NY Court discontinues adversary proceeding against AFX Capital Markets
The New York Eastern Bankruptcy Court has discontinued the adversary proceeding against AFX Capital Markets, Ltd., AFX Capital U.S. Corp. and STO Super Trading Online.
The relevant order was signed by Judge Elizabeth S Stong on October 12, 2022. This happens shortly after Ronald J. Friedman, Esq, the Liquidating Trust Trustee of the Gallant Liquidating Trust 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.
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 sought a turnover of Gallant property and recovery of assets of the Gallant estate.
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.