Current Report


 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 8-K

 

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): November 10, 2017

 

 

 

Global Brokerage, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-34986   27-3268672
(State or other jurisdiction
of incorporation)
  (Commission File Number)   (IRS Employer
Identification No.)

 

55 Water Street, FL 50 New York, NY   10041
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code (212) 897-7660

 

Not Applicable

(Former name or former address, if changed since last report)

 

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

 

 

 

Item 1.01.   Entry into a Material Definitive Agreement.

 

Restructuring Support Agreement and Prepackaged Plan of Reorganization

 

On November 10, 2017, Global Brokerage, Inc. (the “Company”) announced that the Company, along with its affiliates Global Brokerage Holdings, LLC (“Holdings”) and FXCM Group, LLC (“Group”), have signed a definitive restructuring support agreement (the “RSA”) with Leucadia National Corporation and LUK-FX Holdings, LLC (together, “Leucadia”) and an ad hoc group (the “Ad Hoc Group”) of holders of more than 68.5% of the Company’s 2.25% Convertible Notes due 2018 (the “Current Notes”) on the terms of a consensual restructuring transaction. Under the RSA, the Ad Hoc Group and Leucadia have agreed, subject to certain terms and conditions, to support a financial restructuring of the Company and Holdings (the “Restructuring”) pursuant to a prepackaged plan of reorganization (the “Plan”) to be filed under chapter 11 of the United States Bankruptcy Code. The Company and Holdings commenced a solicitation of votes for the Plan on November 10, 2017, and expects to commence the chapter 11 case on or before December 20, 2017. All obligations and commitments under the RSA are subject to the terms and conditions provided therein.

 

The overall purpose of the Plan is to enable Global Brokerage to extend the maturities on its current debt obligations for five years and restructure its current operations to reduce current expenses.

 

The Plan will be based on the restructuring term sheet attached to and incorporated into the RSA (the “Term Sheet”), which includes:

 

Current Notes will be exchanged for an equal amount of a new series of senior secured notes (the “New Secured Notes”) due five years from the Company’s emergence from chapter 11 protection. The New Secured Notes will be guaranteed by Global Brokerage Holdings and accrue cash interest at a rate of 7.00% with a payment in kind toggle option. The indenture governing the New Secured Notes will not include a convertible feature, but will include certain covenants, including covenants which, subject to certain exceptions, limit the ability of the Company and Holdings to incur additional indebtedness, engage in certain asset sales, make certain types of restricted payments, engage in transactions with affiliates and create liens on assets. The New Secured Notes are not liabilities of Group and only have recourse to the assets of the Company and Holdings.

 

The credit agreement among Holdings and Group, as borrowers, and Leucadia, as lender, (the “Credit Agreement”) will be amended to provide a twelve-month extension.

 

The rights of holders of the Company’s common stock will be unimpaired.

 

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

 

The 2016 Incentive Bonus Plan for founders and executives, which had provided a long-term incentive program for the founders of the Company, was terminated on November 8.

 

The waterfall for distributions from Group will be allocated as follows:

 

Amounts due under the Credit Agreement: 100% Leucadia
Next $350 million: 50% Leucadia / 50% Holdings
Next $600 million: 90% Leucadia / 10% Holdings
All aggregate amounts thereafter: 60% Leucadia / 40% Holdings

 

Mutual releases will be effectuated among the members of the Ad Hoc Group, Lecuadia, the Company, Holdings and Group.

 

All administrative expense claims, priority tax claims, and priority claims, as well as all undisputed customer, vendor or other trade obligations, of the Company will be paid in full.

 

 

 

 

Upon receipt of the requisite votes to accept the Plan, which requires the consent of more than two-thirds in terms of value of the voting holders of Current Notes and 50% in number of those noteholders who vote, the Company plans to file a chapter 11 case to consummate the Plan. The restructuring process is expected to take no longer than 60 days.

 

Group is not involved with the chapter 11 filing. The RSA and the Plan were designed not to impact – and should have no impact on – Group’s business or operations.

 

The information in this Current Report on Form 8-K is not intended to be, and should not in any way be construed as, a solicitation of votes on the Plan, nor should the information contained herein or in the RSA be relied on for any purpose with respect to the Plan. The foregoing description of the RSA, including the Term Sheet, is only a summary and does not purport to be a complete description of the terms and conditions under the RSA and the Term Sheet, and such description is qualified in its entirety by reference to the full text of the RSA (to which the Term Sheet is attached), a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference into this Item 1.01.

 

Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.

 

As previously announced, on May 2, 2017, the Nasdaq Stock Market (“Nasdaq”) notified Global Brokerage Inc. (the “Company”) that the market value of the Company’s publicly held shares does not meet the requirement for continued listing under Nasdaq Listing Rule 5450(b)(2). On November 6, 2017, the Company was notified that Nasdaq would remove the Company from The Nasdaq Global Market.

 

Nasdaq has approved the Company to transfer its stock to The Nasdaq Capital Market exchange, and the stock will begin trading at the opening of business on November 13, 2017.

 

However, by the end of the 2017 calendar year, the Company intends to initiate the steps to deregister its common stock under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and terminate its duty to file periodic reports with the Securities and Exchange Commission (the “SEC”), such as quarterly and annual reports.

 

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

In an effort to further minimize expenses as contemplated by the restructuring, the Board of Directors of the Company (the “Board”) has also decided to reduce its size. Effective as of the Effective Date of the Plan, Messrs. David Sakhai and Eduard Yusupov will resign from their positions as members of the Board. Messrs. Sakhai and Yusupov do not serve on any committees of the Board. The decisions by Messrs. Sakhai and Yusupov to resign are not a result of any disagreement with the Company.

 

In addition, the following Executive Officers of the Company will submit their resignation to the Board, effective as of the Effective Date of the Plan: (i) Margaret Deverell, Chief Accounting Officer, (ii) Robert Lande, Chief Financial Officer, and (iii) David S. Sassoon, General Counsel.

 

Item 7.01.   Regulation FD Disclosure.

 

On November 10, 2017, the Company issued a press release announcing the signing of the RSA and the expected Nasdaq Delisting, SEC deregistration and changes to the Board and management, a copy of which is attached hereto as Exhibit 99.1 and incorporated herein by reference. The information contained in the press release is being furnished and shall not be deemed “filed” for purposes of the Exchange Act, or otherwise subject to liabilities of that Section, unless the Company specifically states that the information is to be considered “filed” under the Exchange Act or expressly incorporates it by reference into a filing under the Exchange Act or the Securities Act.

 

 

 

 

Item 9.01. Financial Statements and Exhibits.

 

(d)    Exhibits

 

10.1 Restructuring Support Agreement, dated as of November 10, 2017, by and among the Company, Holdings, Group, the Ad Hoc Group and Leucadia.

 

99.1 Press Release, dated November 10, 2017.

 

 

 

 

 

 

Signatures

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

     
  Global Brokerage, Inc.
   
Date: November 13, 2017 By: /s/ David S. Sassoon
    David S. Sassoon
    General Counsel

 

 

 

Exhibit 10.1 

 

RESTRUCTURING SUPPORT AGREEMENT   

 

This RESTRUCTURING SUPPORT AGREEMENT is made and entered into as of November 10, 2017 (as amended, supplemented or otherwise modified in accordance herewith, this “ Support Agreement ”) by each of (i) (a) Global Brokerage, Inc., a Delaware corporation (“ GLBR ”), and (b) Global Brokerage Holdings, LLC, a Delaware limited liability company (“ Holdco ” and collectively with GLBR, the “ Company Parties ” and each a “ Company Party ”), (ii) FXCM Group, LLC, a Delaware limited liability company (“ Group ”); (iii) the undersigned beneficial holders, or investment advisors to beneficial holders (on behalf of such beneficial holders) of Existing GLBR Notes (as defined below) issued pursuant to the Existing GLBR Notes Indenture (as defined below) (the “ Consenting Noteholders ”); (iv) LUK-FX Holdings, LLC, a Delaware limited liability company, in its capacity as a member of Group (“ Leucadia ”) and in its capacity as lender under the Leucadia Credit Agreement (as defined below) (the “ Leucadia Group Lender ”) and Leucadia National Corporation, as administrative agent under the Leucadia Credit Agreement (together with the Leucadia Group Lender, the “ Group Lender ”), in each case with respect to a restructuring of GLBR’s outstanding obligations under the Existing GLBR Notes (as defined below) and, with certain exceptions, all other claims (as defined in section 101(5) of the Bankruptcy Code) among the parties held by each of the Consenting Noteholders, Group, Leucadia and the Group Lender against the Company Parties (the “ Restructuring ”) as contemplated by the term sheet attached hereto as Exhibit A (the “ Term Sheet ”). Each party to this Support Agreement may be referred to as a “ Party ” and, collectively, as the “ Parties .” Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Term Sheet, which Term Sheet is expressly incorporated by reference herein and made a part of this Support Agreement as if fully set forth herein. Notwithstanding the foregoing, if there is a conflict between any term in the Definitive Documents (as defined below) and the Term Sheet, the terms of the Definitive Documents will control.  

 

RECITALS   

 

WHEREAS , GLBR has issued and outstanding as of the date hereof $172,500,000.00 principal amount of 2.25% Convertible Senior Notes due 2018 (the “ Existing GLBR Notes ”) pursuant to that certain Indenture, dated as of June 3, 2013 (the “ Existing GLBR Notes Indenture ”), among GLBR, as issuer and The Bank of New York Mellon, as trustee (the “ GLBR Notes Trustee ”);  

 

WHEREAS , each of Holdco and Group is party to that certain Amended and Restated Credit Agreement, dated as of January 24, 2015, as amended through the date hereof (the “ Leucadia Credit Agreement ”), by and among Holdco, Group, the Leucadia Group Lender, and Leucadia National Corporation, as administrative agent, and certain agreements related thereto (the “ Leucadia Debt Documents ”);

 

WHEREAS , the Parties have engaged in arms’ length, good-faith discussions with respect to a potential restructuring of the Existing GLBR Notes;

 

 

 

 

 

WHEREAS , as a result of the discussions between the Parties, the Parties have reached agreement and desire to implement a restructuring of the Existing GLBR Notes, and related transaction steps, through a pre-packaged chapter 11 plan of reorganization (the “ Plan ”) for GLBR consummated through a voluntary reorganization case (the “ Chapter 11 Case ”) pursuant to chapter 11 of title 11 of the United States Code (the “ Bankruptcy Code ”) to be filed with the United States Bankruptcy Court for the Southern District of New York (the “ Bankruptcy Court ”), each upon the terms and conditions set forth in this Support Agreement and the Term Sheet; and  

 

WHEREAS , the Parties desire to express to each other their mutual support and commitment in respect of the matters discussed in this Support Agreement and the Term Sheet. 

 

NOW, THEREFORE , in consideration of the covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the Parties to this Support Agreement, intending to be legally bound hereby, agrees as follows:  

 

AGREEMENT  

 

Section 1. Proposed Restructuring .   

 

1.1          The Restructuring.   

 

(a)          The Restructuring will be implemented pursuant to the following documentation (collectively, the “ Transaction Documents ”), 

 

(i) the following agreements necessary to effectuate the issuance of and evidence the New Notes (as defined in the Term Sheet): 

 

1.     indenture governing the New Notes (the “ Indenture ”) and the New Notes in the form attached as Exhibit D to the Plan;  

 

2.     the Security Documents, the Guarantee, and the Holdings Notes (each as defined in the Indenture); 

 

(ii) Fourth Amended and Restated Limited Liability Company Agreement of FXCM Holdings, LLC, in the form attached as Exhibit B to the Plan; 

 

(iii) Second Amended and Restated Limited Liability Company Agreement of FXCM Group, LLC, in the form attached as Exhibit A to the Plan;  

 

(iv) Second Amended and Restated Credit Agreement by and among Holdco and Group, as borrowers, the Leucadia Group Lender, as lender, and Leucadia National Corporation, as administrative agent, in the form attached as Exhibit E to the Plan;

 

(v) Intercreditor Agreement between Leucadia National Corporation, as Senior Priority Agent, and the indenture trustee and collateral trustee named therein, as Junior Priority Agent, and acknowledged by each of the Company Parties, in the form attached as Exhibit C to the Plan; and

 

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(vi) legal opinions of counsel to the Company Parties addressed to the Consenting Noteholders customarily delivered in respect of a secured debt financing in respect of Transaction Documents satisfying clause (i) of the definition thereof, and (2) further opinion on, inter alia , the due authorization, execution and delivery, enforceability, and validity of the Transaction Documents satisfying clause (ii) of the definition thereof;

 

(vii) the release (the “ Release ”) set forth on Exhibit B attached hereto; and

 

(viii) such other definitive documentation as contemplated by this Support Agreement or the Term Sheet, as applicable.

 

Any Transaction Documents not attached hereto shall be consistent with this Support Agreement and the Term Sheet and shall be in form and substance reasonably acceptable to the Parties; provided however, that all opinions satisfying clause (vi) of the definition of Transaction Documents shall be in form and substance acceptable to the Required Consenting Noteholders in their reasonable discretion. 

 

1.2         The Chapter 11 Case. 

 

(a) To effectuate the Restructuring and the Chapter 11 Case, GLBR shall solicit the holders of the Existing GLBR Notes prior to the Petition Date (as defined below) for their approval of the Plan. The Plan and the related documents (collectively, including, without limitation, the documents set forth in this Section 1.2(a) , the “ Plan Documents ”), are as follows, (i) the Plan, a copy of which is attached as an exhibit to the Disclosure Statement (as defined below), (ii) the disclosure statement describing the Plan, a copy of which is attached hereto as Exhibit C (the “ Disclosure Statement ”), (iii) the ballots and other materials (the “ Solicitation Materials ”) related to the solicitation of votes for the Plan pursuant to sections 1125, 1126 and 1145 of the Bankruptcy Code (the “ Chapter 11 Solicitation ”), and (v) any other material agreements, instruments, petitions, motions, pleadings, orders and/or documents that are filed by the Company Parties in connection with the Plan and Disclosure Statement or the Chapter 11 Case, including, but not limited to, (A) a proposed confirmation order approving the Plan and Disclosure Statement (the “ Confirmation Order ”), (B) any appendices, amendments, modifications, supplements, exhibits and schedules relating to the Plan or the Disclosure Statement including, but not limited to, the plan supplement (the “ Plan Supplement ”)1, (C) any “first day” motions, and, (D) a motion (the “ RSA Assumption Motion ”) seeking approval of the Bankruptcy

 

 

  

1 The Plan Supplement shall include the compilation of documents and forms of documents, schedules and exhibits, in each case, in a form reasonably satisfactory to Leucadia and the Required Consenting Noteholders, to be filed five (5) calendar days prior to the confirmation hearing, as amended, modified or supplemented from time to time in accordance with the terms of the Plan and the applicable provisions of the Bankruptcy Code and the Bankruptcy Rules, comprising, as applicable, without limitation, any Transaction Documents not filed with the Plan or Disclosure Statement (the Plan Supplement Transaction Documents ).

 

Court for the Company Parties to assume this Support Agreement and the order (the “ RSA Assumption Order ”) approving such motion. The Plan Documents and the Transaction Documents are collectively referred to herein as the “ Definitive Documents .” To the extent not attached hereto, the Plan, each of the other Plan Documents, and the other motions, applications, or other documents contemplated by Section 1.2(c) shall be in form and substance consistent with the Term Sheet and the documents attached hereto and otherwise reasonably satisfactory to the Parties, provided , however , that without the consent of the Required Consenting Noteholders, under no circumstances shall the Plan fail to provide that or the Confirmation Order fail to direct and provide that: (1) the New Notes shall be issued by GLBR, (2) the securities registration exemption of Section 1145(a) of the Bankruptcy Code shall be applicable to the guarantee of the New Notes by Holdco, (3) GLBR shall duly execute and deliver all Transaction Documents to which GLBR is party and take all necessary steps to give effect to and make legal, valid, and binding such Transaction Documents, and (4) GLBR, in its capacity as sole managing member of Holdco, shall cause Holdco to (w) issue its Guarantee (as defined in the Indenture), (x) execute and deliver the Transaction Documents to which Holdco is party, and (y) take all necessary steps make legal, valid, and binding such Transaction Documents and give effect to the Noteholder Protections (as defined in the Term Sheet). 

 

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(b) If GLBR shall have received votes in favor of the Plan from the holders of the Existing GLBR Notes sufficient to satisfy the requirements of section 1126(c) of the Bankruptcy Code (the “ Plan Approval ”), the Company Parties will effectuate the Restructuring by commencing, in accordance with the terms of this Support Agreement and the Term Sheet, the Chapter 11 Case, which shall include filing, on the Petition Date; (i) the RSA Assumption Motion, (ii) a scheduling motion setting a hearing date to confirm the Plan, and (iii) such other “first day” motions approved by the Parties.

