Global Brokerage’s Liquidation Analysis assumes $174.6m of Unsecured Claims
FinanceFeeds takes a look at the numbers in Global Brokerage’s updated liquidation analysis.
Global Brokerage Inc (OTCMKTS:GLBR), formerly known as FXCM Inc, has submitted an Updated Liquidation Analysis with the United States Bankruptcy Court of the Southern District of New York.
The analysis is in line with Section 1129(a)(7) of the Bankruptcy Code, often called the “best interests test”. This test requires that, as a condition to confirmation of the Prepackaged Plan of Reorganization of Global Brokerage, Inc. Pursuant to Chapter 11 of the Bankruptcy Code (“the Plan”) that each holder of a Claim or Interest in each Impaired Class will receive or retain under the Plan property of a value that is not less than the amount that such holder would receive if the Debtor was liquidated under chapter 7 of the Bankruptcy Code.
Putting it otherwise, the Liquidation Analysis generates a good faith estimate of the proceeds that would be generated if Global Brokerage’s assets were liquidated in accordance with chapter 7 of the Bankruptcy Code.
- Assumptions
The Liquidation Analysis assumes that Global Brokerage would be liquidated on a standalone basis. It also assumes a foreclosure of the Leucadia Credit Agreement, which contains a pledge on Global Brokerage Holdings’ membership interests in FXCM. The analysis further assumes that the Debtor converted the case from chapter 11 to chapter 7 or filed a chapter 7 case on or about December 31, 2017.
The Liquidation Analysis assumes that absent the transaction contemplated in the Plan, the maturity date under the Leucadia Credit Agreement will not be extended, and the loan will mature on January 16, 2018. FXCM does not have cash on hand to pay down the amount due under the Leucadia Credit Agreement at maturity, and it is assumed that absent the transaction contemplated in the Plan, FXCM will not be able to refinance the Leucadia Credit Agreement. As a result, it is assumed that Leucadia will exercise its available remedies and foreclose on Global Brokerage Holdings’ membership interests in FXCM, which is currently pledged in favor of Leucadia pursuant to the Leucadia Credit Agreement and related loan documents.
As a result of the foreclosure by Leucadia on Holdings’ membership interests in FXCM, the net liquidation proceeds from GLBR are expected to primarily include the cash on hand, if any, plus recoverable amount under the intercompany receivables net of liquidation costs.
- The numbers
Detailed data is provided in the table below.
Let’s note that Global Brokerage Holdings’ assets include Cash and Equivalents estimated at $0.7 million, prepaid expenses in the amount of $0.2 million, accounts receivable of $0.0 million, Deferred Financing Fees of $0.8 million, and Intangible Assets and Goodwill of $0.9 million.
The main source of value at GLBR is Holdings’ membership interest in FXCM, which is a component of “Net Investment in Affiliates”.
The Liquidation Analysis assumes that, based upon a review of Global Brokerage’s books and records and its financial statements, there are $0.1 million of Priority Claims. The analysis projects that Priority Claims will be 74-100% pursuant to the liquidation distribution.
The Liquidation Analysis assumes that there will be $174.6 million of Unsecured Claims including:
- Existing Note Claims, consisting of the principal amount of approximately $172.5 million, plus interest of approximately $1.9 million;
- $0.1 million in Claims mainly consisting of accrued corporate expenses at GLBR.
The analysis projects that Unsecured Claims will receive a recovery of 0-0% pursuant to the Liquidation Distribution.
Furthermore, the analysis forecasts that Equity Interests in GLBR will receive no recovery pursuant to the Liquidation Distribution. Let’s note that “Equity Interests” means any and all equity securities in Global Brokerage, such as all shares, common stock, preferred stock, or other instrument evidencing any fixed or contingent ownership interest in the Debtor.
According to Global Brokerage, the Prepackaged Plan of Reorganization of Global Brokerage, Inc. Pursuant to Chapter 11 of the Bankruptcy Code will provide all creditors and equity security holders with a recovery (if any) that is not less than what they would otherwise receive pursuant to a liquidation of Global Brokerage under chapter 7 of the Bankruptcy Code.