FTX Lawyers Challenge Three Arrows Capital’s $1.53B Claim

The event holds significance as it affects FTX’s creditor recovery and sets precedents for
bankruptcy claim amendments amid market fluctuations.

The Delaware
bankruptcy court has granted Three Arrows Capital a claim extension from $120 million to
$1.53 billion. FTX’s legal team vehemently opposed this increase, citing
disruption to the creditor recovery process. Such expansions are rare in ongoing bankruptcies.

Three Arrows Capital’s immense claim increase came despite FTX’s opposition.
Louis D’Origny, CFO of FTX Creditors, warned it could “smash recovery expectations,” impacting
customer creditors. The legal approval may affect ongoing bankruptcy proceedings by setting a concerning
precedent.

This amended claim could reshape the FTX creditor pool, diluting potential recoveries. The
increased claim risks creating additional financial pressures on FTX’s estate. Impact on market
sentiments remains low, though investors might reassess recovery outlooks regarding affected assets.

The decision influences both financial and corporate strategies in bankruptcy
contexts. By expanding the creditor pool, the added burden on available funds could destabilize FTX’s
resolution plans, making the route to recovery complex for all involved parties.

If upheld, the court’s ruling may create avenues for other firms to amend claims late into
bankruptcy proceedings. Such decisions, while lucrative for claimants, introduce strategic
uncertainties for estate managers tasked with other creditors’ interests.

Experts note the potential shift in bankruptcy claim practices, drawing parallels
with historical cases like Mt. Gox. FTX signals suggest a possible renegotiation of creditor
assets if payouts are recalculated, affecting liquidity and institutional confidence.

Louis D’Origny, CFO of FTX Creditors, expressed concerns about the legal ruling: “The ruling would
also increase the claim pool by 20%, which would be a disaster for customer creditors. [It] would ‘smash the
recovery expectations’ if they got over $1.5 billion.”