 

(c) GLBR shall provide to Leucadia’s and the Consenting Noteholders’ legal counsel drafts of all motions or applications, including proposed orders, and other documents that GLBR expects to file with the Bankruptcy Court as soon as reasonably practicable, but not less than three (3) business days before the date when GLBR expects to file any such motion, application or document, including, for the avoidance of doubt, all first day motions and orders; provided , however , that in the event that three (3) business days’ notice is impossible or impracticable under the circumstances, GLBR shall provide draft copies of any motions, applications, including proposed orders and any other documents GLBR expects to file with the Bankruptcy Court to Leucadia’s and the Consenting Noteholders’ legal counsel as soon as practicable, but no less than one (1) business day before the date when GLBR expects to file any such motion, application or document. GLBR shall notify Leucadia’s and the Consenting Noteholders’ legal counsel telephonically or by electronic mail to advise them of the documents to be filed and the facts that make the provision of advance copies not less than three (3) business days before submission impossible or impracticable.

 

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(d) The obligations of the Parties to consummate the Plan shall be conditioned upon the satisfaction of the conditions contained in the Plan, which conditions may be waived by the mutual agreement of each of the Company Parties, Leucadia, Group, the Group Lender and the Required Consenting Noteholders, in each case in their sole discretion. Without limiting the generality of the foregoing, the obligations of the Parties to effectuate the Restructuring through the Chapter 11 Case and confirmation and consummation of the Plan shall be conditioned upon the occurrence of the following events, which conditions may be waived by mutual agreement of each of the Company Parties, Leucadia, Group, the Group Lender and the Required Consenting Noteholders, in each case in their sole discretion:

 

(i) each of the Definitive Documents that by its terms is to be effective contemporaneously with or prior to the Plan Effective Date (as defined below) shall be in full force and effect;

 

(ii) GLBR shall have received votes in favor of the Plan from the holders of the Existing GLBR Notes in the Chapter 11 Solicitation sufficient to have received Plan Approval and the Bankruptcy Court shall have entered the Confirmation Order;

 

(iii) GLBR shall timely pay the Restructuring Expenses as defined and set forth in Section 1.4 of this Support Agreement;

 

(iv) (x) within one (1) business day following the execution of this Support Agreement, and (y) prior to or concurrently with the commencement of the Chapter 11 Case, the Company Parties shall have disclosed all “Material, Non-Public Information” as provided in Section 8 of each of the non-disclosure agreements executed by the Consenting Noteholders and GLBR (the “Non-Disclosure Agreements”);

 

(v) the legal opinions deliverable in respect of the Transaction Documents pursuant to Section 1.1(a)(vi) shall be delivered prior to or contemporaneously with the consummation of the Plan;

 

(vi) the New Notes shall be issued contemporaneously with the consummation of the Plan; and

 

(vii) this Support Agreement shall not have been terminated.

 

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1.3       Support of the Restructuring, Term Sheet and Definitive Documents. 

 

(a) Obligations of the Company Parties . Until the Termination Date (as defined below), each Company Party, jointly and severally, agrees to use reasonable best efforts to support and consummate the Restructuring contemplated under this Support Agreement and the Term Sheet, including (i) with respect to GLBR, the solicitation of acceptances from the holders of the Existing GLBR Notes in connection with the Plan; (ii) with respect to GLBR, to commence the Chapter 11 Case in the manner described herein; (iii) with respect to the Company Parties, to consummate the distribution of the New Notes and the Guarantee (as defined in the Indenture) thereof in accordance with the Plan; (iv) with respect to GLBR, on the Petition Date, (x) to file and seek approval on an interim and final (to the extent applicable) basis of “first day” motions, (y) to file and seek approval of the RSA Assumption Motion; and (z) to file with the Bankruptcy Court and seek approval of the Plan and Disclosure Statement; (v) with respect to each Company Party, to support and consummate the restructuring transactions contemplated under this Support Agreement, the Plan and the Term Sheet; (vi) with respect to each Company Party, except as expressly permitted in Section 3 hereof, not to, directly or indirectly, take any action or omit from taking any action that is inconsistent with, or is intended or is reasonably likely to interfere with or impede or delay consummation of, the Restructuring or the transactions embodied in the Term Sheet, or the Plan, including, but not limited to, (x) pursuit of approval or consummation of Definitive Documents other than those approved by the Parties in accordance with Section 1.1(a) and 1.2(a) above (“ Approved Definitive Documents ”), or (y) soliciting, or causing or allowing any of its agents or representatives to solicit, encourage or initiate, any offer or proposal from, or entering into any agreement with, any person or entity concerning any actual or proposed chapter 11 plan or restructuring transaction other than the Restructuring, or filing any pleading or document with respect to, or proposing, joining in, or participating in the formation of, any actual or proposed chapter 11 plan or restructuring transaction other than the Restructuring, including, without limitation, (aa) any chapter 11 plan, reorganization, restructuring, or liquidation involving any of the Company Parties, (bb) the issuance, sale, or other disposition of any equity or debt interests, or any material assets, of any of the Company Parties, or (cc) a merger, sale, consolidation, business combination, recapitalization, refinancing, share exchange, rights offering, debt offering, equity investment, or similar transaction (including the sale of all or substantially all of the assets of the Company Parties whether through one or more transactions) involving any of the Company Parties (any of the transactions described in subparts (aa), (bb), or (cc), an “ Alternative Transaction ”) and to promptly provide copies of any such offer or proposal relating to an Alternative Transaction to legal counsel to each of Leucadia and the Consenting Noteholders; (vii) with respect to each Company Party, not to take any action or make any filing or commence any action challenging the validity, enforceability, or otherwise seeking to restrict the rights of (xx) holders of the Existing GLBR Notes or (yy) Leucadia or Group Lender and (viii) with respect to each Company Party, if requested by any Party hereto, upon consummation of the Plan, execute and deliver the Release.

 

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(b) Negative Covenants . The Company Parties agree that, from the date of execution of this Support Agreement until the Termination Date, they shall not, without prior written consent of Leucadia, the Group Lender, and the Required Consenting Noteholders do or permit to occur any of the following:

   

(i) file any motion or pleading or other Definitive Document with the Bankruptcy Court (including any modifications or amendments thereof) that, in whole or in part, is not consistent in any material respect with this Support Agreement, the Term Sheet, or the Plan;

 

(ii) move for an order from the Bankruptcy Court authorizing or directing the rejection of a material executory contract (including, without limitation, any employment agreement or employee benefit plan) or unexpired lease other than with the consent of the Parties;

 

(iii) directly assert or support any assertion by any third party that, prior to issuing any termination notice pursuant to Section 2.4 , any Party shall be required to obtain relief from the automatic stay under section 362 of the Bankruptcy Code (and hereby waives, to the greatest extent possible, the applicability of the automatic stay to the giving of such notice);

 

(iv) issue, sell, pledge, dispose of or encumber any additional shares of, or any options, warrants, conversion privileges or rights of any kind to acquire any shares of, any of any equity interests of the Company Parties, including, without limitation, capital stock, limited liability company interests or partnership interests;

   

(v) amend the respective certificate or articles of incorporation, bylaws or comparable organizational documents of the Company Parties;

   

(vi) except as contemplated by this Support Agreement, the Term Sheet or the Plan, (a) split, combine or reclassify any outstanding shares of the capital stock or other equity interests of the Company Parties, (b) declare, set aside or pay any dividend or other distribution payable in cash, stock, property or otherwise with respect to any of the equity interests of GLBR, or (c) declare, set aside or pay any dividend or other distribution payable in cash, stock, property or otherwise with respect to any of the equity interests of Holdco to any recipient other than to GLBR;

   

(vii) redeem, purchase or acquire or offer to acquire any of the equity interests of the Company Parties, including, without limitation, capital stock, limited liability company interests or partnership interests;

 

(viii) acquire or divest (by merger, exchange, consolidation, acquisition of stock or assets or otherwise) (A) any corporation, partnership, limited liability company, joint venture or other business organization or division or (B) assets of the Company Parties, other than in the ordinary course of business consistent with past practices and in no event in excess of $100,000, individually or in aggregate;

 

(ix) incur any capital expenditures other than in the ordinary course of business and in amounts consistent with historical business practices;

 

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(x) incur or suffer to exist any indebtedness, other than indebtedness (1) existing and outstanding as of the date hereof, or (2) authorized by “first day orders” entered by the Bankruptcy Court;

 

(xi) incur or suffer to exist any liens or security interests other than choate or inchoate liens or security interests existing and outstanding as of the date hereof or arising in the ordinary course of the Company Parties’ business;

 

(xii) with respect to GLBR, enter into any commitment or agreement with respect to debtor-in-possession financing or the use of cash collateral;

 

(xiii) hire any executive or employee whose total annual compensation is greater than $100,000 or increase the compensation for any executive or employee whose total annual compensation is greater than $100,000 in the aggregate; or

 

(xiv) allow or settle claims or any pending litigation not otherwise insured under the Company Parties’ or Group’s insurance policies and paid for by the Company’s applicable insurance carrier for more than $50,000 per claim individually, or $200,000 in the aggregate.

 

(c) Obligations of Consenting Noteholders . Until the Termination Date, each Consenting Noteholder, severally and not jointly, in its capacity as a holder of, or investment advisor to, with power and authority to bind, beneficial holders of Existing GLBR Notes and/or with respect to any Note Claims (defined below) that may be subsequently acquired, hereby agrees to: (i) use reasonable best efforts to support and consummate the Restructuring contemplated by the Term Sheet and all of the transactions contemplated herein and therein, including, the filing of the Chapter 11 Case; (ii) when solicited, and subject to the acknowledgements set forth in Section 7 hereof, timely cause to be voted all claims for which such Consenting Noteholder has the power directly or indirectly to vote in favor of the Plan and will not change, revoke, or otherwise modify such vote; (iii) consistent with applicable law and as set forth in the Term Sheet, consent to any third-party releases set forth in the Plan; (iv) if requested by any party hereto, upon consummation of the Plan, execute and deliver the Release; (v) not pursue, propose, support, or encourage the pursuit, proposal, or support of any chapter 11 plan or other restructuring or reorganization for or the liquidation of any Company Party or object to, or support any other person’s efforts to oppose or object to, in each case, directly or indirectly, confirmation of the Plan, the Restructuring or any of the transactions contemplated herein; (vi) not object to, or not support any other person’s efforts to oppose or object to (as applicable) the RSA Assumption Motion and entry of the RSA Assumption Order; (vii) not object to the “first day” motions or any other motions that are not inconsistent with this Support Agreement and the Term Sheet filed by GLBR in furtherance of the Restructuring; (viii) take any action or refrain from taking any action that is materially inconsistent with, or that would materially delay or impede approval, confirmation or consummation of the Restructuring or the Plan, or that is otherwise materially inconsistent with the terms of this Support Agreement and the Term Sheet or any of the transactions contemplated herein; (ix) use its commercially reasonable efforts to support any reasonable and necessary amendment, waiver, supplement or other modification of this Support Agreement and the Definitive Documents as may be necessary in the course of acceptance and implementation of the Restructuring that does not change the treatment of the claims of the holders of Existing GLBR Notes or the material terms of the Plan Documents or Transaction Documents, including the Plan; and (x) not, directly or indirectly, propose, support, solicit, encourage, initiate or participate in either (xi) pursuit of approval or consummation of pleadings or documents other than Approved Definitive Documents, or (y) any offer or proposal from, or enter into any agreement with, any person or entity concerning any actual or proposed Alternative Transaction. Notwithstanding anything else in this Support Agreement, in the event of a termination of this Support Agreement other than as a result of a Company Termination Event pursuant to Section 2.2(a) , each Consenting Noteholder shall have the right to withdraw any consent, tender, agreement or vote in support of the Restructuring and its agreement not to object in its sole and absolute discretion and the Company Parties agree that they shall not oppose such withdrawal or revocation.

 

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(d) Obligations of Leucadia, the Group Lender and Group . Until the Termination Date, each of Leucadia, the Group Lender and Group, severally and not jointly, hereby agrees to: (i) use commercially reasonable efforts to support and consummate the Restructuring contemplated by the Term Sheet and all of the transactions contemplated herein and therein, including, the filing of the Chapter 11 Case; (ii) consent to any third-party releases set forth in the Plan and consistent with the Term Sheet; and (iii) if requested by any party hereto, upon consummation of the Plan, execute and deliver the Release; (iv) not pursue, propose, support, or encourage the pursuit, proposal, or support of any chapter 11 plan or other restructuring or reorganization for or the liquidation of any Company Party or object to, or support any other person’s efforts to oppose or object to, in each case, directly or indirectly, confirmation of the Plan, the Restructuring or any of the transactions contemplated herein; (v) not object to, or not support any other person’s efforts to oppose or object to (as applicable) the RSA Assumption Motion and entry of the RSA Assumption Order; (vi) not object to the “first day” motions or any other motions that are not inconsistent with this Support Agreement and the Term Sheet filed by GLBR in furtherance of the Restructuring; (vii) take any action or refrain from taking any action which action or inaction that is materially inconsistent with, or that would materially delay or impede approval, confirmation or consummation of the Restructuring or the Plan, or that is otherwise materially inconsistent with the terms of this Support Agreement and the Term Sheet or any of the transactions contemplated herein; (viii) use its commercially reasonable efforts to support any reasonable and necessary amendment, waiver, supplement or other modification of this Support Agreement and the Definitive Documents as may be necessary in the course of acceptance and implementation of the Restructuring that does not change the treatment of the claims of Leucadia, the Group Lender and/or Group or the material terms of the Plan Documents or Transaction Documents, including the Plan; and (ix) not, directly or indirectly, propose, support, solicit, encourage, initiate or participate in either (x) pursuit of approval or consummation of pleadings or documents other than Approved Definitive Documents, or (y) any offer or proposal from, or enter into any agreement with, any person or entity concerning any actual or proposed Alternative Transaction. Notwithstanding anything else in this Support Agreement, in the event of a termination of this Support Agreement other than as a result of a Company Termination Event pursuant to Section 2.2(b) , Leucadia, Group Lender and Group shall have the right to withdraw any consent, tender, agreement or vote in support of the Restructuring and its agreement not to object in its sole and absolute discretion and the Company Parties agree that they shall not oppose such withdrawal or revocation.

 

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(e) Forbearance . Until the occurrence of the Termination Date as set forth in Section 2, (i) the Consenting Noteholders agree (A) not to accelerate under the Existing GLBR Notes Indenture, (B) to direct the GLBR Notes Trustee not to accelerate the Existing GLBR Notes, and (C) not to instruct the GLBR Notes Trustee to exercise remedies under the Existing GLBR Notes Indenture, and (ii) with respect to rights or remedies that may arise or vest as a result of the Parties’ pursuit of the Restructuring, (y) the Group Lender agrees not to accelerate or exercise any other remedies under the Leucadia Credit Agreement or any other Leucadia Debt Documents, and, the Group Lender, agrees not to direct the administrative agent under the Leucadia Credit Agreement to accelerate or exercise any other remedies under the Leucadia Credit Agreement or any other Leucadia Debt Documents, and (z) each of Leucadia, Holdco and Group agree not to exercise any remedy under that certain Amended and Restated Limited Liability Company Agreement of Group, dated as of September 1, 2016, as amended through the date hereof, by and among Holdco, Group, Leucadia, GLBR and the other member parties thereto (the “ Group LLC Agreement ”) or the general corporate laws of the State of Delaware with respect to the Group LLC Agreement.

 

(f) Additional Obligations of Each of the Parties . Until the Termination Date, each of the Parties agrees, severally and not jointly, to negotiate in good faith each of the Definitive Documents, to the extent that a form of such Definitive Document is not attached hereto.

 

(g) Nothing in this Support Agreement shall (i) be construed to prohibit any Party from contesting whether any matter or action is a breach of, or is inconsistent with, this Support Agreement, the Approved Definitive Documents attached hereto or the Term Sheet, (ii) be construed to prohibit any Party from appearing as a party-in-interest in any manner to be adjudicated in the Chapter 11 Case so long as, from the Support Agreement Effective Date (as defined below) until the occurrence of a Termination Event (as defined below) applicable to such Party, such appearance and the positions advocated in connection therewith are not for the purpose of hindering, delaying, or preventing the consummation of the transactions contemplated by this Support Agreement and the Term Sheet and are not inconsistent with this Support Agreement or (iii) impair or waive the rights of any Party to (x) assert or raise any objection permitted under this Support Agreement in the Chapter 11 Case or (y) prevent such Party from enforcing this Support Agreement against any other Party.

 

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(h) The Company Parties shall pay and reimburse all reasonable, documented fees and out-of-pocket expenses of Vinson & Elkins LLP, as legal counsel to the Consenting Noteholders, and Centerview Partners LLC, as the financial advisor to the Consenting Noteholders when due and payable pursuant to the letter agreement dated June 5, 2017 by and between GLBR and Vinson & Elkins LLP and the letter agreement dated May 18, 2017 by and between GLBR and Centerview Partners LLC (collectively, the “ Fee Letters ”) and in any event on or prior to the effective date of the Plan (the “ Plan Effective Date ”).

 

(i) The Parties agree that this Support Agreement does not constitute a commitment to, nor shall it obligate any of the Consenting Noteholders to, provide any new financing or credit support. The Parties further agree that this Support Agreement does not constitute a commitment to, nor shall it obligate Leucadia or the Group Lender to, provide any new financing or credit support.

