From Bloomberg's The Brink, March 2:
The creditors bought beaten-down debts and are poised for full payout.
Welcome to The Brink. We’re Lucca de Paoli in London and Steven Church in Delaware, where the collapse of crypto firm FTX is proving a boon for some specialist hedge funds. We also have news on New York Community Bank, Codere and Bed Bath & Beyond. Follow this link to subscribe. Send us feedback and tips at debtnews@bloomberg.net or DM on X to @ManySundays.Hedge Funds Set for FTX Win
FTX is already one of history’s great corporate disasters. Now, for a clutch of specialist funds, it’s shaping up to be a terrific trade too.
A cadre of investment firms have been buying up the rights to FTX customer claims since the crypto firm fell into bankruptcy in late 2022. The basic bet has been that customers would recover more than the pennies-on-the-dollar that market makers were implying in the early days of the collapse.
They were right. In a recent hearing, an FTX lawyer told a US bankruptcy judge that the firm was on track to repay creditors in full, meaning claims that traded for as little as 10% of their nominal value in the aftermath of FTX’s collapse could now pay out at 100%. For those who bought early, the returns could be enormous.
Attestor Limited, a distressed-debt specialist based in London, held around $394 million in FTX claims at the end of January, according to a document filed to US courts at the time. That’s the biggest position among a gaggle of distressed-debt investors that have made big and now, almost certainly, lucrative wagers on FTX’s carcass. Other creditors include Baupost Group, Farallon Capital and Oaktree Capital, according to the filing and people familiar with the matter....
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