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Three Arrows Capital’s Liquidation: Estimated 46% Creditor Recovery

A detailed overview of Three Arrows Capital’s liquidation process, with an estimated 46% recovery rate for creditors, according to the latest Teneo report.

Claudia Fischer

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Three Arrows Capital's Liquidation: Estimated 46% Creditor Recovery

Three Arrows Capital (3AC), recent developments suggest a recovery for those owed money. “the firm handling the liquidation, creditors can expect to receive approximately 45.74% of their claims,” Teneo stated. This estimate is based on the current price of the company’s assets, which is around $1.16 billion as of mid-December. These figures are set against claims totalling $2.7 billion, earmarked for recognition and distribution.

Breakdown of 3AC’s Assets

The bulk of 3AC’s holdings are in the form of illiquid tokens, which make up 82% of the total assets. These tokens, numbering 13 different types, are valued at $563 million based on current market prices. However, their liquidity is restricted by lay schedules extending to the end of 2026, with an average of $50 million expected to be released each quarter. By the end of 2024, it’s anticipated that $200 million worth of these tokens will become available.

In addition to illiquid tokens, the portfolio includes 6.9% in equity and investments, with cash constituting 4.8%. The liquidators have proactively capitalized on these assets, having already generated $5.4 million through staking and $1 million in interest from cash holdings. They have also converted liquid tokens and Non-Fungible Tokens (NFTs) into fiat currency, realizing $66 million from these sales.

Legal Proceedings and Asset Freezing

Teneo’s report discusses legal actions involving 3AC’s co-founders, Su Zhu and Kyle Davies, and Davies’ wife, Kelly Chen. The British Virgin Islands has ordered the freezing up to $1.1 billion of their assets. Zhu, who faced legal troubles in Singapore, was recently released from house arrest after serving a reduced sentence.

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The liquidators have lodged claims for bankrupt trading against the 3AC founders totalling $1.078 billion, with additional claims against Davies and Chen. Despite these challenges, the whereabouts of Davies remain known, though his cooperation with the proceedings has been limited.

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