Adversary proceedings against AFX Capital Markets face dismissal
The adversary proceedings against AFX Capital Markets, Ltd., AFX Capital U.S. Corp. and STO Super Trading Online may be dismissed, as indicated by an order issued by the New York Eastern Bankruptcy Court on September 8, 2022.
The proceedings were launched on April 2, 2018 and have since been marred by numerous delays and postponements. The defendants have not appeared in Court for the past couple of years.
According to the order issued on September 8, 2022 and seen by FX News Group, Ronald J. Friedman, Esq, the Liquidating Trust Trustee of the Gallant Liquidating Trust has advised the Court that, in his business judgment, he believed that the continued prosecution of the Adversary Proceeding was unlikely to result in a benefit to the Debtors’ estate and that he would like to dismiss the Adversary Proceeding but could not do so by stipulation as required by Rule 7041 of the Federal Rules of Bankruptcy Procedure because he has been unable to contact the Defendants as they are not located in the United States; and upon the direction of the Court, the Liquidating Trust Trustee was advised to file this order to show cause so that any party in interest may show cause as to why the Adversary Proceeding should not be dismissed.
The Court ordered that defendants AFX Capital Markets, Ltd., AFX Capital U.S. Corp. and STO Super Trading Online are required to show cause before the Honorable Elizabeth S. Stong, United States Bankruptcy Judge for the United States Bankruptcy Court for the Eastern District of New York, at a telephonic hearing on September 21, 2022, at 2:30 p.m. (the “Hearing”), or as soon thereafter as counsel can be heard, why an order should not be signed and entered: (a) dismissing this adversary proceeding, and (b) granting such other, further and different relief as this Court may deem just and proper.
The Complaint alleges that in 2015 and 2016, Gallant Capital Markets deposited about $2.35 million into a Gallant account maintained at AFX. About two weeks before Gallant commenced its bankruptcy case, there was a balance of approximately $2.4 million in the Gallant account at AFX. Back then, Gallant requested several times that AFX returned Gallant’s funds. These requests, however, were disregarded.
The complaint further alleges that AFX withdrew the remaining balance, lacking any authorization and without any basis, in violation of the automatic stay.
In these adversary proceedings brought by Gallant’s Chapter 11 Trustee, the Trustee seeks a turnover of Gallant property and recovery of assets of the Gallant estate.