Archegos Preps for Insolvency Amid Bank Scramble
Bill Hwang’s Archegos Capital will reportedly look to dodge attempts by its former lenders to recoup losses by filing for insolvency.
Archegos Capital has hired restructuring and insolvency advisors amid attempts by some of the affected banks to «claim as much as they possibly can», according to an «FT» report (behind paywall) citing unnamed sources.
It is also being advised by U.S. law firms King & Spalding, Kellogg Hansen and Gibbons as well as public relations expert Michael Sitrick.
Bank Action
According to the report, some of the six affected banks – Credit Suisse, Nomura, Morgan Stanley, UBS, MUFG and Mizuho – are preparing to issue «letters of demand» to Archegos in hopes to request for payment before taking legal action.
In addition, they are also investigating to ascertain if Archegos had withheld or provided incorrect information about borrowing from other prime brokers.
The report highlights UBS as one such bank that is probing for potential fraud.
$10 Billion Bill
Collectively, the six banks offered as much as $50 billion of leverage to Archegos which resulted in more than $10 billion of total losses.
Archegos alongside its advisors will now look to assess potential legal claims from banks as well as plan for a possible wind-down.
