More than two years have passed since Esther Duval, the Chapter 11 Trustee of Avenica, Inc. and Gallant Capital Markets, Ltd. launched a lawsuit against AFX Capital Markets LTD., AFX Capital U.S. Corp., and STO Super Trading Online at the New York Eastern Bankruptcy Court. Ever since, the defendants have started buying time, using various excuses for delays and protractions.

At yet another hearing in this matter, held on November 2, 2020, the defendants failed to show up (in person or via a legal counsel). The hearing was held and adjourned. A pre-trial conference was set for December 1, 2020.

The last time a defense lawyer appeared for AFX was on November 15, 2019.

These adversary proceedings were launched back in April 2018. 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.

Given AFX’s actions during these proceedings, including agreeing to a settlement but not complying with the agreement, the Chapter 11 Trustee has also sought sanctions against the defendants. These sanctions include the entry of a judgment against the defendants, whereby they will have to pay $830,000. This is the amount that the AFX defendants agreed to pay the Trustee in a settlement agreement executed and presented to the Court for approval back in 2019.

Esther Duval has reiterated that the AFX defendants have engaged in a manipulative strategy of delay, obfuscation, and fabrication in failing to comply with the stipulation of settlement.

In the meantime, in the UK, the Joint Special Administrators (JSAs) of AFX Markets Ltd continue with their efforts to help harmed clients of the broker get their money back. According to the latest progress report, 418 clients have submitted claims with the administrators. These clients claim to be owed GBP 13.77 million in total. A total of 75 client claims (for GBP 2.6 million) have been rejected in full or in part. And 180 claims with a combined value of GBP 6.78 million are currently held pending the receipt of further information.

Let’s recall that, in August 2019, the UK Financial Conduct Authority (FCA) announced that the High Court of Justice of England and Wales appointed special administrators to AFX Markets Limited.

AFX Markets Limited is a UK registered company that has been authorised by the FCA since May 2012. AFX Markets acted as broker for customers trading on its online trading platforms (ww.afxgroup.com and www.stofs.co.uk), principally in Forex and CFDs.