'Much Wow' - 3AC founders blame FTX, buy super yacht while forcing liquidators to subpoena them on Twitter

In just over 24 hours, more than 375,000 people have seen Three Arrows Capital (3AC) founder Kyle Davies served with a subpoena via Twitter. Without context, this appears to be an attempt to embarrass Davies – but contacting the liquidators and reviewing the court documents they provided, it appears to have been more a matter of necessity. Davies and co-founder Su Zhu shun their liquidators.

Twitter account @3ACLiquidation tweeted Davies' account, presenting him with a subpoena. You can view a redacted copy attached to the tweet:

Why does 3AC receive a subpoena?

At the end of June 2022, 3AC became the first in a series of waves of destruction before the collapse of FTX FTT/USD and Alameda Research. 3AC filed for bankruptcy in the British Virgin Islands and began liquidation proceedings. Joint liquidators have been appointed by the court in the British Virgin Islands and are employed by the Teneo global advisory board.

It should be noted that filing for bankruptcy was a voluntary act, and working with liquidators to satisfy creditors is the nature of bankruptcy.

However, co-founders Davies and Zhu appear to have changed their minds, leaving 3AC and the co-liquidators unable to do their jobs. Reuters reported that 3AC complained that Davies and Zhu are "still not cooperating on asset recovery".

The founders of 3AC put the blame squarely on FTX. In an interview with CNBC on Nov. 16, Davies said that FTX and Alameda Research "chased our positions", drove down the price of the Luna cryptocurrency, and "brought us down".

Co-liquidators are reaching out via Twitter because co-founders are putting energy into the tweet and doing interviews that seem to lay the blame on FTX and Alameda, but they're not working with the liquidators to pay their creditors.

On December 3, Davies tweeted: "Unfortunately, our liquidators appear to be refusing to constructively engage us. After months of cash in a bank account and minimal asset sales, there have still been no payments to creditors. Let's talk openly with all creditors to find a better way forward."

However, Davies seems reluctant to show the same openness to liquidators.

Why did the liquidators have to tweet Davies?

Benzinga contacted a Teneo representative to get his side of the story. They shared the presentation they made to Martin Glenn, Chief Bankruptcy Judge in the United States.

The presentation showed a story of trying and failing to speak with the founders of 3AC, stating:

"The Singapore lawyer provided email addresses to contact the founders; however, the founders and their counsel did not respond to communications from the liquidators."

The company lists interviews the founders gave to Bloomberg on July 22, 2022 and CNBC on November 16 and complains that the founders tweeted "throughout the proceedings" and have been “active and responsive to comments on Twitter.”

Although 3AC's founders were active on social media, they "repeatedly failed to engage", according to the liquidators.

On July 6, 2022, the Liquidators had an introductory Zoom call with counsel from Advocatus and Solitaire, the Founders were in attendance, but their video was muted and they remained silent throughout the call, added the liquidators. The liquidators had only one other discussion with Zhu and Davies, and had limited discussions, mostly by email, with the founders' attorney in Singapore. Limited cooperation from the founders has led to only superficial disclosures of assets and some agreements, the liquidators said. They added that there had not been a full transfer of books and records. The founders refused to accept the service through their lawyer in Singapore, the liquidators noted.

In response, Judge Martin Glenn...