The bankruptcy trustees of insolvent crypto hedge fund Three Arrows Capital (3AC) may not use Twitter to force its founders to cooperate in the bankruptcy proceedings, Judge Martin Glenn of the Southern District Court of New York ruled on Dec. 2.
In the virtual hearing, the lawyers for the insolvency administrators accordingly complained that the 3AC founders Zhu Su and Kyle Davies have repeatedly refused to cooperate with the insolvency administrators in recent months. "Communication obligations were agreed, but so far they have not resulted in satisfactory cooperation," as the lawyers state.
The background is that the two company founders are not in the USA but in Indonesia and the United Arab Emirates, which is why it is difficult for the American insolvency administrators to enforce their rights.
The hedge fund's legal representation in Singapore was also unable to cooperate, which is why the insolvency lawyers now want to use alternative methods to persuade Su and Davies to cooperate.
The presiding judge Glenn is open to this argument, but sees legal difficulties in implementing it. The two 3AC founders should actually be forced to cooperate, but only under certain circumstances:
“From the point of view of the court, this would be relevant for obtaining the cooperation. […] But under Article 45, the question arises as to whether this court has the authority to proceed against the individuals concerned on a personal level.”
Accordingly, forcing cooperation via an alternative method such as Twitter would only be possible if a separate “court order” was available for this.
The bankruptcy trustees already have control of $35.6 million from the hedge fund, which is held by banks in Singapore. They also control other assets in the form of 60 different cryptocurrencies stored at different custodians, which could be converted to US dollars whenever necessary.
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