 

1.4          Funding of Restructuring Expenses.  

 

The Parties hereto agree that Group shall pay to Holdco on one or more occasions amounts not to exceed an amount that equals $5 million minus any Payments (as defined in the consent and waiver, dated as of May 8, 2017, by and among Leucadia, GLBR, Holdco, Group and the other parties thereto (the “ Restructuring Consent ”)) paid by Group to Holdco pursuant to the Restructuring Consent prior to the date hereof, in the aggregate (the “ Initial Restructuring Payments ”), solely to enable Holdco to pay the amount of such Initial Restructuring Payments to GLBR to enable GLBR to pay fees and expenses of legal and financial advisors engaged by GLBR or related expenses in connection with the contemplated restructuring of the Existing GLBR Notes and related transactions (including, for the avoidance of doubt, GLBR’s obligations under the Fee Letters and premiums under its D&O Insurance policies) (collectively, the “ Restructuring Expenses ”). Pursuant to Section 6.4(b) of the Group LLC Agreement, any Initial Restructuring Payments paid by Group to Holdco are Restricted Payments (as defined in the Group LLC Agreement) and therefore entitle Leucadia to receive an amount of cash approximately equal to such distribution pursuant to Section 6.4(b) of the Group LLC Agreement. The Parties hereto agree that, in lieu of Group paying to Leucadia such amounts in cash pursuant to Section 6.4(b) of the Group LLC Agreement, such cash shall be retained by and loaned to Group and the amount thereof shall increase the principal amount of Loans (as defined in the Leucadia Credit Agreement) outstanding under the Leucadia Credit Agreement in an amount equal to the amount of such Initial Restructuring Payments.

 

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Each of the Members (as defined in the Group LLC Agreement) consents to waive, and hereby waives, compliance with Section 6.4(b) of the Group LLC Agreement, solely to the extent necessary to permit the Initial Restructuring Payments and accompanying Loan increases to be made prior to the earlier of (i) January 31, 2018 and (ii) the payment of all outstanding obligations under the Leucadia Credit Agreement. As of the date hereof, the Third Amendment to the Leucadia Credit Agreement, dated as of May 8, 2016, and that certain Consent and Waiver, dated as of May 8, 2017, among the Group Lender, Group, Holdco, GLBR and the other parties named therein, shall be of no further force and effect solely with respect to the payment, after the date hereof, of Restructuring Expenses (as defined therein). 

 

In addition, the Parties hereto agree that Group shall pay an amount not to exceed an additional $2,000,000 in the aggregate to Holdco, solely to enable Holdco to pay the amount of such distributions to GLBR to enable GLBR to pay Restructuring Expenses (the “ Additional Restructuring Payments ” and, together with the Initial Restructuring Payments, the “ Restructuring Payments ”). After payment by Group of all Initial Restructuring Payments in accordance with the two preceding paragraphs, distributions of the Additional Restructuring Payments from Group to Holdco shall not result in any increase to the Loans outstanding under the Leucadia Credit Agreement. Each of the Members consents to waive, and hereby waives, compliance with Section 6.4(b) of the Group LLC Agreement, solely to the extent necessary to permit the Additional Restructuring Payments. 

 

In connection with the foregoing, Leucadia hereby waives compliance with Section 7.06 (Restricted Payments) of the Leucadia Credit Agreement, solely to the extent necessary to permit Group to make the Restructuring Payments in accordance with this Section 1.4, and Leucadia hereby waives compliance with Section 12.1(d) of the Group LLC Agreement, solely insofar as such Section incorporates Section 7.06 (Restricted Payments) of the Leucadia Credit Agreement, and solely with respect to making the Restructuring Payments in accordance with this Section 1.4; provided, however, that prior to Group making any Restructuring Payment, Holdco shall have provided Leucadia with a reasonably detailed report setting forth the proposed use of the proceeds of such Restructuring Payment. This Section 1.4 relates only to the specific matters expressly covered herein, shall not be considered to be a waiver of any other rights or remedies of any parties under either the Leucadia Credit Agreement or the Group LLC Agreement and shall not be considered to create a course of dealing or to otherwise obligate in any respect any party thereto to grant any waivers under the same or similar or other circumstances in the future. 

 

The obligations of Group to make distributions pursuant to this Section 1.4 are subject to compliance with Section 18-607 of the Delaware Limited Liability Company Act. 

 

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Section 2. Termination Events .

 

2.1        Consenting Creditor or Group Termination Events. 

 

The occurrence of any of the following either shall be a “ Consenting Creditor Termination Event ” or a “ Creditor/Group Termination Event ,” as indicated:

 

(a) a Creditor/Group Termination Event at 11:59 p.m. (Eastern Time) on November 16, 2017, unless GLBR shall have commenced the Chapter 11 Solicitation in accordance with applicable law;

 

(b) a Creditor/Group Termination Event at 11:59 p.m. (Eastern Time) on December 18, 2017, unless GLBR shall have received votes in favor of the Plan from all classes entitled to vote to accept the Plan in the Chapter 11 Solicitation sufficient to receive Plan Approval;

 

(c) a Creditor/Group Termination Event at 11:59 p.m. (Eastern Time) on December 20, 2017, unless GLBR shall have commenced the Chapter 11 Case (such filing date, the “ Petition Date ”);

 

(d) a Creditor/Group Termination Event at January 26, 2018, or such later date to which the Required Consenting Noteholders, Leucadia, the Group Lender and Group agree in writing, unless prior thereto the Bankruptcy Court has entered the Confirmation Order;

 

(e) a Creditor/Group Termination Event at February 12, 2018, or such later date to which the Required Consenting Noteholders, Leucadia, the Group Lender and Group agree in writing, unless prior thereto the Plan Effective Date has occurred;

 

(f) a Creditor/Group Termination Event in the instance of any amendment or modification of the Disclosure Statement, the Plan, the Confirmation Order, or any material documents related to the Plan, notices, exhibits or appendices, or any of the Definitive Documents, or the filing of a pleading by GLBR that seeks to amend or modify any of the foregoing in a manner that is inconsistent with this Support Agreement or the Term Sheet, in each case without the consent of the Required Consenting Noteholders, Leucadia, the Group Lender and Group;

 

(g) a Creditor/Group Termination Event in the instance of any order approving the Disclosure Statement, or the Confirmation Order, is (i) amended or modified without the consent of the Required Consenting Noteholders, Leucadia, the Group Lender and Group; or (ii) reversed, permanently stayed, dismissed, or vacated, each unless the Court enters a new order approving the Disclosure Statement, or a new Confirmation Order, as applicable, which order shall be in form and substance reasonably satisfactory to the Required Consenting Noteholders, Leucadia, the Group Lender and Group;

 

(h) a Creditor/Group Termination Event if any order of the Bankruptcy Court (i) dismissing the Chapter 11 Case, (ii) converting the Chapter 11 Case to a case under chapter 7 of the Bankruptcy Code, (iii) appointing a trustee or an examiner with expanded powers pursuant to section 1104 of the Bankruptcy Code, (iv) terminating or shortening exclusivity under section 1121 of the Bankruptcy Code, or (v) vacating or modifying (y) any order granting relief sought in a “first day’ motion, or (z) the RSA Assumption Order, in a manner inconsistent with the Definitive Documents or the Term Sheet or that is otherwise not reasonably satisfactory to Leucadia, the Group Lender, Group and the Required Consenting Noteholders;

 

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(i) a Consenting Creditor Termination Event (but only with respect to the Required Consenting Noteholders) in the instance of (i) a filing by any Company Party of any motion, application or adversary proceeding challenging the validity, enforceability, or priority of the Existing GLBR Notes or the documents related thereto or, any other cause of action against and/or seeking to restrict the rights of holders of the Existing GLBR Notes in their capacity as such (or if any Company Party supports any similar motion, application or adversary proceeding commenced by any third party or consents to the standing of any third party to bring any similar motion) or (ii) an order of the Bankruptcy Court sustaining any such motion, application or adversary proceeding filed by a third party;

 

(j) a Consenting Creditor Termination Event (but only with respect to Leucadia and Group Lender) in the instance of (i) a filing by or on behalf of any Company Party of any motion, application, or adversary proceeding challenging the validity, enforceability, or priority of or (y) the Leucadia Credit Agreement, any other Leucadia Debt Documents or the documents related thereto or, any other cause of action against and/or seeking to restrict the rights of Leucadia National Corporation as administrative agent or of the Group Lender under the Leucadia Credit Agreement, in each case, in their capacity as such (or if any Company Party supports any similar motion, application or adversary proceeding commenced by any third party or consents to the standing of any third party to bring any similar motion) or (z) the Group LLC Agreement or the documents related thereto, or any other cause of action against and/or seeking to restrict the rights of Leucadia as an equity holder of Group in its capacity as such (or if any Company Party supports any similar motion, application or adversary proceeding commenced by any third party or consents to the standing of any third party to bring a similar motion) or (ii) an order of the Bankruptcy Court sustaining any such motion, application or adversary proceeding filed by a third party;

 

(k) a Consenting Creditor Termination Event in the instance of any Party materially breaches any of its obligations hereunder, including any action by any Party that is inconsistent with such Party’s obligations pursuant to Section 1 hereof, that (to the extent curable), remains uncured for a period of five (5) business days after written notice and a description of such breach is provided to all Parties; provided , that (i) the Consenting Noteholders may not seek to terminate this Support Agreement based on its own breach or a breach of this Support Agreement by any other Party arising primarily out of the Consenting Noteholders’ own action in breach of this Support Agreement and (ii) neither Leucadia, the Group Lender nor Group may seek to terminate this Support Agreement based on a breach of this Support Agreement by any Party arising primarily out of Leucadia’s, the Group Lender’s or Group’s own action in breach of this Support Agreement;

 

(l) a Creditor/Group Termination Event in the instance of the failure to occur of any of the conditions set forth in Section 1.2(d) ;

 

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(m) a Consenting Creditor Termination Event in the instance of any Company Party or Group (i) voluntarily commencing any case or filing any petition seeking bankruptcy, winding up, dissolution, liquidation, administration, moratorium, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, administrative receivership or similar law now or hereafter in effect, except as provided for in this Support Agreement, (ii) consenting to the institution of, or failing to contest in a timely and appropriate manner, any involuntary proceeding or petition described above, (iii) filing an answer admitting the material allegations of a petition filed against it in any such proceeding, (iv) applying for or consenting to the appointment of a receiver, administrator, administrative receiver, trustee, custodian, sequestrator, conservator or similar official for the Company Parties for a substantial part of its assets, or (v) making a general assignment for the benefit of creditors;

 

(n) a Creditor/Group Termination Event if (i) any court of competent jurisdiction or other competent governmental or regulatory authority issues a final, non- appealable order (ii) making illegal or otherwise preventing or prohibiting the consummation of the transactions contemplated in this Support Agreement, the Term Sheet or any of the Definitive Documents, or (iii) making illegal or otherwise preventing or modifying materially the business operations and/or the financing or capital requirements of the Company Parties and Group (when viewed as a whole), in each case in a way that cannot be reasonably remedied by the Company Parties and Group to the reasonable satisfaction of the Required Consenting Noteholders, Leucadia, and the Group Lender;

 

(o) a Creditor/Group Termination Event (but only with respect to the Consenting Noteholders) upon the exercise by Leucadia or the Group Lender of any acceleration, enforcement, declaration of a default, or exercise of remedies under the Leucadia Credit Agreement, the Group LLC Agreement, or the general corporate laws of the State of Delaware with respect to the Group LLC Agreement;

 

(p) a Consenting Creditor Termination Event upon the termination by the Company Parties of this Support Agreement in accordance with Section 3 ; and

 

(q) any representation or warranty in this Support Agreement made by any Company Party or Group shall have been untrue in any material respect when made or shall have become untrue in any material respect, and such breach remains uncured for a period of five (5) business days following the Company Parties’ or Group’s receipt of notice pursuant to Section 2.4(b) of this Support Agreement.

  

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2.2 Company Termination Events.

 

The occurrence of any of the following shall be a “ Company Termination Event ” and together with any Creditor/Group Termination Event and Consenting Creditor Termination Event, a “ Termination Event ”:

 

(a) one or more of the Consenting Noteholders breaches any of its obligations herein that (to the extent curable) remains uncured for a period of five (5) business days after written notice and a description of such breach is provided to the Consenting Noteholders; provided , that the Company Parties may not seek to terminate this Support Agreement based on a breach of this Support Agreement by a Consenting Noteholder arising primarily out of the Company Parties’ own actions in breach of this Support Agreement; and provided , further , that so long as non-breaching Consenting Noteholders continue to hold at least 66 2/3% of the principal amount of Existing GLBR Notes, such termination shall be effective only with respect to the breaching Consenting Noteholders;

 

(b) Leucadia, the Group Lender or Group breaches any of its obligations herein that (to the extent curable) remains uncured for a period of five (5) business days after written notice and a description of such breach is provided to Leucadia; provided , that the Company Parties may not seek to terminate this Support Agreement based on a breach of this Support Agreement by Leucadia, the Group Lender or Group arising primarily out of the Company Parties’ own actions in breach of this Support Agreement;

 

(c) any court of competent jurisdiction or other competent governmental or regulatory authority issues a final, non-appealable order making illegal or otherwise preventing or prohibiting the consummation of the Restructuring contemplated in the Term Sheet or any of the Definitive Documents in a way that cannot be remedied by the Company Parties subject to the satisfaction of the Company Parties, the Required Consenting Noteholders, Leucadia, Group and the Group Lender; and

 

(d) ninety (90) calendar days after the Petition Date, unless prior thereto the Plan Effective Date has occurred.

 

2.3 Consensual Termination.

 

In addition to any Termination Event set forth herein, this Support Agreement shall (a) terminate effective upon a written agreement of the Company Parties, the Required Consenting Noteholders, Leucadia, the Group Lender and Group to terminate this Support Agreement and (b) automatically terminate with respect to all Parties immediately following the Plan Effective Date.

 

2.4 Termination Event Procedures.

 

(a) Company Termination Event Procedures . Upon the occurrence of any Company Termination Event, the termination of this Support Agreement shall be effective upon delivery by the applicable Company Party of written notice to legal counsel to the Consenting Noteholders and Leucadia, the Group Lender and Group by the Company Parties (the date of the effectiveness of such termination, the “ Company Termination Date ”).

 

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(b) Consenting Creditor and Creditor/Group Termination Event Procedures . This Support Agreement shall terminate five (5) business days after legal counsel to (i) with respect to either a Creditor/Group Termination Event or a Consenting Creditor Termination Event, the Consenting Noteholders shall have given written notice to counsel to the Company Parties and Leucadia of the intent of the Required Consenting Noteholders to terminate this Support Agreement, (ii) with respect to either a Creditor/Group Termination Event or a Consenting Creditor Termination Event, Leucadia or the Group Lender shall have given written notice to counsel of the Company Parties and the Consenting Noteholders of the intent of Leucadia or the Group Lender to terminate this Support Agreement, or (iii) with respect to a Creditor/Group Termination Event, Group shall have given written notice to counsel of the Company Parties, Leucadia and the Consenting Noteholders of the intent of Group to terminate this Support Agreement in each case, which notice shall include the purported breach under this Support Agreement, and the breach giving rise to the right to so terminate this Support Agreement (to the extent curable) shall not have been cured during the five (5) business day period after receipt of such notice (the date of termination hereof, the “ Creditor/Group Termination Date ,” and the first date of termination of this Support Agreement pursuant to a Company Termination Date, a Creditor/Group Termination Date or in accordance with Section 2.3 hereof, the “ Termination Date ”).

 

(c) The automatic stay applicable under Section 362 of the Bankruptcy Code shall not prohibit a Party from taking any action necessary to effectuate the termination of this Support Agreement pursuant to and in accordance with the terms hereof.

 

(d) On the Termination Date, this Support Agreement shall forthwith terminate and be of no further force or effect other than as specifically set forth herein, each Party hereto shall be released from its commitments, undertakings and agreements under or related to this Support Agreement, and there shall be no liability or obligation on the part of any Party hereto; provided , that nothing in this Section 2.4(d) shall relieve any Company Party of its obligations to pay fees and expenses under the Fee Letters; provided , further that in no event shall any such termination relieve a Party hereto from liability for its breach or non- performance of its obligations hereunder prior to the date of such termination or preclude any Party from seeking specific performance or any other remedy available under applicable law for breach of this Support Agreement, notwithstanding any termination of this Support Agreement by any other Party; provided , further , that notwithstanding anything to the contrary herein, any Termination Event may be waived in accordance with the procedures established by Section 8.11 , in which case the Termination Event so waived shall be deemed not to have occurred, this Support Agreement shall be deemed to continue in full force and effect, and the rights and obligations of the Parties hereto shall be restored, subject to any modification set forth in such waiver. Upon the Termination Date (other than a Termination Date that occurs as a result of the consummation of the Restructuring), any and all consents, tenders, waivers, forbearances and votes delivered by a Consenting Noteholder, Group, Leucadia or Group Lender automatically shall be deemed, for all purposes, to be null and void from the first instance and shall not be considered or otherwise used in any manner by the Company Parties.

 

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Section 3. Company Parties’ Fiduciary Obligations .

