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Terraform Labs’ Bankruptcy Restructuring Plan: List of Creditors With Largest Unsecured Claims

Last Updated January 22, 2024 4:21 PM
James Morales
Last Updated January 22, 2024 4:21 PM

Key Takeaways

  • Terraform Labs has filed for Chapter 11 bankruptcy.
  • Court documents show that the  Terra developer has a string of unpaid debts.
  • Liabilities include a potential SEC fine relating to an ongoing lawsuit alleging securities fraud.

More than a year and a half after UST lost its peg to the dollar, the company behind the ill-fated stablecoin, Terraform Labs, has filed for Chapter 11 bankruptcy.

According to documents  submitted to a Delaware court on Sunday, January 21, the firm has between $100 million and $500 million in liabilities. But who does Terraform owe the most money to? As the bankruptcy proceedings get underway, a list of creditors holding the largest unsecured claims includes investors, unpaid employees and contractors, the firm’s landlord, and the US Securities and Exchange Commission (SEC).

Terraform’s Unpaid Bills 

Of the 12 creditors listed in Terraform’s bankruptcy filing, 10 are service providers the firm is obliged to pay if it is to honor their respective contracts. These include relatively small commitments such as a $1,800 plumbing bill and an $81 unpaid invoice from a small Singaporean printing firm .   

Among the outstanding liabilities for which Terraform provided concrete figures, the largest was a $3,474 owed to the law firm K&L Gates. However, some of its obligations that couldn’t be immediately valued may run much higher.

For terminating the lease on its headquarters in Singapore’s financial district early, Terraform will need to negotiate an agreement with TPC Commercial or risk being sued for whatever rent is due in the remaining tenancy period. 

Meanwhile, several digital service providers are also included on the list, including Cloudfare, Nansen, and Token Terminal, each of which typically charges annual fees of thousands to corporate clients.

SEC Listed as Potential Creditor

Of all Terraform’s unsecured debts, one item threatens to significantly increase the firm’s overall liabilities. 

Included in the list of the company’s creditors, the SEC will want to impose a heavy penalty if it wins a lawsuit  accusing Terraform and its founder Do Kwon of orchestrating a multi-billion dollar crypto securities fraud. 

The Terra developer’s prospects in the case took a turn for the worse earlier this month when Judge Jed Rakkof issued a summary judgment concluding that UST, LUNA, wLUNA, and MIR should be considered securities.

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