For fears that funds could be “disposed of” outside of court proceedings, liquidators have request permission to access 3AC assets in a court filing.
A British Virgin Islands court ordered 3AC into liquidation less than two weeks ago. In court documents filed late Friday, lawyers acting for the fund’s creditors said co-founders Zhu Su and Kyle Davies “have not yet begun to cooperate with the Foreign Representatives in any meaningful manner.”
A court hearing is scheduled for 9 am ET on Tuesday in New York.
In a Zoom call on July 8, people identified as “Su Zhu” and “Kyle” participated, but their video and audio were turned off, and neither spoke despite being asked direct questions. The only dialogue conducted was by their legal representatives Advocatus Law LLP and Solitaire LLP, according to court records.
A subpoena was issued to Davies to provide testimony via video conference and to submit documents by July 19th.
Concerns
Liquidators are genuinely concerned that 3AC may “dispose of” its assets outside of the insolvency proceedings, according to the document.
“There is an actual and imminent risk that the Debtor’s assets may be transferred or otherwise disposed of by parties other than the court appointed Foreign Representatives to the detriment of the Debtor, its creditors, and all other interested parties.”
Considering the nature of 3AC’s business, the “risk is heightened” as cryptocurrency assets are “readily transferable.” The liquidators must facilitate and “effectuate the orderly wind-down of its operations and begin [its] liquidation.”
Subpoena
According to Friday’s 106-page court filing, the following requests were made:
- Access to 3AC assets held within the United States
- Suspension of the right to transfer or dispose of assets outside of a court order
- Subpoenas for Zhu Su and Davies
- Waiving the relief period to action the order
As a result of the subpoena, the founders are required to provide the required documents within 14 days.