3AC Liquidators Estimate 46% Recovery for The Firm's Creditors

The liquidators of the defunct crypto hedge fund 3AC (Three Arrow Capital) project a substantial recovery for creditors who suffered losses in the fund's collapse. The latest report from liquidator firm Teneo reveals an estimated recovery rate of 45.74% for creditors, as the anticipated distribution is poised to commence in the first quarter of 2024.

According to Teneo's recent report, the estimated value of 3AC's assets stands at $1.16 billion as of December 18. In contrast, creditors are expected to receive distributions totaling $2.7 billion. This calculation suggests creditors could recover nearly 46% of their claims when the distribution process unfolds.

As per The Block, Teneo highlights successful litigation settlements with various parties, including DCG, Genesis, and BlockFi, which have contributed an estimated $292 million to 3AC's reported assets. Notably, the settlement with BlockFi is pending approval.

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Claims Landscape

The report discloses 154 claims against the 3AC estate, amounting to a collective value of $3.4 billion. Of these, $200 million in claims were not admitted for distribution, and $322 million in claims have either been rejected or are expected to face rejection. Additionally, claims worth $76 million are currently under dispute.

While a substantial portion of 3AC's assets, approximately 82%, remains locked due to the vesting timeline, only 6% is immediately liquid and market-sellable. The remaining 6.9% comprises assets in equity or investments, with 4.8% represented in cash.

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Legal Developments in Recovery Efforts

Recent legal actions in the British Virgin Islands have seen a worldwide freezing order against Su Zhu and Kyle Davies, founders of Three Arrows Capital, and Davies' wife, Kelly Chen. The order, part of Teneo's endeavors to secure 3AC assets and recover funds, prevents the trio from handling assets valued up to $1.14 billion.

Su Zhu, who was previously arrested in Singapore for non-cooperation with Teneo's liquidation process, is nearing the end of his prison term, as confirmed by Teneo's statement. A similar freezing order was granted against Kyle Davies, although he was not subjected to arrest.

This week's decision, encompassing Kyle Davies' wife, marks an escalation in Teneo's efforts to maximize returns for creditors, given that outstanding claims against 3AC exceed $3 billion.