Teneo, the court-appointed liquidator, has pulled in a Singapore law firm to convince the High Court to recognize the liquidation order issued to Three Arrows Capital (3AC) last month. Presently, the crypto hedge fund’s fate is hanging by a thread.
3AC had filed for Chapter 15 bankruptcy in an effort to protect foreign companies’ assets from creditors in the US. The company had defaulted on a $670 million loan provided by Voyager Digital, which has also filed for bankruptcy.
If Teneo is successful, liquidators would continue the 3AC liquidation process in Singapore. It could subpoena the crypto hedge fund co-founders Su Zhu and Kyle Davies. Both have been missing since last week. If the High Court obliges, Teneo will come up stronger. It will secure 3AC’s assets and meet the company’s obligations to its various creditors.
Moreover, the law firm will argue that Three Arrows Capital’s collapse was due to mismanagement with fingers being pointed at the two co-founders. It should be noted that the Monetary Authority of Singapore had also issued a notice that 3AC provided the regulator with false information. The company had reportedly opened an entity in the BVI. The Monetary Authority of Singapore said 3AC novated the management of its fund to an unregulated offshore entity. But the regulator said this representation was misleading as Zhu was a shareholder in the BVI-based entity.
Furthermore, the debt-riddled company was reprimanded for failing to notify the authorities about changes in the directorships and shareholdings of the directors. It exceeded the 3AC’s permissible $250 million assets under the management limit between July 2020 – September 2020, and November 2020 – August 2021.