According to the latest set of documents published by the special administrator appointed to manage the bankruptcy of LQD Markets, the process has faced a major hurdle at the initial meeting with clients and creditors.
Back in January, LQD Markets fell victim to the Swiss National Bank (SNB) induced foreign exchange industry debacle. While the management of the brokerage was exploring its options to stay in business, the company got another hit from an error on its platform, just as the Asian markets were opening for a Monday morning trading session around 23:00 GMT.
The LQD Markets bankruptcy procedure has been halted at least until next week
The bankruptcy case of LQD Markets has been engulfed in controversy as thereâs a substantial amount of client funds missing. The total amount has bubbled up to $2.8 million from the initial estimates of $1.3 million after Baker Tilly identified 137 additional accounts were missing from the documentation.
At the initial meeting with clients and creditors of LQD Markets, the majority of the creditors of the company voted against the proposal prepared by Baker Tilly last month. Thereby, the process of the bankruptcy of LQD Markets has been halted at least until next week, when on the 20th of April there will be a second meeting with creditors and clients of the bankrupt brokerage.
The voting procedure states that each clientâs vote was admitted for the purposes of the vote with the value of his claims to the client money pool. About 81% of clients voted for the approval of the initial proposal with their total value totaling about £196,400. The remaining 32,447 voted against.
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In an extraordinary development, it was the creditors of the company with their vote totaling £826 who blocked the proposal from going through. In accordance with the law the proposal has to be approved by both clients and creditors in order for the special administration process to continue.
Those £826 represented 91% of the vote of the creditors of LQD Markets. A new meeting which will only be with the creditors of LQD Markets has been set up for the 20th of April of 2015.
At the second meeting, the creditors will be able to present their amendments to the procedure proposed by the special administrators apportioned to the case. Should any modifications be introduced by creditors, the clients will have to take another vote in order to approve those.
Creditors of the company blocked the Baker Tilly proposal from going through with £826 worth of votes
In the case of a second rejection of the initial proposal by the creditors, Baker Tilly will turn to court in order to apply for directions on how to proceed forward with the bankruptcy process. This process may result in a substantial delay for the return of client funds to the creditors of the company.
Interestingly, due to the client money shortfall, a substantial amount of votes may be gathered to remove the £826 obstacle. Clients of LQD Markets may attend the second initial meeting in their capacity as creditors. As such, they may vote for the value of the estimated shortfall of client money available to meet their client money claim.
According to estimates made by Baker Tilly this totals approximately 60% of the total amount of the client money claim. Ultimately, the stubborn creditors holding the golden £826 may have to let go of their resistance to the bankruptcy process proposed by the special administrator of LQD Markets.