A former customer of FTX is taking legal action against a hedge fund for not honoring a deal regarding a bankruptcy payout. Alexander Nikolas Gierczyk claims that Olympus Peak, the hedge fund he sold his bankruptcy claim to, is refusing to pay him the additional amount he believes he is owed due to the bankruptcy payout being higher than expected.
Gierczyk, based in California, alleges that Olympus Peak, through their bankruptcy claims purchasing desk, has failed to make the promised payments on the claim he sold to them. According to documents filed in the U.S. District Court Southern District Of New York, Gierczyk agreed to sell his $1.59 million FTX bankruptcy claim to Olympus Peak Trade Claims Opportunities Fund at a 42% discount, with an “excess claim provision.”
The agreement stipulated that if the claim ended up being allowed in an amount greater than the initial claim, Olympus Peak would purchase the excess amount by paying the excess claim amount multiplied by the purchase rate. Gierczyk agreed to the sale because the purchase agreement included a clause that explicitly stated his right to receive additional recovery if his claim was paid above par through the bankruptcy proceedings.
Gierczyk’s lawyers argue in the filing that recent FTX disclosures indicate that claims similar to his could receive up to 146% of their value in distributions. However, they claim that Olympus Peak has refused to fulfill their end of the agreement, stating that Gierczyk no longer has any economic interest in the claim.
In response to the lawsuit, Ariel Lavinbuk, a Partner at Kramer Levin representing Olympus Peak, dismissed the claims as without merit and based on a misinterpretation of the contract between the parties. In the initial stages of FTX’s bankruptcy, claims were being sold for 13 cents on the dollar on bankruptcy marketplaces.
In conclusion, the dispute between Gierczyk and Olympus Peak highlights the complexities and challenges involved in bankruptcy claims transactions. It serves as a reminder of the importance of clear and precise agreements in such dealings to avoid misunderstandings and conflicts down the line.