FNG Exclusive… Continuing our exclusive coverage of the bankruptcy of Australian Retail FX and CFDs broker Union Standard International Group Pty Ltd, which operated the USGFX brand, FNG has learned that an initial meeting of creditors held last week (along with follow-up claims to the meeting) yielded approximately AUD $30 million of claims against the company.

According to administrator BRI Ferrier there is approximately AUD $6 million in designated client trust bank accounts held with Commonwealth Bank of Australia on behalf of USGFX clients. BRI Ferrier stated that these do seem sufficient to cover reported client liabilities.

However, the administrator is also reporting that a substantial number of previously unreported creditor claims were submitted at the first meeting of creditors. These claims allege that USGFX provided a service to hold client funds in Australian bank accounts and earn interest, rather than for trading purposes. BRI Ferrier stated that they intend to investigate these claims as a matter of priority.

Initial reports are that these additional claims against USGFX may be as large as AUD $24 million, which would bring total client claims up to AUD $30 million. BRI Ferrier initially indicated that there is (possibly) an additional AUD $40 million held in trust by the company in China, not Australia, as cover to these claims. But again, the administrator said it will make investigating these claims, and the whereabouts of money behind the claims, a matter of priority.

The company’s administrators also confirmed FNG’s earlier report that USGFX’s front-of-shirt sponsorship deal with UK Premier League team Sheffield United FC was indeed with the now-bankrupt Australian entity, and not with another USG group company (such as the FCA-licensed arm Union Standard International Group Limited).

The administrators noted that the sponsorship is on the Australian company’s balance sheet as a pre-payment to Sheffield United, indicating that a good portion of the fee to SUFC was already paid. The three-year sponsorship deal signed in mid 2019 is reportedly worth more than USD $8 million a year.

If there are not enough assets to satisfy USGFX Australia’s creditors in the bankruptcy, it is possible that the administrator and creditors might try to recoup whatever was prepaid to SUFC, but that seems a longshot. More likely is that the creditors will want something in return from USGFX-UK (or Cyprus) for the benefit they are receiving from the sponsorship, if the sponsorship is indeed continued as planned.

We expect to hear more from the administrators in the coming weeks as the administrators work their way through both the assets and debts of Union Standard. In the meantime, the USGFX organization outside of Australia is moving forward with plans to set up a licensed subsidiary in Cyprus and move the nexus of its operations to the UK, while continuing to operate the USGFX brand. The group is also looking for a new CEO, likely in London, to replace longtime USGFX CEO Shay Zakhaim who left concurrent with the Australia bankruptcy filing, as was exclusively reported by FNG.