Global Brokerage seeks official closure of Chapter 11 case

Global Brokerage Inc (OTCMKTS:GLBR), formerly known as FXCM Inc, on Thursday filed a motion for closing its Chapter 11 case.

According to the documents, seen by FinanceFeeds, the hearing regarding the proposed decree will be held on June 14, 2018 at the United States Bankruptcy Court for the Southern District of New York. Anyone having objections to the proposed closure will have to submit them at the Court no later than no than 4:00 p.m. (prevailing Eastern time) on June 11, 2018.

There are no unresolved motions, contested matters, or adversary proceedings pending in the Chapter 11 Case, according to the broker.

The documents say that as of the Effective Date, litigation asserting Other Subordinated Claims shall be permitted to proceed, and any Claims or causes of action covered thereby shall not be affected or discharged by virtue of the Chapter 11 Case. Also, to preserve the Debtor’s corporate structure, on the Effective Date, all Interests shall remain unaffected and the Holders thereof shall retain all legal, equitable and contractual rights to which Holders of such Interest are otherwise entitled.

Let’s recall that Global Brokerage filed for bankruptcy on December 11, 2017. The Chapter 11 case was multi-faceted, as what may be seen as hidden agenda was revealed during the the hearing before the so-called “exit” from Chapter 11 restructuring. The transcript of the hearing has shown that a certain part of the bankruptcy plan did not go through – the part where Global Brokerage provides releases to its directors and officers, that is, gives them a clean slate to move on, while quietly nixing a number of derivative lawsuits against them.

The Judge assigned to the case has voiced his concerns about the proposed releases in the plan:

“All I know is that in the context of what is supposed to be a limited restructuring targeted only on the notes with little effect on anybody else, I have buried in here the Debtor dropping its potential claims against officers and directors in situations where I don’t see any compliance with what the directors would have to do ordinarily under state law to get blessed for that. Why should I bless it?”

The Judge explained that the essence of a pre-packaged reorganization is that in contrast to a full-blown bankruptcy case that includes a disclosure statement that is sent to everybody, usually, as is the case with Global Brokerage, one particular part of the capital structure is targeted by the restructuring, and everybody else is meant to sail through with the bankruptcy not really affecting them.

The provisions about the releases did not fit within the context of the case, he noted back then.