The liquidating trustee of Gallant Capital Markets today provided a brief update on the adversary proceedings against AFX Capital Markets Ltd, AFX Capital U.S. Corp. and STO Super Trading Online at the New York Eastern Bankruptcy Court.
The notice, seen by FX News Group, states that the hearing on the motion for a judgment against the AFX defendants, seeking sanctions and fees for engaging in bad faith and injunctive relief is adjourned from April 8, 2021 to June 18, 2021.
Ronald J. Friedman, Esq., in his capacity as the Liquidating Trustee of Gallant says that he has disbursed a distribution to Class 2 Claimants and is the process of enforcing three overseas judgments in the United Kingdom, the Cayman Islands and New Zealand. Furthermore, the Trustee is monitoring the status of the AFX Adversary Proceeding to determine if any funds will be available for this estate.
This case was brought by the trustee for Gallant’s estate. 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.
Back in September 2019, the Chapter 11 trustee filed a motion for sanctions, arguing that the AFX defendants have engaged in a manipulative strategy of delay, obfuscation, and fabrication in failing to comply with a stipulation of settlement.
Ever since, however, this motion has been pending. No explanation for the delays has ever been provided.