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Global Brokerage files for bankruptcy, delists from NASDAQ, FXCM not involved

Nov 13 2017
By
Jonathan Smith

Global Brokerage, a once partner and stakeholder in the major forex and CFD broker FXCM Group, announced on November 10 it is filing for bankruptcy under Chapter 11 of the United States Bankruptcy Code and is planning to restructure. 

 

In the official statement published in the Investor Relations section of its site, the company also said it is delisting from NASDAQ and is parting ways with some of its board members and senior managers.

 

According to the official statement, Global Brokerage has entered into into a restructuring support agreement with around 70% of its noteholders. They include FXCM Group and Leucadia National Corporation. The plan provides for Global Brokerage to extend the maturity on its current debt obligations for five years and restructure its current operations to reduce current expenses. The credit agreement between Global Brokerage Holdings and FXCM Group, as borrowers, and Leucadia, as the lender, will be extended by twelve months and the management bonus plan that was agreed upon in 2016, was terminated on November 7, 2017.

 

The Global Brokerage Chapter 11 filing does not involve and will not affect FXCM, its customers and their funds and the brokerage will continue to operate normally. Similarly, FXCM’s banking and trading counterparties, service providers, and other business relationships will not be impacted either.

 

Global Brokerage and FXCM have been in trouble since the Swiss franc turmoil of January 2015, when the two companies (a single entity back then) borrowed $300 million from Leucadia. As of August 2017, the outstanding debt of FXCM to Leucadia was $66.8 million.

 

This February FXCM had to close its US retail forex business and to pay a hefty fine to CFTC for old sins. Subsequently it changed its name to Global Brokerage and in May it became apparent that it may be forced to delist from NASDAQ. In October the remaining business of FXCM Group parted ways with Global Brokerage, with Leucadia holding a 49.9% equity interest and up to a 65% economic interest in FXCM, while GLBR is a shareholder with 50.1% equity ownership and a minority economic interest.

 

It appears that FXCM is now actually breathing a sigh of relief, with senior managers assuring that the latest Global Brokerage developments are actually for the better.

 

“We are very pleased that GLBR has pursued a path that, in relatively short order, will resolve the uncertainties relating to its future. We believe that the Restructuring is a very positive thing for FXCM that will allow FXCM to put to rest any remaining uncertainties surrounding its ability to drive forward and continue to plan for the future following the changes in early 2017. To that end, Leucadia extended our credit agreement to give FXCM even better flexibility to achieve that goal”, said Jimmy Hallac, Chairman of the Board of FXCM and Managing Director of Leucadia.

 

The CEO of FXCM Brendan Callan also chimed in: “FXCM clients should know that GLBR’s refinancing does not affect FXCM Group, which continues to operate as usual. GLBR’s plan is positive news for FXCM as it allows us to put GLBR’s distractions behind us. Leucadia’s incredible support and loan extension allows FXCM to appropriately balance debt repayment with our growth and innovation plans.”

 

   

TAGS: global brokerage  fxcm  bankruptcy 

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