Adversary Proceedings against AFX Capital Markets Faces Another Delay

The hearing in the adversary proceedings brought against retail FX broker AFX Capital Markets by Gallant Capital Markets back has reportedly further adjourned until December 9, 2021, with the defendant’s yet another absence from the hearing held on August 19, 2021.   

Gallant Capital Markets, the foreign exchange brokerage filed for bankruptcy protection in the US Bankruptcy Court for the Eastern District of New York in April 2017, brought the adversary proceedings targeting AFX Capital Markets back in April 2018.

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The plaintiff alleged in its complaint that it has deposited about $2.35 million into a Gallant account maintained at AFX in 2015 and 2016. The balance in the Gallant account at AFX stood at approximately $2.4 million within two weeks before Gallant commenced its bankruptcy case. Around that time, Gallant made multiple demands requiring the defendant to return its funds, all of which were disregarded.

Also, the complaint alleged that the remaining balance was withdrawn by AFX, without any authorization or basis, which violated the automatic stay.

Gallant seeks in the adversary proceedings a turnover of its property and recovery of assets of the Gallant estate. Gallant’s Chapter 11 Trustee had filed a motion for sanctions in September 2019, alleging that AFX failed to comply with a stipulation of settlement, having engaged in a manipulative strategy of delay, obfuscation, and fabrication. The motion has been pending ever since.