Avenica’s bankruptcy to shift from Chapter 11 to Chapter 7
A bankruptcy case concerning the retail Forex industry is set for some changes, as indicated by recent filings with the New York Eastern Bankruptcy Court.
The case, initially filed early in 2017, concerns the bankruptcy of Avenica Inc. The company used to provide services and technical support to FX broker Gallant Capital Markets, which also filed for Chapter 11 relief in April 2017. In fact, the estates of Gallant and Avenica were administered jointly by Esther DuVal, CPA, as their Chapter 11 Trustee.
Let’s also note that Salvatore Buccatello held 100% of the membership interest in Avenica and was the CEO of both debtors.
Now, Avenica’s case is set for a shift. On December 22, 2020, Esther DuVal filed a notice with the Court informing it that she will present a proposed Stipulated Order converting the Avenica, Inc. estate from a Chapter 11 case to a Chapter 7 case. The reason for that change is that the Avenica estate had no assets for the Trustee to administer, and thus could not fulfill the requirements under Bankruptcy Code § 1129.
Chapter 11 is often called the reorganization chapter, as it allows businesses and some individuals to reorganize, without having to liquidate all assets. In filing a Chapter 11, the debtor presents a plan to creditors, which, if accepted by the creditors and approved by the Court, will allow the debtor to reorganize personal, financial or business affairs, and again become a financially productive entity.
Chapter 7 is also known as the liquidation chapter. It is used by individuals and businesses that are unable to repair their financial situation. In Chapter 7, asset classes, the debtor’s estate is liquidated under the rules of the bankruptcy code. Liquidation is the process through which the debtor’s non-exempt property is sold for cash by a trustee and the proceeds are distributed to creditors.
Avenica’s trustee will present the proposed order for case conversion on January 8, 2021. Any objections are expected no later than January 4, 2021.
Let’s recall that, back in May 2017, when the motion for the joint administration of the estates of Avenica Inc and Gallant Capital Markets was filed, the debtors estimated that there were more than 1,200 customers and parties-in-interest in these bankruptcy cases.
So, the next steps for Avenica are now pretty much clear. However, there seems a long way to go for the Gallant Capital Markets’ bankruptcy proceedings, with a status hearing set for January 19, 2021.
Plus, some of the related cases are still ongoing. The list of such cases includes the adversary proceedings against AFX Capital Markets. As FX News Group has reported, the last several hearings in these proceedings were held without the appearance of the defendant, that is, AFX.