Recently placed on liquidation order, the investment fund Three Arrows Capital (3AC) continues to make news. Su Zhu, one of its co-founders, has stated, with evidence, that its liquidators are refusing to cooperate. Thus, the 2 parties involved are passing the quid.
Three Arrows Capital in the fog
After more than a month of silence, Su Zhu, one of the co-founders of the investment fund Three Arrows Capital (3AC), has spoken out via Twitter, indicating that its liquidators are refusing to cooperate.
This statement is the exact opposite of the information revealed two days ago. Indeed, it was then the hedge fund’s creditors who accused the 2 co-founders of 3AC of being absent.
Sadly, our good faith to cooperate with the Liquidators was met with baiting. Hope that they did exercise good faith wrt the StarkWare token warrants. pic.twitter.com/CF73xI8r6n
– Zhu Su (@zhusu) July 12, 2022
“Unfortunately, our willingness to cooperate with the liquidators has been met with bait and switch,” he wrote in the tweet, taking screenshots of two emails sent by Advocatus Law LLP, the law firm defending Three Arrows Capital following its placement in liquidation by a BVI court in late June.
According to him, the lawyers defending the creditors of the investment fund are limited to requesting a number of documents without really cooperating “in good faith” in order to find a common ground with the two co-founders.
According to an exclusive report from The Block, the first meeting held by Three Arrows Capital’s creditors will take place on 18 July and will be governed by Teneo, the New York-based consulting firm in charge of the liquidation process.
Three Arrows Capital has filed for Chapter 15 bankruptcy protection in order to protect itself and to allow it to cooperate with the courts and its creditors.
An investment in Starkware in jeopardy
Among its many investments, Three Arrows Capital had planned to invest in Starkware’s upcoming token, a scaling solution for the Ethereum blockchain (ETH).
According to the second email presented by Su Zhu, the liquidators did not take the necessary steps to enforce this right, causing Three Arrows Capital to lose “substantial value”. Three Arrows Capital had invested $75 million in a March 2021 fundraising round for Starkware.
This would have the effect, according to the lawyer, of harming all parties involved in the evolution of 3AC:
Their rights as creditors, investors and shareholders of the company have been prejudiced. The conduct of the liquidators on the starkware exercise may constitute a breach of their duties, for which they are answerable to the creditors, investors and shareholders of the company. “
Meanwhile, as written in the email captured earlier, Su Zhu and Kyle Davies, the 2 co-founders of Three Arrows Capital, did not participate in the scheduled July 12 call with their liquidators, pending more appropriate communication:
“Depending on your response, we will let you know when our clients can reasonably speak with you.”
