(Bloomberg) -- Top distressed-debt investors are scooping up FTX Group claims on the cheap, betting that the company’s lengthy bankruptcy process will uncover additional valuable assets.

Silver Point Capital, Diameter Capital Partners and Attestor Capital are among investors who have bought more than $250 million worth of FTX debts since the beginning of the year, according to a Bloomberg analysis of court records. One recent trade saw Hudson Bay Capital Management buy a $23 million claim from a fortune cookie distributor, and sell about half of it to Diameter shortly after, court papers show.

The investors are trading in the unregulated market for bankruptcy claims, where the payables of insolvent companies change hands for pennies on the dollar. The market for FTX debts was relatively quiet in the immediate aftermath of its collapse, but has gained momentum as lawyers and bankers uncover more assets amid the rubble, sending the value of certain claims surging north of 30 cents on the dollar.

“People made careers off of Lehman and Madoff — I think people see FTX as a Lehman or Madoff” opportunity, said Thomas Braziel, an investor who buys bankruptcy claims, referring to the trading of debts tied to the failed bank and Ponzi scheme. “The guys that are buying in these dockets, I consider them some of the smartest people in distressed.”

Representatives for Silver Point, Diameter and Attestor declined to comment. Hudson Bay didn’t respond to a request seeking comment sent via its website.

In the months since FTX imploded amid allegations of fraud, advisers have found billions of dollars worth of crypto and are trying to claw back money spent on the likes of questionable acquisitions and payments to co-founder Sam Bankman-Fried’s parents. The recovery effort is spearheaded by John J. Ray III, who oversaw the liquidation of Enron.

Some low-ranking FTX claims were quoted at about 35 cents on the dollar in recent weeks, according to data from Claims Market, a broker of the debt. That’s up from as low as 12 cents at the start of the year.

Claims trading takes place after almost every sizable corporate blowup, but big investment firms shy away from all but the largest failures because the bets are often too small to be worth the hassle. Claims can run the gamut from simple overdue electric bills worth thousands of dollars to sophisticated assertions of contract-abandonment damages exceeding $1 billion. 

It’s likely that the total face value of FTX claims traded is far higher than the more-than $250 million of deals disclosed on the public docket. Buyers and sellers sometimes wait months to file the paperwork documenting a trade, Braziel said, adding that he’s aware of individual FTX claims of more than $100 million changing hands. 

Whatever the size, the basic trade is this: investors buy unpaid bills at some discount to how much FTX owes, hoping to ultimately recover more than what they paid for the claim. The trade off is that bankruptcies can take years to unwind, and it can be difficult to guess what a failed enterprise is worth. 

In the case of FTX, investors are in many cases buying the rights to accounts with assets stuck on the exchange. Contrarian Capital Management, for example, in May purchased an account that owed a smattering of crypto including Bitcoin and Ether, along with about $430,000 of cash, court records show. Prices paid for claims aren’t disclosed. 

A spokesperson for Contrarian declined to comment. 

Some claims aren’t tied to individual accounts. Attestor Capital purchased a $17 million claim from Miami-Dade County tied to the naming rights deal FTX once held with the city’s professional basketball arena. 

--With assistance from Ethan M Steinberg and Amelia Pollard.

©2023 Bloomberg L.P.