AFX Capital is unresponsive and fails to pay outstanding invoices, US counsel confirms
AFX’s unresponsiveness renders it virtually impossible for their counsel to obtain needed information for representing the defendants.
AFX Capital Markets LTD., AFX Capital U.S. Corp., and STO Super Trading Online, which are targeted in a legal action by Chapter 11 Trustee Esther DuVal, are about to lose another counsel.
On November 22, 2019, White and Williams LLP (WW) filed a motion with the New York Eastern Bankruptcy Court asking to withdraw as a counsel for AFX.
The previous legal representatives of AFX – Foley & Lardner LLP withdrew as counsel to the defendants due to the non-payment of significant legal services and the defendants failure to communicate with Foley & Lardner LLP. The problems that WW is experiencing appear to be similar.
WW explains that “irreconcilable differences have arisen” between the defendants and WW. In particular, despite WW’s repeated requests for AFX to pay outstanding invoices for legal services and expenses, the defendants have failed to pay WW the amounts owed for representation in this case.
AFX has also failed to respond to requests from WW for information and direction in this case. This includes not responding to telephone calls, emails, and other correspondence from WW.
WW is uncertain of the current status of the defendants.
Let’s recall that, in October this year, AFX’s counsel said the firm cannot be expected to fund a settlement in the US case, which has been brought by the trustee for the estates of Gallant Capital Markets and Avenica.
Under the Complaint against AFX, throughout 2015 and 2016, Gallant Capital Markets deposited approximately $2.35 million (for its benefit) into a Gallant account maintained at AFX. Within the two-week period prior to Gallant’s commencement of its bankruptcy case, there was a balance of approximately $2.4 million in the Gallant account at AFX. Around that time, Gallant made multiple demands upon Defendants for the turnover of Gallant’s funds—all of which were disregarded.
Nevertheless, AFX withdrew the remaining balance, without authorization and without basis, on the Filing Date – in violation of the automatic stay. This case involves core issues whereby the Trustee is seeking a turnover of Gallant property and recovery of assets of the Gallant estate, and enforcement of the automatic stay.
