3AC Liquidators Plan to Impose A Hefty $10,000 Per Day Fine on Co-Founder

Liquidators of the now-defunct hedge fund Three Arrows Capital (3AC) have requested a judge to fine co-founder Kyle Davies $10,000 per day, over the charges of their refusal to cooperate with their investigation into the firm’s collapse. This has impeded their ability to unwind 3AC’s operations, said the liquidators.

Lawyers representing the 3AC liquidators noted that the fine against the co-founder is warranted since he hasn’t been responding to a subpoena for over the past five months. New York bankruptcy court Judge Martin Glenn had said that Davies is risking being held in contempt of court over his refusal to comply with the subpoena.

The liquidators are trying different methods to get the co-founders of 3AC to provide information. They even asked Glenn, one of the co-founders, for permission to issue a subpoena to Davies through Twitter, as he often posts there. The liquidators believe that a fine of $10,000 per day is reasonable and will likely convince Davies to respond.

The liquidators don’t know where Davies and the other co-founder, Su Zhu, are currently living. However, they mentioned an article from June 9 in The New York Times that stated Davies went to Bali after 3AC collapsed.

3AC Founder Has No Remorse

In a sworn statement, 3AC liquidator Russell Crumpler stated that Davies has shown no remorse regarding the collapse of the fund despite owing creditors a massive $3 billion. He added:

“In my view and experience as a liquidator, Mr. Davies’s behavior and recent public statements confirm his disregard for court orders and his obligations to the Debtor’s estate”.

Lawyers for Davies and Zhu did not respond to a message sent on Thursday asking for their comment. In the email exchange shared with the court by the liquidators, the lawyers representing Davies and Zhu claimed that the court orders obtained by the liquidators are unfounded. They argued that their clients, who are not present in the United States, are not under the jurisdiction of US courts.

Judge Glenn previously stated that the liquidators provided strong evidence that Davies is still subject to the court’s jurisdiction, despite not living in the country anymore. The liquidators stated that Davies was born in the US, and Three Arrows (3AC), the company involved, was initially established in Delaware and operated in California before it was incorporated in the British Virgin Islands, as confirmed in a ruling made in March.