 

Notwithstanding anything to the contrary herein, (a) (i) the Company Parties and each respective board or managing member thereof shall be permitted to take (or permitted to refrain from taking) any action with respect to the Restructuring to the extent such board or managing member determines, in good faith based upon advice of counsel, that taking such action, or refraining from taking such action, as applicable, is reasonably required to comply with applicable law, including its fiduciary duties, and may take such action without incurring any liability and (ii) the officers and employees of the respective Company Party shall not be required to take any actions inconsistent with applicable law; and (b) to the extent that such fiduciary obligations require a Company Party or its board of directors to terminate such Company Party’s obligations under this Support Agreement and the Term Sheet, such Company Party may do so without incurring any liability to any Party to this Support Agreement or the Term Sheet, provided , that nothing in this Section 3 shall preclude the other Parties to this Support Agreement from challenging such termination as inconsistent with applicable law or the fiduciary duties of the Company Parties or any board, director, or managing member thereof and if such challenge is successful, no limitation of liability contained in Section 3 (b) shall apply. In the event that such Company Party or its board of directors determines that its fiduciary duties require the Company Party to terminate this Support Agreement (or to otherwise not perform their obligations under this Support Agreement), the Company Party shall provide five (5) business days’ written notice to legal counsel to the Parties hereto. Upon termination of this Support Agreement pursuant to this Section 3 , all obligations of each Party hereunder shall immediately terminate without further action or notice.

 

Section 4. Effectiveness of Support Agreement; Extension of Waiver Agreement .

 

4.1     Conditions Precedent to Support Agreement.

 

    The obligations of the Parties and the effectiveness of the Support Agreement are subject to the following conditions:

 

(a) The execution and delivery of signature pages for this Support Agreement by (i) the Company Parties, (ii) Consenting Noteholders that collectively have the power, directly or indirectly, to vote or cause to be voted not less than 66 2/3% of the aggregate principal amount of the Existing GLBR Notes, (iii) Leucadia, (iv) the Group Lender, and (v) Group (the date upon which such condition is satisfied, the “ Support Agreement Effective Date ”).

 

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Section 5. Representations, Warranties and Covenants .

 

5.1 Power and Authority.

 

Each Party, severally and not jointly, represents, warrants and covenants to each other Party that, as of the date of this Support Agreement, (i) such Party has and shall maintain all requisite corporate, partnership, or limited liability company power and authority to enter into this Support Agreement and to carry out the transactions contemplated by, and perform its respective obligations under this Support Agreement and (ii) the execution and delivery of this Support Agreement and the performance of its obligations hereunder have been duly authorized by all necessary action on its part.

 

5.2 Enforceability.

 

Each Party, severally and not jointly, represents, warrants and covenants to each other Party, that this Support Agreement is its legally valid and binding obligation, enforceable in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization or other similar laws limiting creditors’ rights generally or by equitable principles relating to enforceability or ruling of the Bankruptcy Court.

 

5.3 Governmental Consents.

 

Each Party, severally and not jointly, represents, warrants and covenants to each other Party that, to its knowledge as of the date of this Support Agreement, its execution, delivery, and performance of this Support Agreement does not and shall not require any registration or filing with, consent or approval of, or notice to, or other action to, with, or by, any Federal, state, or other governmental authority or regulatory body, except (a) any of the foregoing as may be necessary and/or required in connection with the Chapter 11 Case, including the approval of the Disclosure Statement and confirmation of the Plan, (b) filings with applicable state authorities, and other registrations, filings, consents, approvals, notices, or other actions that are reasonably necessary to maintain permits, licenses, qualifications, and governmental approvals to carry on the business of GLBR, and (c) any other registrations, filings, consents, approvals, notices, or other actions, the failure of which to make, obtain or take, as applicable, would not be reasonably likely, individually or in the aggregate, to materially delay or materially impair the ability of any Party hereto to consummate the transactions contemplated hereby.

 

5.4 Ownership.

 

(a) Each Consenting Noteholder, severally and not jointly, represents, warrants and covenants to the Company Parties that, without limiting the ability to sell, transfer or assign any of the Existing GLBR Notes or any other legal or equitable claims against or interests in the Company Parties or in or against any of the other Parties hereto, whether in contract, tort, or otherwise (collectively, the “ Note Claims ”), subject to Section 8 below, (i) such Party is the legal and beneficial holder, or is investment advisor to the beneficial holder(s) of the Note Claims in the principal amounts indicated on such Party’s signature page hereto, or has and shall maintain the power and authority to bind the beneficial owner(s) of such Note Claims to the terms of this Support Agreement, (ii) such Party (aa) has and shall maintain full power and authority to vote on and consent to or (bb) has received direction and power and authority from the party having full power and authority to vote on and consent to such matters concerning its Note Claims and to exchange, assign and transfer such Note Claims, (iii) such Party has the full power and authority necessary to execute the Release and release the claims described therein, and (iv) other than pursuant to this Support Agreement, such Note Claims are and shall continue to be free and clear of any pledge, lien, security interest, charge, claim, equity, option, proxy, voting restriction, right of first refusal or other limitation on disposition, or encumbrances of any kind, that would materially and adversely affect in any way such Party’s performance of its obligations contained in this Support Agreement.

 

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(b) Leucadia and each Group Lender, severally and not jointly, represents, warrants and covenants to the Company Parties that, without limiting the ability to sell, transfer or assign any of the Obligations (as defined in the Leucadia Credit Agreement) or any other legal or equitable claims against or interests in the Company Parties or Group, whether in contract, tort, or otherwise (collectively, the “ Leucadia Holdings ”; and together with the Note Claims, collectively, the “ Holdings ”), subject to Section 8 below, (i) such Party is the legal and beneficial owner of the Leucadia Holdings in the principal amounts indicated on such Party’s signature page hereto, or has and shall maintain the power and authority to bind the legal and beneficial owner(s) of such Leucadia Holdings to the terms of this Support Agreement, (ii) such Party (aa) has and shall maintain full power and authority to vote on and consent to or (bb) has received direction from the party having full power and authority to vote on and consent to such matters concerning its pro rata share of the Leucadia Holdings and to exchange, assign and transfer such Leucadia Holdings, (iii) such Party has the full power and authority necessary to execute the Release and release the claims described therein, and (iv) other than pursuant to this Support Agreement, such Leucadia Holdings are and shall continue to be free and clear of any pledge, lien, security interest, charge, claim, equity, option, proxy, voting restriction, right of first refusal or other limitation on disposition, or encumbrances of any kind, that would materially and adversely affect in any way such Party’s performance of its obligations contained in this Support Agreement.

 

5.5 No Material Misstatement or Omission.

 

Each Company Party, jointly and severally, represents, warrants and covenants as follows:

 

(a) None of the material or information provided by or on behalf of the Company Parties to the Consenting Noteholders, Group, Leucadia or the Group Lender contained in, or incorporated by reference into, the Disclosure Statement, when read or considered together, contains any untrue statement of a material fact or omits to state a material fact necessary in order to prevent the statements made therein when taken as a whole from being materially misleading, in each case, as of such date; and

 

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(b) The consolidated financial statements (including, in each case, any notes thereto) contained in, or incorporated by reference into, the Disclosure Statement were prepared: (i) in accordance with generally accepted accounting principles in the United States of America (“ GAAP ”) applied on a historically consistent basis throughout the periods indicated (except as may be indicated in the notes thereto or, in the case of interim consolidated financial statements, where information and footnotes contained in such financial statements are not required under the rules of the Securities and Exchange Commission (the “ SEC ”) to be in compliance with GAAP) and (ii) in compliance, as of their respective dates of filing with the SEC, in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, and in each case, such consolidated financial statements fairly presented, in all material respects, the consolidated financial position, results of operations, changes in stockholder’s equity and cash flows of GLBR and its consolidated subsidiaries as of the respective dates thereof and for the respective periods covered thereby (subject, in the case of unaudited statements, to normal year-end adjustments).

 

5.6 Additional Company Party Covenants.

 

(a) From and after the date hereof and until the consummation of the Restructuring, the Company Parties will operate their businesses in the ordinary course and consistent with past practice, other than (i) as contemplated in this Support Agreement or consistent with effectuating the Plan or (ii) with the consent of the Required Consenting Noteholders, Group, Leucadia and the Group Lender, and will keep the Consenting Noteholders, Group, Leucadia and the Group Lender reasonably informed about the operations of the Company Parties and provide Consenting Noteholders, Group, Leucadia and the Group Lender such information regarding the operations of the Company Parties or the Restructuring as may be reasonably requested.

 

(b) From and after the date hereof and until the consummation of the Restructuring, GLBR will not make or declare any dividends, distributions or other payments on account of its equity and Holdco will not make or declare any dividends, distributions or other payments on account of its equity to any recipient other than GLBR.

 

5.7 Cash and Cash Equivalents.

 

Each Company Party, jointly and severally, represents, warrants and covenants that it believes, to its knowledge after reasonable inquiry, upon the Plan Effective Date the Company Parties will have sufficient cash and cash equivalents to pay the fees and expenses relating to the Restructuring (including, for the avoidance of doubt, the Restructuring Expenses).

 

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Section 6. Remedies .

 

It is understood and agreed by each of the Parties that any breach of this Support Agreement would give rise to irreparable harm for which money damages would not be an adequate remedy and accordingly the Parties agree that, in addition to any other remedies, each non-breaching Party shall be entitled to specific performance and injunctive or other equitable relief, without the necessity of posting a bond, for any such breach. The Parties agree that for so long as a Party has not taken any action to prejudice the enforceability of this Support Agreement (including without limitation, alleging in any pleading that this Support Agreement is unenforceable), and has taken such actions as are reasonably required or desirable for the enforcement hereof, then no such Party shall have any liability for damages hereunder in the event a court determines that this Support Agreement is found by a court of competent jurisdiction, on a final and non-appealable basis, not enforceable. For the avoidance of doubt, any and all remedies and liability for breach of this Support Agreement shall survive any termination of this Support Agreement.

 

Section 7. Acknowledgement .

 

This Support Agreement, the Term Sheet and transactions contemplated herein and therein are the product of negotiations among the Parties, together with their respective representatives. Notwithstanding anything herein to the contrary, this Support Agreement is not (a) a solicitation of votes for the acceptance of the Plan or any Chapter 11 plan for the purposes of sections 1125 and 1126 of the Bankruptcy Code or otherwise, or (b) an offer for the purchase, sale, exchange, hypothecation, or other transfer of securities for purposes of the Securities Act of 1933, as amended and the Securities Exchange Act of 1934, as amended.

 

Section 8. Miscellaneous Terms .

 

8.1 Assignment; Transfer Restrictions.

 

(a) (i) Each Consenting Noteholder hereby agrees, severally and not jointly, for so long as this Support Agreement shall remain in effect, not to sell, assign, transfer, hypothecate or otherwise dispose of (including by participation) any Note Claims to any third party that is not a Consenting Noteholder and (ii) Leucadia and the Group Lender hereby agrees, severally and not jointly, for so long as this Support Agreement shall remain in effect, not to sell, assign, transfer, hypothecate or otherwise dispose of (including by participation) any Leucadia Holdings to any third party unless, as a condition precedent to any such transaction, the transferee thereof executes and delivers a joinder in the form of Exhibit D hereto (the “ Joinder ”) to the Company Parties and legal counsel to the Consenting Noteholders and Leucadia prior to or contemporaneously with the execution of an agreement (or trade confirmation) in respect of the relevant transfer. Upon execution of a Joinder, the transferee shall be deemed to be a Consenting Noteholder or Group Lender, as applicable, for purposes of this Support Agreement, except as otherwise set forth or limited herein. For the avoidance of doubt, each (i) Consenting Noteholder may freely sell, assign, transfer, hypothecate or otherwise dispose of (including by participation) any Note Claims to any other Consenting Noteholder notwithstanding the foregoing and (ii) Group Lender and Leucadia may freely sell, assign, transfer, hypothecate or otherwise dispose of (including by participation) any Leucadia Holdings to Leucadia notwithstanding the foregoing.

 

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(b) Any sale, assignment, transfer, hypothecation or other disposition (including by participation) of any Holdings that does not comply with the procedures set forth in Section 8.1(a) hereof shall be deemed void ab initio .

 

(c) Any person that receives or acquires Holdings pursuant to a sale, assignment, transfer, hypothecation or other disposition (including by participation) of such Holdings by a Consenting Noteholder or Group Lender, as applicable, hereby agrees to be bound (and shall be deemed to be bound regardless of whether it executes and delivers a Joinder) by all of the terms of this Support Agreement (as the same may be hereafter amended, restated or otherwise modified from time to time) (a “ Joining Party ”). The Joining Party shall be deemed to be a Party for all purposes under this Support Agreement except as otherwise set forth or limited herein. Upon compliance with the foregoing, the transferor shall be deemed to relinquish its rights (and be released from its obligations, except for any claim for breach of this Support Agreement that occurs prior to such transfer and any remedies with respect to such claim) under this Support Agreement to the extent of such transferred rights and obligations.

 

(d) With respect to the Holdings of any Joining Party upon consummation of the sale, assignment, transfer, hypothecation or other disposition (including by participation) of such Holdings, the Joining Party hereby makes (and is deemed to have made) the representations and warranties of the Consenting Noteholders or Group Lender, as applicable, set forth in Section 5 hereof to the Company Parties.

 

(e) This Support Agreement shall in no way be construed to preclude any Consenting Noteholder or Group Lender from acquiring additional Holdings; provided that any such Holdings shall automatically be deemed to be subject to the terms of this Support Agreement.

 

(f) Notwithstanding anything to the contrary herein, a Qualified Marketmaker (as defined below) that acquires any of the Holdings with the purpose and intent of acting as a Qualified Marketmaker for such Holdings shall not be required to execute and deliver to counsel a Joinder or otherwise agree to be bound by the terms and conditions set forth in this Support Agreement if such Qualified Marketmaker transfers such Holdings (by purchase, sale, assignment, participation, or otherwise) to a Consenting Noteholder, Group Lender or a transferee that executes a Joinder as provided herein. As used herein, the term “ Qualified Marketmaker ” means an entity that (i) holds itself out to the public or the applicable private markets as standing ready in the ordinary course of business to purchase from customers and sell to customers claims against the Company Parties (or enter with customers into long and short positions in claims against the Company Parties), in its capacity as a dealer or market maker in claims against the Company Parties and (ii) is, in fact, regularly in the business of making a market in claims against issuers or borrowers (including debt securities or other debt).

 

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8.2 No Third Party Beneficiaries.

 

Unless expressly stated herein, this Support Agreement shall be solely for the benefit of the Parties. No other person or entity shall be a third party beneficiary.

 

8.3 Entire Agreement.

 

This Support Agreement, including exhibits and annexes hereto, constitutes the entire agreement of the Parties with respect to the subject matter of this Support Agreement, and supersedes all other prior negotiations, agreements, and understandings, whether written or oral, among the Parties with respect to the subject matter of this Support Agreement; provided , however , that any confidentiality agreements, including, for the avoidance of doubt, the Non- Disclosure Agreements, executed by any Party shall survive this Support Agreement and shall continue in full force and effect, subject to the terms thereof, irrespective of the terms hereof.

 

8.4 Counterparts.

 

This Support Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which shall constitute one and the same agreement. Delivery of an executed signature page of this Support Agreement by email or facsimile transmission shall be as effective as delivery of a manually executed counterpart hereof.

 

8.5 Settlement Discussions.

 

This Support Agreement and the Term Sheet are part of a proposed settlement of disputes among the Parties hereto. Nothing herein shall be deemed to be an admission of any kind. Pursuant to Federal Rule of Evidence 408 and any applicable state rules of evidence, this Support Agreement and all negotiations relating thereto shall not be admissible into evidence in any proceeding other than a proceeding to enforce the terms of this Support Agreement or obtain entry by the Bankruptcy Court of the RSA Assumption Order pursuant to the RSA Assumption Motion or in connection with the confirmation of the Plan.

 

8.6 Reservation of Rights.

 

(a) Except as expressly provided in this Support Agreement or in any applicable confidentiality agreement, nothing herein is intended to, does or shall be deemed in any manner to limit (i) the ability of (x) a Consenting Noteholder to consult with other Consenting Noteholders, Group, Leucadia, Group Lender or the Company Parties or (y) Group, Leucadia or a Group Lender to consult with Consenting Noteholders, Group, Leucadia, other Group Lender or the Company Parties, (ii) the rights of a Consenting Noteholder, Group, Leucadia or a Group Lender to be heard as a party in interest in the Chapter 11 Case, or (iii) the rights of a Consenting Noteholder, Group, Leucadia or a Group Lender to defend against any objection to, or estimation of, any of its Holdings, in each case so long as such consultation, appearance or defense is consistent with the Consenting Noteholder’s, Group’s, Leucadia’s or Group Lender’s, as applicable, obligations under this Support Agreement.

 

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(b) If the transactions contemplated by this Support Agreement and in the Term Sheet are not consummated as provided herein, if a Termination Date occurs, or if this Support Agreement, or a Party’s obligations under this Support Agreement, is otherwise terminated for any reason, each Party fully reserves any and all of its respective rights, remedies and interests (if any) under the Existing GLBR Notes Indenture, the Leucadia Credit Agreement and other Leucadia Debt Documents, any other relevant Holdings, applicable law and in equity.

 

8.7 Governing Law; Waiver of Jury Trial.

 

(a) THE PARTIES WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY JURISDICTION IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE BETWEEN THE PARTIES ARISING OUT OF THIS SUPPORT AGREEMENT, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.

