(1) Most likely, EV US concluded that it had zero viable defenses to the clawback claims for 2022 transfers, and got concessions to drop clawbacks on the 2018 & 2019 claims. The estate’s EV of litigating the 2018⁄19 claims may have been negative or minimal anyway, as there may have been viable to strong defenses for those.
(2) Plausibly, EV US thought that the financial expected value of litigation was positive, but that the optics costs were too high.
(3) Conspiratorally, EV US really wanted that release from discovery obligations in paragraph 9 of the stipulation (Doc. 3745-2 at 9). This is very unlikely, given that the stipulation expressly specifies that it does not impair the right to demand discovery from EV UK (which likely “knows” the bulk of what EV US would know).
One possible silver lining for some grantees is the recitation that pursuit of litigation against many smaller re-grantees would have been uneconomical (Doc. 3745 at 9, para. 23). There is also a recitation that recipients of re-grants from EV US may have had some additional defenses (id. at 8, para. 21, probably alluding to 11 USC 550(b)(1)), although without any detail it is hard to say whether the FTX estate’s lawyers really believe this or whether it is the standard sort of possibility one mentions when asking a bankruptcy judge to sign off on a settlement.
Totally unsurprising to me.
Why would EV US have settled?
(1) Most likely, EV US concluded that it had zero viable defenses to the clawback claims for 2022 transfers, and got concessions to drop clawbacks on the 2018 & 2019 claims. The estate’s EV of litigating the 2018⁄19 claims may have been negative or minimal anyway, as there may have been viable to strong defenses for those.
(2) Plausibly, EV US thought that the financial expected value of litigation was positive, but that the optics costs were too high.
(3) Conspiratorally, EV US really wanted that release from discovery obligations in paragraph 9 of the stipulation (Doc. 3745-2 at 9). This is very unlikely, given that the stipulation expressly specifies that it does not impair the right to demand discovery from EV UK (which likely “knows” the bulk of what EV US would know).
One possible silver lining for some grantees is the recitation that pursuit of litigation against many smaller re-grantees would have been uneconomical (Doc. 3745 at 9, para. 23). There is also a recitation that recipients of re-grants from EV US may have had some additional defenses (id. at 8, para. 21, probably alluding to 11 USC 550(b)(1)), although without any detail it is hard to say whether the FTX estate’s lawyers really believe this or whether it is the standard sort of possibility one mentions when asking a bankruptcy judge to sign off on a settlement.