For more than a year, liquidator Teneo has been attempting to recoup assets worth over $1 billion from the founders of Three Arrows Capital (3AC) in a bid to claw back losses for the bankrupt hedge fund’s creditors.
On Thursday, December 21, Teneo announced it had secured a court order freezing assets held by 3AC founders Zhu Su and Kyle Davies and Davies’ wife Kelly Chen. The British Virgin Islands (BVI) bankruptcy court’s decision appears to spell the end of Zhu and Davies’ attempts to dodge the liquidator, but the saga isn’t over yet.
According to Teneo, the BVI court issued an order preventing Zhu, Davies and Chen from transferring or selling assets worth up to $1.14 billion. The firm estimates that 3AC creditors are owed around $3.3 billion in total.
In a statement, Teneo said: “The order is specifically designed to prevent the Founders and Ms. Kelly Chen from disposing of or otherwise dealing with assets in any way that might frustrate eventual enforcement by the liquidators.”
Zhu and Davies had largely evaded Teneo’s attempts to seize assets they controlled, since their hedge fund went bust in June 2022. Teneo’s target includes millions of dollars in crypto Zhu and Davies are accused of draining from 3AC’s wallets.
But the disgraced 3AC founders couldn’t evade responsibility forever.
In September, the Monetary Authority of Singapore issued prohibition orders against Zhu and Davies, barring them from engaging in regulated financial activity for nine years.
Later that month, Zhu was arrested at Singapore airport. A court then sentenced him to four months in prison for failing to cooperate with investigators. Hoping to identify the whereabouts of the missing 3AC millions, Teneo reportedly visited him in jail shortly after.
Meanwhile, Davies’ whereabouts remain unknown, but Teneo is reportedly working with authorities globally to track him down.
Teneo’s next step will be to establish the proper legal ownership of the contested assets.
Doing so will entail further legal wrangling and potential appeals from Zhu and Davies.
In addition to a stash of cryptocurrency, Teneo has previously raised suspicions that Zhu and Davies used money belonging to 3AC to fund a down payment on a $50 million yacht and a Singapore bungalow purchased under the name of Zhu’s wife.