 

(b) This Support Agreement shall be governed by and construed in accordance with the laws of the State of New York and without regard to any conflicts of law provision or principle that would require or permit the application of the law of any other jurisdiction. By its execution and delivery of this Support Agreement, each Party hereby irrevocably and unconditionally agrees for itself that, subject to Section 8.7(c) hereof, any legal action, suit or proceeding against it with respect to any matter under or arising out of or in connection with this Support Agreement or for recognition or enforcement of any judgment rendered in any such action, suit or proceeding, may be brought in any federal court of competent jurisdiction in New York County, State of New York, and by execution and delivery of this Support Agreement, each of the Parties hereby irrevocably accepts and submits itself to the nonexclusive jurisdiction of such court, generally and unconditionally, with respect to any such action, suit or proceedings.

 

(c) Notwithstanding the foregoing, if the Chapter 11 Case is commenced, the Bankruptcy Court shall have exclusive jurisdiction over all matters arising out of or in connection with this Support Agreement.

 

8.8 Successors.

 

This Support Agreement is intended to bind the Parties and inure to the benefit of the Parties and each of their respective successors, permitted assigns, heirs, executors, administrators and representatives; provided , however , that nothing contained in this Section 8.8 shall be deemed to permit any transfer, tender, vote or consent, of any claims or interests other than in accordance with the terms of this Support Agreement.

 

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8.9 Relationship Among Consenting Noteholders.

 

Notwithstanding anything herein to the contrary, (a) the duties and obligations of the Consenting Noteholders under this Support Agreement shall be several, not joint, (b) the duties and obligations of Leucadia and the Group Lender under this Support Agreement shall be several, not joint, and (c) none of the Consenting Noteholders, Leucadia or the Group Lender shall have any duty, whether a fiduciary duty or otherwise, to any other Consenting Noteholder, Leucadia, other Group Lender, any Company Party or any of their respective subsidiaries or any other lender, creditor, stakeholder, person or entity simply by being a party to this Support Agreement or in connection with the transactions contemplated hereby. In addition, nothing in this Support Agreement shall limit the ability of any Consenting Noteholder, Leucadia or Group Lender to trade securities, bank debt or other financial instruments of the Company Parties, subject to Section 8.1 hereof.

 

8.10 Acknowledgment of Counsel.

 

Each of the Parties acknowledges that it has been represented by counsel (or had the opportunity to be so represented and waived its right to do so) in connection with this Support Agreement and the transactions contemplated by this Support Agreement. Accordingly, any rule of law or any legal decision that would provide any Party with a defense to the enforcement of the terms of this Support Agreement against such Party based upon lack of legal counsel shall have no application and is expressly waived. The provisions of this Support Agreement shall be interpreted in a reasonable manner to effect the intent of the parties hereto. No Party shall have any term or provision construed against such Party solely by reason of such Party having drafted the same.

 

8.11 Amendments, Modifications and Waivers.

 

Except as otherwise specified herein, this Support Agreement (including, without limitation, the Term Sheet) may only be modified, amended or supplemented, and any of the terms thereof may only be waived, by an agreement in writing signed by each of the Company Parties, the Consenting Noteholders representing a majority of the principal amount of Existing GLBR Notes held by the Consenting Noteholders on the date hereof (collectively, the “ Required Consenting Noteholders ”), Group, Leucadia and the Group Lender; provided , however , that if one or more of the Consenting Noteholders on the date hereof transfers Note Claims pursuant to Section 8.1 , “ Required Consenting Noteholders ” shall be a majority of the principal amount of Existing GLBR Notes held by such non-transferring Consenting Noteholders on the date hereof; provided , further , that if the modification, amendment, supplement or waiver at issue materially and adversely impacts the treatment or rights of any Consenting Noteholder disproportionately to other Consenting Noteholders, the agreement in writing of such Consenting Noteholder whose treatment or rights are disproportionately impacted shall also be required for such modification, amendment, supplement, or waiver to be effective.

 

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8.12 Severability of Provisions.

 

If any provision of this Support Agreement for any reason is held to be invalid, illegal or unenforceable in any respect, that provision shall not affect the validity, legality or enforceability of any other provision of this Support Agreement.

 

8.13 Notices.

 

Unless otherwise set forth herein, all notices and other communications required or permitted hereunder shall be in writing and shall be deemed given when: (a) delivered personally or by overnight courier to the applicable addresses set forth below; or (b) sent by facsimile transmission or email to the parties listed below with a confirmatory copy delivered by overnight courier.

 

If to the Company Parties, to:

 

Global Brokerage, Inc.

55 Water Street

New York, NY 10041

Attention:     David Sassoon, General Counsel

Email:           dsassoon@fxcm.com

 

with a copy to:

 

King & Spalding LLP

1180 Peachtree Street, 34th Floor

Atlanta, Georgia 30309

Attention:     Sarah Borders

Keith Townsend

Telecopy:     (404) 572-5100

E-mail:         sborders@kslaw.com

ktownsend@kslaw.com

 

If to any Consenting Noteholder, to the email address set forth on its signature page, with a copy to (for informational purposes only):

 

Vinson & Elkins LLP

666 5th Avenue, 26 th Floor

New York, NY 10103

Attention:     David Meyer

Steven Abramowitz

Email:           dmeyer@velaw.com

sabramowitz@velaw.com

  

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If to Leucadia or Group Lender, to the email address set forth on its signature page, with a copy to (for informational purposes only):

 

Skadden, Arps, Slate, Meagher &
Flom LLP Four Times Square

New York, NY 10036

Attention:      J. Eric Ivester

Gregory A. Fernicola

Telecopy:      (212) 735-3000

E-mail:          Eric.Ivester@Skadden.com

Gregory.Fernicola@Skadden.com

 

If to Group, to the email address set forth on its signature page.

 

8.14 Disclosure of Consenting Creditor Information.

 

(a) Unless required by applicable law or regulation, each Party agrees to keep confidential the amount of all Holdings in the Company Parties held (beneficially or otherwise) by any Consenting Noteholder or Group Lender absent the prior written consent of such Consenting Noteholder or Group Lender. If GLBR determines that it is required to attach a copy of this Support Agreement to any document or public filing in connection with the Restructuring, it will redact any reference to a specific Consenting Noteholder or Group Lender and such holder’s Holdings. The foregoing shall not prohibit GLBR from disclosing the aggregate claims or interests of all Consenting Noteholders or the Group Lender, as applicable, as a group. The Parties’ obligations under this Section 8.14 shall survive termination of this Support Agreement.

 

(b) Notwithstanding the foregoing, the Company Parties will as soon as practicable, and in no event no less than one (1) business day prior to their anticipated publication, submit to counsel for the Consenting Noteholders and Leucadia all press releases, public filings, public announcements or other communications with any news media in each case to be made by the Company Parties relating to this Support Agreement or the transactions contemplated hereby and any amendments thereof for prior approval by the Consenting Noteholders and Leucadia. Neither Leucadia, the Group Lender, nor the Consenting Noteholders shall use the name of the Company Parties in any press release without the Company Parties’ prior written consent. Nothing contained herein shall be deemed to waive, amend or modify the terms of any confidentiality or non- disclosure agreement between the Company Parties, any Consenting Noteholder, any Group Lender or Leucadia.

 

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8.15 Continued Banking Practice.

 

Except as limited herein or in the Term Sheet, each Consenting Noteholder, each Group Lender, Leucadia and their respective affiliates may accept deposits from, lend money to, and generally engage in any kind of lending, investment banking, trust or other business with, or provide debt financing (including debtor in possession financing), equity capital or other services (including financial advisory services) to any Company Party or any affiliate of any Company Party or any other person, including, but not limited to, any person proposing or entering into a transaction related to or involving any Company Party or any affiliate thereof.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Support Agreement to be executed and delivered by their respective duly authorized officers, solely in their respective capacity as officers of the undersigned and not in any other capacity, as of the date first set forth above.

           
  GLOBAL BROKERAGE, INC.
           
    By: /s/ Ken Grossman
      Name: Ken Grossman
      Title: Chief Executive Officer
           
  GLOBAL BROKERAGE HOLDINGS, LLC
           
    By: Global Brokerage, Inc., its sole managing member
           
        By:  /s/ Ken Grossman
          Name: Ken Grossman
          Title: Chief Executive Officer
           
  FXCM GROUP, LLC
           
    By: /s/ Robert Lande
      Name: Robert Lande
      Title: Chief Financial Officer

  

[Signature Page to Restructuring Support Agreement]

 

 

 

       
  LEUCADIA NATIONAL CORPORATION
       
    By: /s/ Michael J. Sharp
      Name: Michael J. Sharp
      Title: EVP, General Counsel
       
  LUK-FX HOLDINGS, LLC
       
  By: Leucadia National Corporation, its sole member
       
    By: /s/ Michael J. Sharp
      Name: Michael J. Sharp
      Title: EVP, General Counsel

  

[Signature Page to Restructuring Support Agreement]

 

 

 

683 Capital Partners LP
As a Consenting Noteholder
   
/s/ Joseph Patt  
By: 683 Capital Partners LP  
Name: Joseph Patt  
Title: Head Trader  

  

Principal amount of Existing GLBR Notes: [REDACTED]  

     
Notice Address: 3 Columbus Circle  
  Suite 2205  
Attn: Alan Leibel, CFO  
Fax:    
Email: aleibel@683capital.com  

  

[Signature Page to Restructuring Support Agreement]

 

 

 

     
Lazard Asset Managemenet LLC  
As a Consenting Noteholder (in its capacity as investment adviser to certain beneficial owners of the notes referenced herein)
   
By: /s/ Gerald B. Mazzari  
Name: Gerald B. Mazzari  
Title: Chief Operating Officer  

 

Principal amount of Existing GLBR Notes: [REDACTED]

  

Notice Address: Lazard Asset Management LLC  
  30 Rockefeller Plaza, 55 th Floor  
  New York, NY 10112  
Attn: General Counsel  
Fax: (212) 332-1703  
Email: Mark.Anderson@lazard.com  

  

[Signature Page to Restructuring Support Agreement]

 

 

  

     
PENDERFUND CAPITAL MANAGEMENT LTD.  
As a Consenting Noteholder  
   
/s/ Felix Narhi    
Name: Felix Narhi  
Title: Chief Investment Officer, Penderfund Capital Management Ltd.
   
/s/ Geoff Castle    
Name: Geoff Gastle  
Title: Portfolio Manager, Penderfund Capital Management Ltd.

 

Principal amount of Existing GLBR Notes: [REDACTED]

 

Notice Address: 1640-1066 West Hastings St.  
  Vancouver, BC V6E 3X1  
Attn: Geoff Castel/Parul Garg  
Fax: 604-563-3199  
Email: trading@penderfund.com /  
  pgarg@penderfund.com /  
  gcastle@penderfund.com  

  

[Signature Page to Restructuring Support Agreement]

 

 

  

Phoenix Investment Adviser LLC  
As a Consenting Noteholder  
   
/s/ Lance Friedler  
Name: Lance Friedler  
Title: General Counsel  
   
Principal amount of Existing GLBR Notes: [REDACTED]

 

Notice Address: Phoenix Investment Adviser LLC  
     
Attn: A. Agarwal  
Fax:    
Email:    

 

[Signature Page to Restructuring Support Agreement]

 

 

 

   
WOLVERINE FLAGSHIP FUND TRADING LIMITED
As a Consenting Noteholder
By Wolverine Asset Management, LLC, its investment manager
 
/s/ Kenneth L. Nadel  
By: Kenneth L. Nadel
Title: Chief Operating Officer

  

Principal amount of Existing GLBR Notes: [REDACTED]

   

Notice Address: 175 W. Jackson Blvd, Suite 340  
  Chicago, Il 60604  
Attn: Kenneth L. Nadel  
Fax: 312 884-3050  
Email: notices@wolvefunds.com  

  

[Signature Page to Restructuring Support Agreement]

  

 

 

EXHIBIT A

 

TERM SHEET

 

 

 

Prepared for Settlement Discussions

Subject to FRE 408

 

Term Sheet

 

This document sets forth the principal terms of new secured notes (the “ New Notes ”) to be offered in exchange for the existing 2.25% Convertible Senior Notes due 2018 (the “ Existing Notes ”) issued by Global Brokerage, Inc. (“ GLBR ”), as well as additional terms and conditions of the exchange transaction.

 

It is anticipated that the restructuring and transactions contemplated hereby will be consummated pursuant to a prepackage chapter 11 plan (the “ Plan ”) in a bankruptcy case (the “ Chapter 11 Case ”) commenced by GLBR. However, this proposal is not an offer to purchase securities or solicitation of votes on a chapter 11 plan of reorganization.

 

Terms of New Notes
Issuer GLBR
Guarantor Global Brokerage Holdings, LLC (“ Holdings ”)
Amount

$172.5 million plus accrued and unpaid interest as of the petition date of the Chapter 11 Case 

Maturity 5 years
Interest Rate

7.00% cash interest with PIK toggle if cash at GLBR is insufficient to satisfy interest payment 

Collateral

All assets and equity interests held by GLBR and Holdings, subordinate in the case of Holdings to the obligations owed to Leucadia National Corporation

Sinking Fund Provision

●      Distributions to Holdings (net of payment of reasonable expenses) other than with respect to certain permitted payments and in excess of Minimum Reserve Cash will be contributed to a sinking fund (“ Sinking Fund ”)

 

●     Minimum Reserve Cash ” shall equal one semi-annual interest payment ($6.0375 million) plus $250,000

 

●      Holdings and/or GLBR will use funds available in the Sinking Fund subject to a minimum threshold to run a quarterly reverse dutch auction to repurchase as many notes as possible at market prices at, or below, par or to pay cash interest payments on the Notes.

Indenture Covenants

Negative covenants to apply to GLBR and Holdings, and to include:

 

●      limits on Restricted Payments (dividends, equity repurchases, etc.);

●      limits on Incurrence of Debt;

●      limits on Liens/Secured Debt/Sale Leasebacks;

●      limits on Affiliate Transactions;

●      limits on Asset Sales (including interests in FXCM);

●      limits on Mergers/Consolidation (substantially all assets of Holdings or GLBR); and

●      limits on additional Upstream Restrictions (dividend stoppers) at subsidiaries.  

 

 

 

 

 

Additional covenants to apply to GLBR and Holdings, and to include:

 

●      future guarantor requirements;

●      standard quarterly reporting (including quarterly management calls); and  

●      collateral related covenants (maintenance of liens on the expected collateral).  

Additional Terms

●      Indenture to include no-call provision

 

●      Existing mirror note documentation to be amended and restated to reflect issuance of the New Notes  

Subordination/Standstill/ Intercreditor Agreement

●      The definitive documents will provide that (a) the obligations of Holdings under the Guaranty and the Mirror Notes will be subordinate in right of payment to the prior payment in full of all obligations of Holdings under the Leucadia Credit Agreement, (b) the security interest granted by Holdings in favor of the noteholders and the Indenture Trustee will be subordinate to the security interest granted by Holdings under the Leucadia Credit Agreement and (c) the noteholders and the Indenture trustee will not pursue any remedies against Holdings under the guaranty, the Mirror Notes or the security documents until all obligations of Holdings under the Leucadia Credit Agreement have been paid in full in cash.  

Modifications to FXCM LLC Agreement
Waterfall

Existing waterfall modified according to the following thresholds:

 

●      First $350 million of distributions split 50.0%, 50.0%, between LUX-FX Holdings, LLC (“ Leucadia ”) and Holdings, respectively;

 

●      Next $600 million of distributions split 90.0%, 10.0% between Leucadia and Holdings, respectively;

 

●      All further distributions split 60.0%, 40.0% between Leucadia and Holdings, respectively; and

 

●      Provided, that if any of the interest under the New Notes eligible to be classified as a Permitted Payment has been paid-in-kind (“ Permitted Payment PIK Interest ”), then the first threshold shall be increased by an amount equal to the Permitted Payment PIK Interest divided by Holdings’ allocation under the first tranche of the waterfall, as adjusted for any potential management allocations.  

Excess Cash

Distributions

 

Covenant to be added requiring mandatory, quarterly distributions of FXCM Excess Cash

 

●      FXCM Excess Cash ” shall mean 100% of freely available cash and cash equivalents held by FXCM and its subsidiaries in excess of the sum of (a) projected maximum amount of cash and cash equivalents required for: (i) regulatory capital and margin requirements, each as forecasted by management for the next 12-month period and approved by the FXCM Board and (b) $15 million. Notwithstanding the foregoing, after conferring with Holdings and Leucadia, (a) the FXCM Board may elect to distribute an amount greater than FXCM Excess Cash and (b) an amount of FXCM Excess Cash shall not be distributed to the extent that three or more members of the FXCM Board determine in the good faith exercise of their reasonable business judgment that it is in the best interests of FXCM and its members not to make such distribution; provided that , in the event the FXCM Board elects not to make a distribution of an amount of FXCM Excess Cash pursuant to this section (b), FXCM shall provide written notice of such election and the reasons for such election to Holdings, and Holdings shall provide an update to the Noteholders of the same as part of and in accordance with the reporting required under the Indenture.

