3AC Bankruptcy Updates: Insights from Kyle Davies and Creditors Group

The Birth of the Creditors Group

In a surprising twist on January 11, Kyle Davies, co-founder of the beleaguered Three Arrows Capital (3AC), took to Twitter to announce the formation of a creditors group. This came as no shock to those keeping an eye on the chaotic bankruptcy process, especially with creditors voicing their frustrations. The public outcry? High bankruptcy costs and the apparent snail’s pace of asset management.

The Frustration Is Real

Davies shared that many creditors are feeling the pain of ongoing costs eating away at potential recoveries. They believe intercreditor disputes are making matters worse, significantly delaying the proceedings and preventing the estate value from hitting those maximal highs. In fact, during the group’s initial meeting—now a regular event for concerned creditors—this issue took center stage.

Topics on the Table

What’s on the agenda in these creditor group sessions? Here are a few golden nuggets discussed:

Curbing Legal Costs: Strategies to stifle these relentless ongoing legal fees.
Contingency Claims: Pursuing potential claims against heavyweights like Luna consortium, FTX, and Genesis.
Asset Management: Finding better methods for handling asset sales and distributions. Because who doesn’t want that?

The Elusive Co-founders

Davies and his partner in crime, Zhu Su, seem to have mastered the art of the disappearing act since their company’s Chapter 15 bankruptcy filing on July 1. Their current locations? Rumored to be Indonesia and the UAE. Not exactly easy locations for liquidators to enforce any foreign court orders.

The Liquidators’ Dilemma

The plight of the liquidators can be likened to a game of hide-and-seek, with Davies and Su playing exceptionally well. In a last-ditch effort, a subpoena was issued via Twitter on January 5, seeking their cooperation to recover vital account information, seed phrases, and private keys related to 3AC’s digital and fiat assets. As if locating the ghost of crypto past wasn’t challenging enough!

A Glimmer of Hope

Despite the challenges, there have been some wins. Liquidators managed to seize a staggering $35.6 million in fiat currencies tied up in Singaporean banks. They’ve also identified over 60 types of cryptocurrencies, held safely in a custody account, which could hopefully contribute to appeasing those frustrated creditors.