Global Brokerage moves forward with prepackaged Chapter 11 filing

By Wendy Van Sickle

Columbus, Ohio, Dec. 11 – Global Brokerage, Inc. filed for a voluntary petition for reorganization under Chapter 11 in the United States Bankruptcy Court for the Southern District of New York after receiving votes approving the proposed prepackaged plan from about 78.5% of the holders of its 2.25% convertible notes due 2018, according to a press release issued Monday evening.

The company said the bankruptcy case is expected to take no longer than 60 days and that all voting creditors voted in favor of the plan.

Global Brokerage announced on Nov. 10 that it had reached an agreement on a prepackaged debt restructuring with an ad hoc group holding more than 68.5% of the 2.25% convertible notes due 2018.

The restructuring support agreement also includes participation by FXCM Group, LLC, Leucadia National Corp. and LUK-FX Holdings, LLC, as previously reported.

FXCM is not involved in the planned Chapter 11 filing.

Under the plan, Global Brokerage will extend the maturity of its debt by five years and restructure its operations to reduce expenses.

Global Brokerage started the process of deregistering its stock on Friday.

Specifically, the proposed plan will result in the convertibles being exchanged for an equal amount of new senior secured notes due five years from Global Brokerage’s emergence from Chapter 11 protection.

The new notes will pay cash interest at 7% and have a payment-in-kind toggle option. They will not be convertible.

The credit agreement with Global Brokerage Holdings, LLC and FXCM Group as borrowers and Leucadia as lender will be extended by 12 months.

Global Brokerage common stock will be unimpaired.

The operating agreements of Global Brokerage Holdings and FXCM Group will be amended to provide covenants that will, among other things, permit certain excess cash generated by FXCM Group and its affiliates to be distributed to Global Brokerage Holdings and so to Global Brokerage.

The 2016 incentive bonus plan for founders and executives was terminated on Nov. 8.

Distributions from FXCM will be allocated 100% to Leucadia up to the amount due under the credit agreement, 50% to Leucadia and 50% to Global Brokerage Holdings for the next $350 million, 90% to Leucadia and 10% to Global Brokerage Holdings for the next $600 million and 60% to Leucadia and 40% to Global Brokerage Holdings for further amounts.

To reduce expenses, the board will be reduced by two members through the departure of David Sakhai and Eduard Yusupov.

When the restructuring plan becomes effective, Margaret Deverell, chief accounting officer, Robert Lande, chief financial officer, and David S. Sassoon, general counsel, will resign. The executives will focus on these roles in FXCM Group.

Global Brokerage is a New York-based holding company with an indirect effective ownership of FXCM Group, through its equity interest in Global Brokerage Holdings, of between 7.5% and 37.3%, depending on the amount of distributions made by FXCM Group.

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