 

 

 

 

Permitted Payments

“Fixed Charge Coverage Ratio” test will be deleted

 

Permitted Payments allowed for

 

●      On the next interest payment date for New Notes, 2.25% interest payments on the lesser of (1) $172,500,000 aggregate principal amount of the New Notes and (2) the original aggregate principal amount of the New Notes that remain outstanding as of such time after giving effect to any reductions, repurchases, acquisitions or retirements in principal (as a result of note repurchases in connection with the Sinking Fund auction or otherwise), and without giving effect to the issuance of any PIK interest notes. All redemptions, repurchases, acquisitions or retirements of New Notes shall be treated for purposes of the foregoing as reducing the original $172,500,000 principal balance before reducing any PIK interest notes.

 

●      Ordinary course expenses of GLBR and Holdings to be capped at $1.0 million annually, subject to certain exceptions to be determined

 

●      Post-Effective date expenses up to an additional $6 Million; provided that any such permitted payments will increase the size of the Leucadia Credit Agreement (consistent with the provision outlined below) or, alternatively, in the discretion of FXCM, may be accomplished via a pro rata distribution to the holders of interests in FXCM

 

●      Certain other permitted payments set forth in the definitive documentation  

Other

●      Change of Control provisions in the FXCM LLC Agreement, which require FXCM to purchase Leucadia’s interest at appraised value in the event of a change of control at GLBR or Holdings, shall be waived in connection with any change of control at GLBR or Holdings to the extent that the change of control occurs as a result of the noteholders becoming equity owners of GLBR or Holdings following an event of default and exercise of remedies under the New Notes

 

●      Related Party matter approval in Section 3.6(d) shall be modified to require any Related Party Matter to be commercially reasonable and on terms that could be obtained from non-affiliated third parties

 

 

 

 

Modifications to Credit Agreement
Maturity Extended 12 months
Amendments

●      Any amendments to the Credit Agreement that increase the principal amount, rate or fees payable with respect to the Credit Agreement shall be commercially reasonable and on terms that could be obtained from non-affiliated third parties

 

●      Any future borrowings under the Leucadia Credit Agreement that are consistent with past practice shall be permitted (e.g., additions to the loan balance made as a consequence of FXCM’s funding of Holding/ GLBR’s non-ordinary course expenses); provided that , following consummation of the Restructuring, any such increases in the Leucadia Credit Agreement balance shall not exceed $6 million in the aggregate, without the consent of Holdings and Noteholder Designated Member (as defined below) .

 

Other ●      Any other amendments or waivers necessary to issue the New Notes (including modifications to Permitted Payment definitions consistent with the above)
Governance

Holdings LLC Agreement and corporate documents to be amended to provide for a Noteholder-designated special member of Holdings (“ Noteholder Designated Member ”) whose affirmative vote will be required as a condition to Holdings agreeing to the following actions:

 

1.    A sale of the FXCM or Holdings pursuant to Section 12.3 of the FXCM LLC Agreement; but solely to the extent that Holdings’ consent or agreement is now required under the FXCM LLC Agreement for such sale.

 

2.    Holdings agreeing to any amendment, modification or waiver of the FXCM LLC Agreement that results in modifications or waivers of the following provisions of the FXCM LLC Agreement, but solely to the extent that Holdings’ consent or agreement is now required under the FXCM LLC Agreement for such modification or waiver:

 

a)        The waterfall, permitted payment and other amendments to the FXCM LLC Agreement and the Holdings LLC Agreement made in connection with this exchange;

 

b)        amendment, modification or consent that directly or indirectly diminishes the Class A Unit Percentage in FXCM by Holdings below 50.1% (including, without limitation, Holdings’ consent rights under Section 5.1(a)) or materially impairs the rights and powers of the Class A Units held by Holdings;

 

c)        Any amendment, modification or waiver of Section 4.2, Section 4.3, Section 4.6, Section 4.7, Section 4.8, Section 4.9 or Section 4.11 of the FXCM LLC Agreement or any other action which directly or indirectly diminishes the right of the FXCM Holder ( i.e. , Holdings) to appoint at all times 50% of the Directors and its related independent Director rights;

 

d)        Any amendment, modification, or consent to deviation of compliance with Section 12.1(a), 12.1(b) and 12.1(c) of the FXCM LLC Agreement. For the avoidance of doubt, the affirmative vote of the Noteholder Designated Member will be required as a condition to Holdings giving its consent pursuant to, or waiving compliance with, any of Section 12.1(a), Section 12.1(b) or Section 12.1(c); and

 

 

 

 

e)        Any amendment, modification or consent to deviation of compliance with Section 12.1(d) and 12.1(e) of the FXCM LLC Agreement. Without limitation, Holdings shall not permit any increase in the $50 million secured debt basket contemplated by 12.1(d)(i) and (iii) of the FXCM LLC Agreement. For the avoidance of doubt, the affirmative vote of the Noteholder Designated Member will be required as a condition to Holdings giving its consent pursuant to, or waiving compliance with, any of Section 12.1(d) or Section 12.1(e).

 

Notwithstanding the foregoing, the FXCM LLC Agreement may be amended without the vote or consent of the Noteholder Designated Member to provide for a management incentive benefit solely to the extent that (i) the FXCM Board, in its discretion, determines to allocate up to 10.0% of the waterfall distributions to certain members of management, and (ii) such amendment reflects the following conditions: (1) such management allocations will only entitle management to potential distributions upon a sale of FXCM, (2) in no circumstances shall Holdings allocation drop below 45.0%, 8.8% and 34.4% in the three waterfall tranches, respectively, and (3) in the event that Holdings’ distribution is reduced in the first tranche, the total size of the first tranche will increase by $7.14 million for every 1 point reduction in Holdings’ distribution;

 

3.    After the Effective Date, Holdings shall not consent to increase the Leucadia Credit Agreement principal balance in amounts beyond those provided for in the Leucadia Credit Agreement and other Plan Documents as of the Effective Date without consent of the Noteholder Designated Member, with such consent not to be unreasonably withheld.

 

4.    Holdings agreeing to a dissolution of FXCM pursuant to Section 8.1, or Holdings’ consenting to any amendment, modification or waiver of the FXCM LLC Agreement that would reasonably be expected to have an adverse effect on Holdings’ rights as a Class A Member, the FXCM Holder or as a Lead Member Holder; but solely to the extent that Holdings’ consent or agreement is now required under the FXCM LLC Agreement for such action.

 

The Noteholder Designated Member shall be included in any consultation with Holdings pursuant to the FXCM Excess Cash provision in the FXCM LLC Agreement, and such consultation shall include access to projections and other non-priority materials relevant to a determination by the FXCM Board with respect to distribution of FXCM Excess Cash.

 

Holdings LLC Agreement to provide for (i) a waiver of the Noteholder Designated Member’s fiduciary and other duties to the fullest extent permitted by applicable law and with the express right of the Noteholder Designated Member to consider only the interests of the Noteholders, (ii) exculpation of the Noteholder Designated Member for all actions taken in such capacity except to the extent of a final, non-appealable judgment that such member committed a bad faith violation of the implied contractual covenant of good faith and fair dealing, (iii) indemnification of the Noteholder Designated Member by Holdings for all actions taken in such capacity except to the extent of a final, non-appealable judgment that such member committed a bad faith violation of the implied contractual covenant of good faith and fair dealing (with such indemnification being primary to any other sources of indemnification that may be available to such Noteholder Designated Member, without subrogation), (iii) customary advancement of expenses to the Noteholder Designated Member in connection with any claims for indemnification under the Holdings LLC Agreement, (iv) the Noteholder Designated Member to be designated, replaced and removed only by a vote of the requisite Noteholders, (v) appropriate information rights to the Noteholder Designated Member to enable it to exercise its rights pursuant to the Noteholder Protections, and (vi) third party beneficiary rights in favor of the Noteholders to enforce the provisions set forth in this term sheet under “Governance” (such provisions, collectively, the “ Noteholder Protections ”).

 

 

 

 

Indenture for New Notes will prohibit (by way of event of default) any modification or waiver of the Noteholder Protections in the Holdings corporate governance documents or the removal or replacement of the Noteholder Designated Member without the consent of the requisite Noteholders. The Holdings LLC Agreement will provide that in the absence of a Noteholder Designated Member for whatever reason (e.g. resignation, incapacity) and after the Noteholders have had a reasonable opportunity to designate a replacement Noteholder Designated Member (including taking into account any time period for a consent solicitation) , GLBR, can designate an independent person (satisfying standards of independence under the New York Stock Exchange and Delaware state law including with respect to Leucadia and any affiliate of GLBR) to serve as Noteholder Designated Member (the “ Temporary Designated Member ”) until such time, if any, as Temporary Designated Member is replaced by a designee of the majority Noteholders; provided, howev er, that any Temporary Designated Member shall be required to represent only the interests of the Noteholders and will otherwise benefit from the other Noteholder Protections outlined above.

 

 

 

 

EXHIBIT B

 

RELEASE

 

 

 

 

MUTUAL RELEASE 

 

This MUTUAL RELEASE (the “ Release ”) is made and entered into as of ___________, 201[_] by and among Global Brokerage, Inc., a Delaware corporation (“ GLBR ”), (b) Global Brokerage Holdings, LLC, a Delaware limited liability company (“ Holdco ”), and (c) FXCM Group, LLC, a Delaware limited liability company (“ Group ”); (ii) the undersigned beneficial holders or investment advisor to the beneficial holders of Existing GLBR Notes (as defined below) issued pursuant to the Existing GLBR Notes Indenture (as defined below) (the “ Consenting Noteholders ”); (iii) LUK-FX Holdings, LLC, a Delaware limited liability company, in its capacity as a member of Group (“ Leucadia ”) and in its capacity as lender under the Leucadia Credit Agreement (as defined below) (the “ Leucadia Group Lender” ) and Leucadia National Corporation, as administrative agent under the Leucadia Credit Agreement (together with the Leucadia Group Lender, the “ Group Lender ”, and collectively with GLBR, Holdco, Group, the Consenting Noteholders, Leucadia and Group Lender, the “ Parties ”). 

 

WHEREAS, the Parties are parties to that certain Restructuring Support Agreement, dated as of November 10, 2017 (as amended to date, the “ Agreement ”), pursuant to which the Parties have agreed to restructure (the “ Restructuring ”) the 2.25% Convertible Senior Notes due 2018, with an outstanding principal amount of $172,500,000.00 as of the date of the Agreement (the “ Existing GLBR Notes ”) pursuant to that certain Indenture, dated as of June 3, 2013 (the “ Existing GLBR Notes Indenture ”);

 

WHEREAS, each of Holdco and Group is party to that certain Amended and Restated Credit Agreement, dated as of January 24, 2015 (as amended through the date hereof, the “ Leucadia Credit Agreement ”), by and among Holdco, Group, the Leucadia Group Lender, and Leucadia National Corporation, as administrative agent, and certain agreements related thereto (the “ Leucadia Debt Documents ”); 

 

WHEREAS, the Parties have reached agreement and desire to implement the Restructuring of the Existing GLBR Notes through a pre-packaged chapter 11 plan of reorganization (the “ Plan” ) for GLBR consummated through a voluntary reorganization case (the “ Chapter 11 Case ”) pursuant to chapter 11 of title 11 of the United States Code (the “ Bankruptcy Code ”) to be filed with the United States Bankruptcy Court for the Southern District of New York (the “ Bankruptcy Court ”), each upon the terms and conditions set forth in the Agreement; and 

 

WHEREAS, the Agreement provides that one of the conditions to the Restructuring and consummation of the Agreement is the execution and delivery of this Release upon request by any Party to the Agreement following the consummation of the Plan. 

 

 

 

1 Capitalized terms not defined herein shall have the meanings ascribed to such terms in the Agreement 

 

 

 

 

NOW, THEREFORE, for good and valuable consideration, including the concessions made in the Agreement and related transaction documents, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows: 

 

1.          Release of GLBR, Holdings and Group . The Consenting Noteholders, on behalf of themselves and in their capacity as such, and Leucadia and Leucadia Group Lender on behalf 

 

of themselves and on behalf of their respective directors, officers, shareholders, managers, members, employees, administrators, successors, heirs, executors, agents, representatives, attorneys, partners and affiliates (and each of their respective officers, directors, managers and employees) and assigns hereby agree to fully and irrevocably release, waive and forever discharge GLBR, Holdco and Group, and each of their respective directors, officers, shareholders, managers, members, partners, employees, successors, heirs and assigns, as applicable and all persons acting by, through, under or in concert with any of them (collectively, the “ Company Released Parties ”), from any and all claims, obligations, rights, suits, damages, causes of action, remedies, and liabilities whatsoever, including any derivative claims asserted or assertable against the Company Released Parties, whether known or unknown, foreseen or unforeseen, liquidated or unliquidated, contingent or fixed, existing or hereafter arising, in law, at equity or otherwise, whether for tort, contract, violations of federal or state securities laws or otherwise, based on or relating to, or in any manner arising from, in whole or in part: (i) GLBR; (ii) GLBR’s bankruptcy estate; (iii) the conduct of GLBR’s business; (iv) GLBR’s Chapter 11 Case; (v) the purchase, sale, or rescission or the purchase or sale of any security of GLBR or reorganized GLBR; (vi) the subject matter of, or the transactions or events giving rise to, any claim or interest that is treated in the Plan; (vii) the Leucadia Credit Agreement, that certain Amended and Restated Limited Liability Company Agreement of FXCM Group, LLC, dated September 1, 2016 (as amended or modified from time to time, the “ Group LLC Agreement ”), and any of the agreements, documents, or transactions that in any way relate to such agreements; (viii) the business or contractual arrangements among GLBR, Holdco, Group, the Consenting Noteholders, and the Group Lender; (ix) the restructuring of claims and interests prior to or in the Chapter 11 Case; or (x) the negotiation, formulation, or preparation of the Agreement, or related agreements, instruments, or other documents; and resulting from any act or omission, transaction, or occurrence taking place on or before the date of this Release. 

 

Notwithstanding anything in the foregoing paragraph and except as specifically set forth in the Definitive Documents (as defined in the Plan), (a) nothing in this Release shall affect or otherwise release, waive, or alter any rights and remedies of Leucadia under (i) the Leucadia Credit Agreement and Leucadia Debt Documents, (ii) the Other Contractual Agreements,2 and (iii) the Group LLC Agreement, and (b) nothing shall bar any claim or cause of action of a Consenting Noteholder alleged prior to______ , 2017 in In re Global Brokerage, Inc. f/k/a FXCM Inc. Securities Litigation , Master File No. 1:17-cv-00916-RA (S.D.N.Y.) (the “ Securities Class Action ”), but only to the extent such claims or causes of action are covered by one or more of GLBR’s insurance policies for current and former director and officer liability (such claim or cause of action, the “ Preserved Accepting Noteholder Claims ”), it being understood that the Preserved Accepting Noteholder Claims shall not be released by any Consenting Noteholder, and the right of any Consenting Noteholder to participate in the Securities Class Action or receive a recovery from the proceeds of GLBR’s director and officer liability insurance policies (the “ D&O Liability Insurance Policies ”) based on the Preserved Accepting Noteholder Claims shall not be affected by this Release; provided , that each former or current director or officer who is a Company Released Party shall have no personal liability related to any Preserved Accepting 2As defined herein, “ Other Contractual Agreements ” means the following contractual agreements among Leucadia and certain other Parties: (A) the consent and waiver, dated as of February 17, 2017, (B) the Acknowledgement, dated as of February 2, 2017, (C) the consent and waiver, dated as of May 12, 2017, and (D) the consent and waiver, dated as of May 15, 2017. Noteholder Claims in excess of any such liability that falls within the coverage and available policy limits of the D&O Liability Insurance Policies and is payable by such policies; provided further, that, it is expressly understood that (a) the Accepting Noteholders will not name the Debtor or Reorganized Debtor as a nominal party to the Securities Class Action based on the parties' understanding and this Court's determination that nothing in the Plan, including this Article IX, shall in any way affect, bar, modify, or release any of the pending claims against the D&O Releasees in the Securities Class Action (including section 20a claims based on the primary or underlying liability of the Debtor) whether or not the Debtor or Reorganized Debtor is a party to the Securities Class Action and (b) counsel for the D&O Releasees/Debtor and Reorganized Debtor has agreed to enter a stipulation to such effect in the Securities Class Action.

 

 

 

2 As defined herein, “ Other Contractual Agreements ” means the following contractual agreements among Leucadia and certain other Parties: (A) the consent and waiver, dated as of February 17, 2017, (B) the Acknowledgemjent, dated as of February 2, 2017, (C) the consent and waiver, dated as of May 12, 2017, and (D) the consent and waiver, dated as of May 15, 2017.

