Global Brokerage’s Chapter 11 bankruptcy plan gets into effect

Maria Nikolova

The Effective Date of the Plan occurred on February 8, 2018 and, as a result, the Plan has been substantially consummated.

fxcm

There is an update from Global Brokerage Inc (OTCMKTS:GLBR), formerly known as FXCM Inc, on the progress of its Chapter 11 bankruptcy plan. Last night the company submitted a notice of entry of order confirming its prepackaged plan of reorganization and the occurrence of the effective date of the plan.

The Effective Date of the Plan occurred on February 8, 2018 and, as a result, the Plan has been substantially consummated.

Let’s recall that on January 22, 2018, the New York Southern Bankruptcy Court approved Global Brokerage’s Chapter 11 with certain modifications. These modifications reflected the objections by a number of plaintiffs in legal cases against the broker. Such plaintiffs include Brett Kandell and the Retirement Board of the Policemen’s Annuity and Benefit Fund of Chicago. The plan was modified in line with objections raised by these parties.

The US Trustee, however, saw favorable response only to some of his objections. The objections that were satisfied concern the Debtor Release (this will not be a release of any claims of the Debtor against its current or former officers, directors and employees) and exculpation provisions.

Global Brokerage got the Court’s approval to assume the employment agreement of its CEO Kenneth Grossman. Let’s recall that the Grossman Employment Agreement provides for both an annual salary of $600,000 and a “Completion Bonus” of $1,000,000 payable as a lump sum on July 31, 2018. The Trustee argued that Global Brokerage must show that the Completion Bonus is a “pay for value” plan that offers incentives based on performance rather than a “pay to stay” plan.

Global Brokerage has also received the Court’s approval for issuance of the new notes. The Debtor or Reorganized Debtor, as applicable, is authorized to issue the New Notes. The New Notes shall be, upon execution and delivery, legal, valid, and binding obligations of the Reorganized Debtor, the Court ruled.

The next steps following the Plan’s entry into effect have yet to be known.

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