Hearing on settlement in AFX Capital case set to be postponed

Maria Nikolova

The hearing dedicated to the proposed settlement between AFX Capital and the Chapter 11 Trustee of Gallant Capital Markets Ltd is set to be adjourned to July 2, 2019.

Nothing seems to be happening fast when it comes to the lawsuit brought by the Chapter 11 Trustee of Gallant Capital Markets Ltd. against AFX Capital Markets Ltd., AFX Capital U.S. Corp. and STO Super Trading Online.

Even after the parties in the case announced that a settlement has been reached and scheduled a hearing so that the Court may approve the proposed stipulation, another delay in the proceedings looms. The hearing, originally scheduled for June 11, 2019, is set to be shifted to July 2, 2019. This becomes clear from a Letter filed with the New York Eastern Bankruptcy Court.

The text of the Letter is pretty formal and does not provide any details as to the reasons for the adjournment:

“This letter is to confirm the adjournment of the pre-trial conference in the above- mentioned adversary proceeding and the motion to approve the Trustee’s Stipulation with the Defendants, on consent of Defendants’ counsel, from Tuesday, June 11, 2019 at 10:00 a.m., to Tuesday, July 2, 2019 at 9:30 a.m”.

Let’s recall that, under the Complaint against AFX, throughout 2015 and 2016, Gallant 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.

Under the terms of the proposed settlement, the defendants will pay the sum of $830,000 in full and final satisfaction of any and all claims the Trustee and the Debtors’ estates have or may have. The Settlement Sum is to be paid to the Trustee, on behalf of the Gallant estate. The Trustee believes the settlement sum is fair and reasonable and in the best interest of the estate.

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