 

  2

 

 

2.          Release of Leucadia and Leucadia Group Lender . The Consenting Noteholders, on behalf of themselves and in their capacities as such, and GLBR, Holdco, and Group on behalf of themselves and their respective directors, officers, shareholders, managers, members, employees, administrators, successors, heirs, executors, agents, representatives, attorneys, partners and affiliates (and each of their respective officers, directors, managers and employees) and assigns hereby agree to fully and irrevocably release, waive and forever discharge Leucadia, Leucadia Group Lender, and each of their respective directors, officers, shareholders, managers, members, partners, employees, successors, heirs and assigns, as applicable and all persons acting by, through, under or in concert with any of them (collectively, the “ Leucadia Released Parties ”), from any and all claims, obligations, rights, suits, damages, causes of action, remedies, and liabilities whatsoever, including any derivative claims asserted or assertable against the Leucadia Released Parties, whether known or unknown, foreseen or unforeseen, liquidated or unliquidated, contingent or fixed, existing or hereafter arising, in law, at equity or otherwise, whether for tort, contract, violations of federal or state securities laws or otherwise, based on or relating to, or in any manner arising from, in whole or in part: ((i) GLBR; (ii) GLBR’s bankruptcy estate; (iii) the conduct of GLBR’s business; (iv) GLBR’s Chapter 11 Case; (v) the purchase, sale, or rescission or the purchase or sale of any security of GLBR or reorganized GLBR; (v) the purchase, sale, or rescission or the purchase or sale of any security of GLBR or reorganized GLBR; (vi) the subject matter of, or the transactions or events giving rise to, any claim or interest that is treated in the Plan; (vii) the Leucadia Credit Agreement, the Group LLC Agreement, and any of the agreements, documents, or transactions that in any way relate to such agreements; (viii) the business or contractual arrangements among GLBR, Holdco, Group, the Consenting Noteholders, and the Group Lender; (ix) the restructuring of claims and interests prior to or in the Chapter 11 Case; or (x) the negotiation, formulation, or preparation of the Agreement, or related agreements, instruments, or other documents; and resulting from any act or omission, transaction, or occurrence taking place on or before the date of this Release. 

 

3.          Release of the Consenting Noteholders . GLBR, Holdco, Group, Leucadia and Leucadia Group Lender, on behalf of themselves and on behalf of their respective directors, officers, shareholders, managers, members, employees, administrators, successors, heirs, executors, agents, representatives, attorneys, partners and affiliates (and each of their respective officers, directors, managers and employees) and assigns hereby agree to fully and irrevocably release, waive and forever discharge the Consenting Noteholders, and each of their respective directors, officers, shareholders, managers, members, partners, employees, successors, heirs and assigns, as applicable and all persons acting by, through, under or in concert with any of them (collectively, the “ Noteholder Released Parties ”), any and all claims, obligations, rights, suits, damages, causes of action, remedies, and liabilities whatsoever, including any derivative claims asserted or assertable against the Noteholder Released Parties, whether known or unknown, foreseen or unforeseen, liquidated or unliquidated, contingent or fixed, existing or hereafter arising, in law, at equity or otherwise, whether for tort, contract, violations of federal or state securities laws or otherwise, based on or relating to, or in any manner arising from, in whole or in part: (i) GLBR; (ii) GLBR’s bankruptcy estate; (iii) the conduct of GLBR’s business; (iv) GLBR’s Chapter 11 Case; (v) the purchase, sale, or rescission or the purchase or sale of any security of GLBR or reorganized GLBR; (v) the purchase, sale, or rescission or the purchase or sale of any security of GLBR or reorganized GLBR; (vi) the subject matter of, or the transactions or events giving rise to, any claim or interest that is treated in the Plan; (vii) the Leucadia Credit Agreement, the Group LLC Agreement, and any of the agreements, documents, or transactions that in any way relate to such agreements; (viii) the business or contractual arrangements among GLBR, Holdco, Group, the Consenting Noteholders, and the Group Lender; (ix) the restructuring of claims and interests prior to or in the Chapter 11 Case; or (x) the negotiation, formulation, or preparation of the Agreement, or related agreements, instruments, or other documents; and resulting from any act or omission, transaction, or occurrence taking place on or before the date of this Release. 

 

  3

 

 

4.          In furtherance of the foregoing releases in Paragraphs 1, 2 and 3 of this Release and except as otherwise provided in such paragraphs, the Parties each hereby irrevocably covenant and agree to refrain from, directly or indirectly, asserting any claim or demand, or commencing, instituting, or causing to be commenced or instituted any proceeding, of any kind or nature whatsoever against any Company Released Party, Leucadia Released Party or Noteholder Released Party, respectively, based upon any matter released under this Release. 

 

5.          This Release shall be governed by the laws of the State of New York. Any claim or action arising out of or relating to this Release shall be brought in the Bankruptcy Court or in the United States District Court for the Southern District of New York, if the Bankruptcy Court declines or does not have jurisdiction. 

 

6.          The Parties may pursue any and all remedies available at law or equity for any alleged breach of the releases and covenants in Paragraphs 1, 2, and 3 of this Release, including the right to seek specific performance of the terms of such Paragraphs. In the event that any suit or action is instituted under or in relation to this Release, including without limitation to enforce any provision in this Release, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Release, including without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals. 

 

7.          In executing this Release, each of the Parties, on behalf of itself and each of its respective releasing parties, hereby acknowledges, represents and warrants that it (i) has read and understands the terms in this Release, (ii) has consulted with and obtained the advice and counsel of its own attorney, (iii) has executed this Release without relying upon any statements, representations or warranties, written or oral, as to any law or fact made by any other Party, not expressly set forth herein, and (iv) has executed this Release voluntarily and without any duress, coercion or undue influence of any kind. 

 

  4

 

 

8.          It is hereby understood and agreed that nothing herein, nor the acceptance or delivery of this Release by any Party shall be deemed or construed as an admission of liability of any nature whatsoever by any Party. 

 

9.          Each of the Parties hereby represents, warrants and agrees to the other that (i) it has the requisite power and authority to enter into and perform the terms of this Release on behalf of itself and each of its respective Releasing Parties, (ii) no further authority or approval is necessary, and (iii) the person executing this Release on his, her or its behalf, if applicable, has the full right and authority to fully commit and bind such Party.

 

10.        Each of the Parties shall bear its own expenses incurred in connection with the negotiation, execution and performance of this Release. 

 

11.        If one or more of the provisions of this Release shall be held invalid, illegal or unenforceable under applicable law, the validity, legality and enforceability of the remaining provisions shall not be affected or impaired thereby. 

 

12.        This Release sets forth the entire understanding of the Parties with respect to the subject matter hereof, and supersedes all prior letters of intent, agreements, covenants, arrangements, communications, representations or warranties, whether oral or written, made by any officer, director, manager, member or representative of any of the Parties. 

 

13.        This Release may be executed in multiple counterparts, each of which when taken together shall constitute one and the same instrument, and facsimile and PDF signatures shall be deemed originals.

 

[Signature Page to Follow]

 

  5

 

 

IN WITNESS WHEREOF, the Parties have caused this Release to be executed as of the date first written above. 

 

  GLOBAL BROKERAGE, INC.
       
  By:  
      Name: Ken Grossman
      Title:   Chief Executive Officer

 

  GLOBAL BROKERAGE HOLDINGS, LLC
   
    By: Global Brokerage, Inc., its sole managing member

 

      By:    

        Name: Ken Grossman  
        Title:   Chief Executive Officer  
       
  FXCM GROUP, LLC
       
    By:  
      Name: Robert Lande
      Title:   Chief Financial Officer

   

[Signature Page to Mutual Release]

 

 

 

 

  LEUCADIA NATIONAL CORPORATION
   
  By:  
      Name:
      Title:   
       
  LUK-FX HOLDINGS, LLC
       
  By: Leucadia National Corporation, its sole member
       
    By:  
      Name:
      Title:   

 

[Signature Page to Mutual Release] 

 

 

 

  

[CONSENTING NOTEHOLDER]
As a Consenting Noteholder 

 

   
By:  
Name:  
Title:  

 

Principal amount of Existing GLBR Notes: $_________________

 

Notice Address:    
     
Attn:    
Fax:    
Email:    

 

[Signature Page to Mutual Release]

 

 

 

 

EXHIBIT C

 

DISCLOSURE STATEMENT

 

 

 

  

 

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK 

 

In re: x   Chapter 11
  :    
Global Brokerage, Inc., :   Case No. 17- ___________ ( )
  :    
Debtor. :    
  :    
  :    
  x    

  

DISCLOSURE STATEMENT FOR SOLICITATION OF ACCEPTANCES 

OF A PREPACKAGED PLAN OF REORGANIZATION OF GLOBAL BROKERAGE, INC.  

PURSUANT TO CHAPTER 11 OF THE BANKRUPTCY CODE

 

Dated: November 10, 2017 

 

Sarah R. Borders  
Thaddeus D. Wilson Arthur Steinberg
Elizabeth T. Dechant Michael R. Handler
KING & SPALDING LLP KING & SPALDING LLP 
1180 Peachtree Street, NE 1185 Avenue of the Americas
Atlanta, GA 30309 New York, NY 10036
Telephone:          (404) 572-4600  Telephone:         (212) 556-2100
Facsimile:           (404) 572-5100 Facsimile:           (212) 556-2222

  

Proposed Attorneys for Debtor and Debtor in Possession

 

 

 

 

 

 

Disclosure Statement

for

Solicitation of Acceptances of a

Prepackaged Plan of Reorganization

 

THE VOTING DEADLINE TO ACCEPT OR REJECT THE PLAN IS 5:00 P.M. (PREVAILING EASTERN TIME) ON DECEMBER 4, 2017 UNLESS EXTENDED BY GLOBAL BROKERAGE, INC. (THE “ VOTING DEADLINE ”). TO BE COUNTED, BALLOTS MUST BE RECEIVED BY THE VOTING AGENT (AS DEFINED HEREIN) ON OR BEFORE THE VOTING DEADLINE.

 

THIS SOLICITATION IS BEING CONDUCTED TO OBTAIN SUFFICIENT ACCEPTANCES OF A PREPACKAGED PLAN OF REORGANIZATION PRIOR TO THE FILING OF A VOLUNTARY CHAPTER 11 CASE UNDER CHAPTER 11 OF TITLE 11 OF THE UNITED STATES CODE. NO CHAPTER 11 CASE HAS YET BEEN COMMENCED . AS NO CHAPTER 11 CASE HAS YET BEEN COMMENCED, THIS DISCLOSURE STATEMENT HAS NOT BEEN APPROVED BY THE BANKRUPTCY COURT AS CONTAINING “ADEQUATE INFORMATION” WITHIN THE MEANING OF SECTION 1125(a) OF THE BANKRUPTCY CODE. IF A VOLUNTARY CHAPTER 11 CASE IS FILED, IMMEDIATELY FOLLOWING SUCH FILING, GLOBAL BROKERAGE, INC. EXPECTS TO SEEK AN ORDER OF THE BANKRUPTCY COURT APPROVING THIS DISCLOSURE STATEMENT AS CONTAINING ADEQUATE INFORMATION, AND THE SOLICITATION OF VOTES FOR AND CONFIRMING, THE PREPACKAGED PLAN OF REORGANIZATION DESCRIBED HEREIN.

 

Global Brokerage, Inc. (“ GLBR ” or the “ Company ”, or on and after a bankruptcy filing, the “ Debtor ,” as applicable) 1 hereby transmits this disclosure statement (as may be amended, supplemented or otherwise modified from time to time, the “ Disclosure Statement ”) pursuant to section 1126(b) of title 11 of the United States Code, 11 U.S.C. §§ 101-1532, as amended (the “ Bankruptcy Code ”), in connection with GLBR’s solicitation of votes (the “ Solicitation ”) to confirm the Prepackaged Plan of Reorganization for Global Brokerage, Inc. Pursuant to Chapter 11 of the Bankruptcy Code (as may be amended, supplemented or otherwise modified from time to time, the “ Plan ”). All capitalized terms in this Disclosure Statement not otherwise defined herein have the meanings given to them in the Plan attached hereto as Exhibit 1. The purpose of this Disclosure Statement is to provide Holders of Claims that are entitled to vote on the Plan (i.e., Holders of Existing Notes Claims under the Plan) (the “ Voting Class ”) with sufficient information to allow them to make an informed decision on whether to accept or reject the Plan.

 

 

 

1 The last four digits of the taxpayer identification number of the Debtor follow in parentheses: Global Brokerage, Inc. (8672). The location of the Debtor’s corporate headquarters and the Debtor’s service address is: 55 Water Street, 50th Floor, New York, New York 10041.

 

 

 

 

The overall purpose of the Plan is to enable GLBR to restructure its obligations under $172,500,000 Principal Amount of 2.25% Convertible Senior Notes due 2018 (the “ Existing Notes ”), by effecting an exchange of such notes for new notes with new terms, including an extended maturity date. All obligations of GLBR other than those owed to the holders of Existing Notes are expected to be paid in full in cash in the ordinary course of GLBR’s business. The legal rights of holders of equity interests in GLBR will be unimpaired under the Plan.

 

YOU HAVE RECEIVED THIS DISCLOSURE STATEMENT, THE BALLOT AND THE ENCLOSED MATERIALS BECAUSE YOU ARE ENTITLED TO VOTE ON THE PLAN.

 

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. THIS DISCLOSURE STATEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR WILL THERE BE ANY DISTRIBUTION OF THE SECURITIES DESCRIBED HEREIN UNTIL THE EFFECTIVE DATE OF THE PLAN.

 

THE COMPANY HAS ENTERED INTO A RESTRUCTURING SUPPORT AGREEMENT (THE “ RESTRUCTURING SUPPORT AGREEMENT ” OR THE “ SUPPORT AGREEMENT ”) WITH GLOBAL BROKERAGE HOLDINGS, LLC (“ HOLDINGS ”), FXCM GROUP, LLC (“ FXCM ”) LUK-FX HOLDINGS, LLC IN ITS CAPACITY AS A MEMBER OF FXCM AND AS THE SOLE LENDER UNDER THE LEUCADIA CREDIT AGREEMENT (AS DEFINED BELOW), LEUCADIA NATIONAL CORPORATION IN ITS CAPACITY AS THE ADMINISTRATIVE AGENT UNDER THE LEUCADIA CREDIT AGREEMENT (TOGETHER WITH LUK-FX HOLDINGS, LLC, “ LEUCADIA ”), AND CERTAIN BENEFICIAL HOLDERS OF EXISTING NOTES REPRESENTING MORE THAN 68.5% OF THE OUTSTANDING PRINCIPAL AMOUNT OF THE EXISTING NOTES (SUCH PARTIES, THE “ PLAN SUPPORT PARTIES ”). PURSUANT TO THE SUPPORT AGREEMENT, CERTAIN BENEFICIAL HOLDERS OF THE EXISTING NOTES, OR INVESTMENT ADVISORS ON THEIR BEHALF, HAVE AGREED, AMONG OTHER THINGS, TO VOTE ALL OF THEIR CLAIMS IN FAVOR OF THE PLAN.

 

THE ONLY DEBTOR IN THE CHAPTER 11 CASE WILL BE GLOBAL BROKERAGE, INC. THE BUSINESS OPERATIONS OF HOLDINGS AND FXCM WILL PROCEED IN THE ORDINARY COURSE OF BUSINESS DURING THE COURSE OF THE CHAPTER 11 CASE AND SHOULD BE UNAFFECTED BY THE CHAPTER 11 CASE.

 

THE CONFIRMATION AND EFFECTIVENESS OF THE PLAN ARE SUBJECT TO MATERIAL CONDITIONS PRECEDENT. THERE IS NO ASSURANCE THAT THESE CONDITIONS WILL BE SATISFIED OR WAIVED.

 

HOLDERS OF CLAIMS AGAINST, AND HOLDERS OF INTERESTS IN, THE COMPANY ARE ENCOURAGED TO READ AND CAREFULLY CONSIDER THE MATTERS DESCRIBED IN THIS DISCLOSURE STATEMENT.

 

IF THE PLAN IS CONFIRMED BY THE BANKRUPTCY COURT AND THE EFFECTIVE DATE OCCURS, ALL HOLDERS OF CLAIMS AGAINST, AND HOLDERS OF INTERESTS IN, THE COMPANY (INCLUDING, WITHOUT LIMITATION, THOSE HOLDERS OF CLAIMS OR INTERESTS WHO DO NOT SUBMIT BALLOTS TO ACCEPT OR REJECT THE PLAN OR WHO ARE NOT ENTITLED TO VOTE ON THE PLAN) WILL BE BOUND BY THE TERMS OF THE PLAN AND THE TRANSACTIONS CONTEMPLATED THEREBY.

 

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NONE OF THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE “ SEC ”), ANY OTHER SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY OR ANY COURT HAS APPROVED OR DISAPPROVED THE PLAN, OR THE NEW NOTES, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THE PLAN OR THE ACCURACY OR ADEQUACY OF THIS DISCLOSURE STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THIS DISCLOSURE STATEMENT DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY STATE OR OTHER JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED.

 

THE COMPANY BELIEVES THAT THE ISSUANCE OF THE SECURITIES UNDER THE PLAN WILL BE EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”), AND RELATED STATE STATUTES BY REASON OF THE APPLICABILITY OF SECTION 1145(a)(1) OF THE BANKRUPTCY CODE OR OTHER APPLICABLE EXEMPTIONS.

 

EXCEPT AS OTHERWISE SET FORTH HEREIN, THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADE BY THE COMPANY AS OF THE DATE HEREOF, AND THE DELIVERY OF THIS DISCLOSURE STATEMENT WILL NOT, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AT ANY TIME SUBSEQUENT TO THE DATE HEREOF.

