
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