A US bankruptcy court has granted Three Arrows Capital (3AC) permission to increase its claim against the collapsed exchange FTX to $1.53 billion, a significant boost from the original $120 million claim sought by 3AC’s liquidators.
**Legal Battle**
In a court filing from March 13, 3AC’s liquidators initially filed a $120 million claim in June 2023, arguing that FTX improperly seized assets before the hedge fund’s collapse. However, they later revised the claim, asserting that $1.53 billion worth of 3AC assets held on the FTX platform were liquidated to satisfy liabilities to FTX.
FTX’s bankruptcy estate contested these claims, arguing that the revisions were introduced too late and were unrelated to the initial filing. They claimed that allowing the amendment would disrupt FTX’s restructuring process and impose an unfair financial burden, especially since their bankruptcy reorganization strategy assumed that 3AC’s claim would not change.
**Court Ruling**
Despite FTX’s objections, Judge John T. Dorsey of the US Bankruptcy Court for the District of Delaware ruled against the exchange, noting that FTX failed to provide sufficient evidence. The court acknowledged the potential for further legal action mentioned in 3AC’s original filing. Additionally, the court found no evidence of bad faith on 3AC’s part, highlighting the difficulties faced by 3AC’s team due to missing records, limited access to FTX’s internal systems, and lack of cooperation from key individuals. Judge Dorsey criticized FTX for restricting access to key individuals and only providing raw transaction data, which complicated the liquidators’ efforts to understand the complete financial picture.
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