Liquidator Seeks $1.3 Billion Recovery from 3AC Founders

According to reports, Teneo, the liquidator for the failed hedge fund Three Arrows Capital (3AC), seeks to recover approximately $1.3 billion from 3AC founders Su Zhu and Kyle Davies.

According to a June 27 Bloomberg report, the liquidator claimed Davies and Zhu incurred the $1.3 billion of debt when 3AC was already insolvent, thereby compounding the losses of creditors.

Reportedly, 3AC owed creditors $3.5 billion, rendering the founders potentially liable for more than one-third of the debt.

Teneo’s objective of obtaining $1.3 billion from the 3AC founders was “generally reflective” of a June 27 presentation to creditors, according to a company spokesperson.

At the time of publication, it did not appear that court documents contained this information.

On June 27, 2022, a court in the British Virgin Islands ordered 3AC to be liquidated. The report was published exactly one year later.

The company also submitted a Chapter 15 petition to the U.S. Bankruptcy Court for the Southern District of New York in July 2022.

Even though Davies and Zhu have remained active on social media throughout the liquidation process, their physical location is largely unclear.

In June, the pair contributed to introducing Open Exchange, a platform for trading claims against insolvent cryptocurrency entities.

During the bankruptcy proceedings, attorneys for the liquidator in the United States have also endeavored to make Davies and Zhu appear in court.

Both founders of 3AC were served with digital subpoenas, and Davies’ legal team sought to hold him in contempt of court for having “repeatedly defied their obligations.”

Former assets of 3AC’s founders include a digital art collection being sold at auction by Sotheby’s. In June, “The Goose,” a work of art by Dmitri Cherniak, was sold for $6.2 million.