Three Arrows Capital was approved to significantly increase its bankruptcy claim against FTX, from $120 million to $1.53 billion

A U.S. bankruptcy court recently ruled that bankrupt crypto hedge fund Three Arrows Capital (3AC) can significantly increase its claim against the FTX exchange from an initial $120 million to $1.53 billion. The decision was made following a ruling by the U.S. Bankruptcy Court, which ultimately upheld 3AC's amended claim despite the objections of the FTX receivership team that the 3AC's request came too late.

3AC said it only recently discovered evidence that FTX liquidated $1.53 billion in 3AC assets two weeks before 3AC itself went into liquidation, well above the $120 million originally claimed.

The FTX bankruptcy administrator protested, and the court still ruled in favor of the 3AC

The FTX Receivership believes that 3AC's claim for an increase at a critical stage in the bankruptcy proceedings will affect the interests of FTX's creditors and cause significant disruption to the reorganization plan. However, the court held that the 3AC liquidation team had notified the request within an appropriate time and that the main reason for the delay in claiming was the failure of the FTX debtor to provide relevant financial records in a timely manner.

"The evidence shows that the 3AC liquidators have been actively trying to obtain relevant information, while the FTX debtors, despite having complete information, have repeatedly delayed delivery, resulting in delays in the claims process," the court documents states.

3AC's new claims cover multiple allegations of breach of contract and unjust enrichment

3AC initially filed a US$120 million claim in June 2023 and subsequently requested an expansion to US$1.53 billion, supported by new evidence, on multiple allegations including breach of contract, return of assets, unjust enrichment, breach of fiduciary duty, and compensation claims.

The FTX bankruptcy is concerned about the impact on the restructuring plan

The FTX receivership team believes that the new claims filed by 3AC are "unduly large" and could have a "material adverse effect" on FTX creditors. FTX said that when developing the restructuring plan, they did not expect 3AC to make such a large-scale claim, and therefore feared that it would undermine the implementation of the plan.

However, the court's ruling means that 3AC can now formally recover up to $1.53 billion from the FTX bankruptcy estate. With the FTX bankruptcy still ongoing, the final outcome of this huge claim remains to be seen.

The article Three Arrows Capital's approval drastically boosted its bankruptcy claim against FTX, skyrocketing from $120 million to $1.53 billion first appeared in Chain News ABMedia.