Global Brokerage’s bankruptcy case triggers stay of legal actions brought by investors, ex-clients
As of the commencement of Global Brokerage’s Chapter 11 case, the actions have been automatically stayed as against the Debtor.
A number of legal actions against Global Brokerage Inc (NASDAQ:GLBR), formerly known as FXCM Inc, are stayed as a result of the filing of a bankruptcy petition by the broker on December 11, 2017. On Thursday, Counsel for Global Brokerage filed documents about the bankruptcy with the New York Southern District Court, thus informing all parties in the cases of the start of the Chapter 11 procedure.
The plaintiffs in several cases, including the actions brought by former clients of the broker, as well as actions brought by former investors in the so-called “mega lawsuit”, and the action concerning the allegedly “Black Swan” events from January 15, 2015, are all affected by the bankruptcy.
The documents filed with the Court explain that as of the commencement of Global Brokerage’s Chapter 11 case, the actions have been automatically stayed as against the Debtor.
Pursuant to Section 362 of the Bankruptcy Code, the filing of a bankruptcy petition automatically stays inter alia:
”the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title . . . [and] any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case under this title.”
The “First Day Hearing” in the bankruptcy case was held on Wednesday, with the Court granting a number of Motions launched by the Debtor, including authorizing Global Brokerage to continue using its existing bank account and business forms, as well as a Motion for the entry of an order establishing notification procedures and approving restrictions on certain transfers of interests in the debtor. The Bankruptcy Judge has also granted the Motion for payment of the so-called Trade Claims.
The Judge also scheduled a Combined Hearing for January 17, 2018, in line with the timetable proposed by Global Brokerage’s Counsel. At this hearing, the Bankruptcy Court will consider, among other things, the adequacy of the Disclosure Statement and confirmation of the Prepackaged Plan for Chapter 11 bankruptcy.