Archegos prepares for insolvency as banks seek compensation: Report

Archegos has hired restructuring advisers to assess the potential legal claims from banks and to plan for a possible winding down of its operations, the report said, citing two people familiar with the matter.

The family office’s meltdown was triggered after ViacomCBS , a company Archegos was heavily exposed to, announced a stock offering in March. A slump in the media company’s share price alarmed the banks, which called on the fund for more collateral.

The fund defaulted on the margin call, which set off a scramble among Wall Street banks that had financed its trades to start unwinding them.

Global banks lost nearly $10 billion from the Archegos fallout. Credit Suisse, Nomura Holdings and Morgan Stanley were some of the banks that were hit.

The New York-based fund had assets of around $10 billion but held positions worth more than $50 billion. The saga is likely to have regulatory repercussions, as the Securities and Exchange Commission and the Federal Reserve both have said the situation is under scrutiny.

A number of the banks who lost money are preparing to issue “letters of demand” to Archegos, which are requests for payment before launching a legal claim, three people close to the process told FT.

Archegos declined to comment on the FT report.