 

NO PERSON HAS BEEN AUTHORIZED BY THE COMPANY IN CONNECTION WITH THE PLAN OR THE SOLICITATION TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED IN THIS DISCLOSURE STATEMENT, THE PLAN AND THE EXHIBITS AND SCHEDULES ATTACHED TO OR INCORPORATED BY REFERENCE OR REFERRED TO IN THE DISCLOSURE STATEMENT AND/OR PLAN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MAY NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.

 

FOR THE CONVENIENCE OF HOLDERS OF CLAIMS AND INTERESTS, THIS DISCLOSURE STATEMENT SUMMARIZES THE TERMS OF THE PLAN AND CERTAIN OF THE PLAN DOCUMENTS. IF ANY INCONSISTENCY EXISTS BETWEEN THE PLAN OR THE APPLICABLE PLAN DOCUMENTS AND THIS DISCLOSURE STATEMENT, THE TERMS OF THE PLAN OR THE APPLICABLE PLAN DOCUMENTS ARE CONTROLLING. THE SUMMARIES OF THE PLAN AND THE PLAN DOCUMENTS IN THIS DISCLOSURE STATEMENT DO NOT PURPORT TO BE COMPLETE AND ARE SUBJECT TO, AND ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO, THE FULL TEXT OF THE PLAN AND THE APPLICABLE PLAN DOCUMENTS. ALL HOLDERS OF CLAIMS AND INTERESTS ARE ENCOURAGED TO REVIEW THE FULL TEXT OF THE PLAN AND THE PLAN DOCUMENTS, AND TO READ CAREFULLY THIS ENTIRE DISCLOSURE STATEMENT, INCLUDING ALL EXHIBITS HERETO.

 

THIS DISCLOSURE STATEMENT MAY NOT BE RELIED ON FOR ANY PURPOSE OTHER THAN TO DETERMINE WHETHER TO VOTE TO ACCEPT OR REJECT THE PLAN, AND NOTHING STATED HEREIN SHALL CONSTITUTE AN ADMISSION OF ANY FACT OR LIABILITY BY ANY PERSON, OR BE ADMISSIBLE IN ANY PROCEEDING INVOLVING THE COMPANY OR ANY OTHER PERSON, OR BE DEEMED CONCLUSIVE EVIDENCE OF THE TAX OR OTHER LEGAL EFFECTS OF THE PLAN ON THE COMPANY OR HOLDERS OF CLAIMS OR INTERESTS.

 

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HOLDERS OF CLAIMS OR INTERESTS SHOULD NOT CONSTRUE THE CONTENTS OF THIS DISCLOSURE STATEMENT AS PROVIDING ANY LEGAL, BUSINESS, FINANCIAL OR TAX ADVICE. EACH HOLDER SHOULD CONSULT WITH ITS OWN LEGAL, BUSINESS, FINANCIAL AND TAX ADVISORS WITH RESPECT TO ANY SUCH MATTERS CONCERNING THIS DISCLOSURE STATEMENT, THE SOLICITATION OF VOTES TO ACCEPT THE PLAN, THE PLAN, THE PLAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY.

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

THIS DISCLOSURE STATEMENT CONTAINS FORWARD-LOOKING STATEMENTS THAT ARE SUBJECT TO RISKS AND UNCERTAINTIES. FORWARD-LOOKING STATEMENTS GIVE THE COMPANY’S CURRENT EXPECTATIONS RELATING TO ITS FINANCIAL CONDITION, RESULTS OF OPERATIONS, PLANS, OBJECTIVES, FUTURE PERFORMANCE AND BUSINESS. THESE STATEMENTS MAY INCLUDE WORDS SUCH AS “ANTICIPATE,” “ESTIMATE,” “EXPECT,” “PLAN,” “INTEND,” “BELIEVE” AND OTHER WORDS AND TERMS OF SIMILAR MEANING IN CONNECTION WITH ANY DISCUSSION OF THE TIMING OR NATURE OF FUTURE OPERATING OR FINANCIAL PERFORMANCE OR OTHER EVENTS. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON ASSUMPTIONS THAT THE COMPANY HAS MADE IN LIGHT OF ITS EXPERIENCE IN THE INDUSTRY IN WHICH IT OPERATES, AS WELL AS ITS PERCEPTIONS OF HISTORICAL TRENDS, CURRENT CONDITIONS, EXPECTED FUTURE DEVELOPMENTS AND OTHER FACTORS IT BELIEVES ARE APPROPRIATE UNDER THE CIRCUMSTANCES. ALTHOUGH THE COMPANY BELIEVES THAT THESE FORWARD-LOOKING STATEMENTS ARE BASED ON REASONABLE ASSUMPTIONS, YOU SHOULD BE AWARE THAT MANY FACTORS COULD AFFECT THE COMPANY’S ACTUAL FINANCIAL CONDITION OR RESULTS OF OPERATIONS AND CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS. THESE FACTORS INCLUDE, AMONG OTHER THINGS, THOSE DISCUSSED IN ARTICLE XI OF THIS DISCLOSURE STATEMENT TITLED “CERTAIN RISK FACTORS TO BE CONSIDERED.”

 

THE COMPANY SUPPORTS CONFIRMATION OF THE PLAN. THE COMPANY URGES ALL HOLDERS OF CLAIMS WHOSE VOTES ARE BEING SOLICITED TO ACCEPT THE PLAN.

 

IF THE CHAPTER 11 CASE IS FILED, THE COMPANY INTENDS TO CONTINUE OPERATING ITS BUSINESS IN CHAPTER 11 IN THE ORDINARY COURSE AND TO OBTAIN THE NECESSARY RELIEF FROM THE BANKRUPTCY COURT TO PAY ITS TRADE AND CERTAIN OTHER CREDITORS IN FULL AND ON TIME IN ACCORDANCE WITH EXISTING BUSINESS TERMS. THE COMPANY AND THE PLAN SUPPORT PARTIES BELIEVE THAT IT IS IN THE BEST INTERESTS OF THE COMPANY FOR THE COMPANY TO CONTINUE TO PAY SUCH CREDITORS IN FULL AND ON TIME, BECAUSE: (I) DOING SO WILL MINIMIZE THE RISK OF A DELAY IN CONSUMMATING THE COMPANY’S PLAN; (II) THE PLAN PROVIDES FOR THE UNIMPAIRMENT OF GENERAL UNSECURED CLAIMS; AND (III) THE CHAPTER 11 CASE IS EXPECTED TO BE BRIEF IN DURATION DUE TO ITS PREPACKAGED NATURE.

 

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BACKGROUND ON RESTRUCTURING

 

GLBR is a holding company with limited business operations. Its primary asset is its ownership of limited liability company membership interests in Holdings, representing 74.5% of the outstanding Class A membership interests in Holdings. Holdings is also a holding company with limited business operations. Holdings’ primary asset is its ownership of limited liability company interests in FXCM, which represent 50.1% of the Class A membership interests in FXCM.

 

The FXCM Agreement (as defined below) sets forth the economic and governance rights of FXCM’s members, including Holdings. In particular, it provides for FXCM to have its own board of directors, of which three directors are designees of Holdings and the other three are designees of LUK-FX Holdings, LLC. The FXCM Agreement also restricts, subject to certain exceptions, the ability of FXCM to, among other things, make distributions on account of FXCM’s equity interests until the Leucadia Credit Agreement is repaid in full. In addition, following the repayment of the Leucadia Credit Agreement, the FXCM Agreement provides for an allocation of distributions and sales proceeds under a waterfall provision pursuant to which the economic interests of Holdings are effectively less than 50.1%.

 

FXCM and its subsidiaries (the “ FXCM Entities ”) are operating companies who provide online foreign exchange (forex) trading, CFD trading, spread betting and related services. Neither Holdings, FXCM or any FXCM Entity is or is expected to be a debtor under the Bankruptcy Code nor has any obligation with respect to the Existing Notes .

 

GLBR derives all of its revenue from distributions and payments made by Holdings to it. Holdings derives all of its revenue from distributions and payments made by FXCM to Holdings. FXCM is an operating company whose revenues are used to pay expenses incurred in its operations, to maintain required regulatory reserves, to maintain margin deposits with liquidity providers, to pay debt service and for other corporate purposes of FXCM. Excess revenues are available for distribution to members of FXCM, including Holdings in accordance with the provisions of the FXCM Agreement (as defined below). Holdings has no source of revenues other than from distributions and payments made by FXCM to it, and in turn, GLBR has no source of revenue other than from distributions and payments made by Holdings to GLBR.

 

GLBR’s Class A common stock trades on the NASDAQ Global Market of The NASDAQ Stock Market LLC (“ NASDAQ ”) under the symbol “GLBR.” On May 2, 2017, NASDAQ notified GLBR that, for the prior thirty (30) consecutive business days, the market value of GLBR’s publicly held shares was less than $15.0 million, and as a result, GLBR did not meet the requirement for continued listing under NASDAQ’s listing rules. NASDAQ further notified GLBR that the market value of GLBR’s Class A common stock must exceed $15.0 million for ten (10) consecutive business days between May 2, 2017 and October 30, 2017 to avoid such stock being delisted by NASDAQ.

 

The market value of GLBR’s Class A common stock did not exceed $15.0 million for ten (10) consecutive business days between May 2, 2017 and October 30, 2017. On November 6, 2017, NASDAQ provided written notice to GLBR that its Class A common stock would be delisted effective November 15, 2017. Upon GLBR’s application, NASDAQ has approved GLBR’s shares to trade on a different NASDAQ exchange tier, NASDAQ Capital Market, through the end of calendar year 2017.

 

Although GLBR’s shares will be traded on NASDAQ Capital Market through the end of calendar year 2017, the failure of GLBR to remain listed on NASDAQ Global Market is a “Fundamental Change,” under the indenture for the Existing Notes (the “ Existing Notes Indenture ”), which will result in each holder of the Existing Notes having the right, at such holder’s option, to require GLBR to purchase for cash all of such holder’s Existing Notes at a purchase price equal to 100% of the principal amount thereof, plus any accrued and unpaid interest. GLBR does not have sufficient funds to repurchase the Existing Notes should one or more of the holders require repurchase. The failure to satisfy the repurchase obligations constitutes an event of default under the Existing Notes Indenture.

 

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GLBR is also obligated to make a scheduled interest payment to Holders of the Existing Notes on December 15, 2017, subject to a thirty (30) day grace period. GLBR does not have and does not anticipate having sufficient liquidity to make the December 15, 2017 interest payment. Absent a waiver or forbearance from the Holders of the Existing Notes, the failure by GLBR to make this interest payment could result in the acceleration of the maturity of the Existing Notes after a 30-day grace period. GLBR does not currently have sufficient liquidity, nor does it anticipate having sufficient liquidity on or before January 14, 2018, to repay the Existing Notes in full if the Holders of the Existing Notes elected to accelerate the maturity of the Existing Notes.

 

The Existing Notes mature by their own terms in June 2018. GLBR does not have sufficient funds and does not anticipate having sufficient funds to repay the Existing Notes at maturity. GLBR does not believe that it will be able to refinance the Existing Notes prior to maturity, other than on the terms set forth in the Plan.

 

In light of the delisting notice received from NASDAQ, the impending December 15, 2017 interest payment and the impending June 2018 maturity of the Existing Notes, GLBR engaged the Plan Support Parties in arms’ length negotiations regarding a potential restructuring of GLBR’s obligations under the Existing Notes. Those negotiations resulted in the execution of the Support Agreement, which established the framework and agreements necessary to proceed with the Plan.

 

The Plan provides for the following:

 

Issuance of new notes to replace the Existing Notes. The New Notes have a five-year maturity, are secured, will be guaranteed by Holdings, lack a conversion feature, and contain certain additional covenants as more fully described therein;

 

Amendment of the limited liability company agreement of Holdings to provide the Holders of the New Notes with additional contractual protections;

 

Amendment of the limited liability company agreement of FXCM to provide for certain permitted payments to fund certain cash interest payments on the New Notes and to ensure certain funds for anticipated expenses of GLBR;

 

Amendment of that certain Amended and Restated Credit Agreement, dated as of January 25, 2015, by and among Holdings, Leucadia (as amended, supplemented and restated, the “ Leucadia Credit Agreement ”) to extend the maturity of the Leucadia Credit Agreement from January 2018 to January 2019 to enhance the prospects for a refinancing of the facility, mitigating a risk to the ongoing financial viability of FXCM and, in turn, the financial viability of Holdings and GLBR.

 

Third-party releases for parties to the Support Agreement, which were required to induce such parties to grant the concessions provided for in the Plan and the Plan Documents.

 

No impairment of the interests held by equityholders in GLBR.

 

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To implement the restructuring, the Company is soliciting votes from Holders of Existing Notes Claims to accept or reject the Plan. GLBR expects to file a voluntary proceeding under chapter 11 of the Bankruptcy Code, and request that the Bankruptcy Court approve the Plan. If the Bankruptcy Court approves the Plan, GLBR can exit bankruptcy once it satisfies all conditions to the effectiveness of the Plan and can then emerge from bankruptcy with the New Notes having a five-year maturity.

 

Because the Company has an agreement from Holders of more than 68.5% in dollar amount of the Existing Notes Claims, the Company believes that it can receive Bankruptcy Court approval of the Plan. However, the Company believes it is still important that Holders of Existing Notes Claims to vote to accept the Plan. A vote to accept the Plan results in the Holder of an Existing Notes Claim to release the Released Parties on the terms set forth in the Plan. Regardless of whether Holders of Existing Notes Claims accept or reject the Plan, they will receive the same recovery under the Plan. If the Holders Existing Notes Claims vote to accept the Plan, however, GLBR believes that the New Notes will offer the prospect for more value than will be available to the Holders of Existing Notes Claims if the Existing Notes are not exchanged as contemplated by the Plan.

 

THE ONLY DEBTOR IN THE CHAPTER 11 CASE WILL BE GLOBAL BROKERAGE, INC. THE BUSINESS OPERATIONS OF HOLDINGS AND FXCM WILL PROCEED IN THE ORDINARY COURSE OF BUSINESS DURING THE COURSE OF THE CHAPTER 11 CASE AND SHOULD BE UNAFFECTED BY THE CHAPTER 11 CASE.

 

Please note that this summary does not contain all of the information that may be important to you. You should carefully read this Disclosure Statement and the documents governing the Restructuring Transaction, which are attached to the Plan, to fully understand the terms of the Plan, as well as the other considerations that are important to you in making your investment decision. You should pay special attention to Article XI regarding “Certain Risk Factors to be Considered.” Capitalized terms used in this Disclosure Statement but not otherwise defined herein shall have the meaning ascribed to such terms in the Plan, a copy of which is attached hereto as Exhibit 1 .

 

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QUESTIONS AND ANSWERS ABOUT THE RESTRUCTURING

 

The following are some questions and answers regarding the Restructuring Transaction (as defined in Section 6.5 below) and the Plan. It does not contain all of the information that may be important to you. You should carefully read this Disclosure Statement to fully understand the terms of the Plan, as well as the other considerations that are important to you in making your investment decision. You should pay special attention to Article XI regarding “Certain Risk Factors to be Considered.” Capitalized terms used in this Disclosure Statement but not otherwise defined herein shall have the meaning ascribed to such terms in the Plan, a copy of which is attached hereto as Exhibit 1 .

 

General

 

Q: What is the purpose of the Restructuring Transaction?

 

A: GLBR believes that a financial restructuring is necessary to provide it with a tenable, long-term capital structure and sufficient liquidity to constitute a going concern. The timing of the restructuring is important in light of impending maturities of the Existing Notes and the Leucadia Credit Agreement, as well as the December 2017 interest payment on the Existing Notes and the inability for GLBR’s stock to continue to trade on the NASDAQ Global Market exchange. Overall, the purpose of the Restructuring Transaction is to extend the maturity of GLBR’s debt obligations, extend the maturity of the Leucadia Credit Agreement, and enhance the likelihood of distributions and payments being made from FXCM to Holdings and Holdings to GLBR to permit GLBR to pay its obligations.

 

The Restructuring Transaction is expected to be accomplished through a plan of reorganization after the filing of a bankruptcy case under chapter 11 of the Bankruptcy Code. If the Plan is approved by the Bankruptcy Court and consummated, the following transactions will occur:

 

The principal amount of Existing Notes, which (absent acceleration) mature on June 15, 2018, will not be reduced; however, the Existing Notes will be cancelled and the New Notes will be issued in an aggregate principal amount equal to the aggregate principal amount of the Existing Notes plus accrued but unpaid interest to holders of the Existing Notes. The New Notes have a five-year maturity, are secured, will be guaranteed by Holdings, lack a conversion feature, and contain certain additional covenants as more fully described therein;

 

Amendment of the limited liability company agreement of Holdings to provide the holders of the New Notes with additional contractual protections;

 

Subject to certain exceptions, amendment of the limited liability company agreement of FXCM to provide for certain permitted payments to fund cash interest payments on the New Notes and to ensure certain funds for anticipated expenses of GLBR;

 

Amendment of the Leucadia Credit Agreement to extend the maturity of that credit facility from January 2018 to January 2019 to enhance the likelihood of a refinancing of the facility, mitigating a risk to the ongoing financial viability of FXCM and, in turn, the financial viability of Holdings and GLBR;

 

Third-party releases for parties to the Support Agreement, which were required to induce such parties to grant the concessions provided for in the Plan and the Plan Documents;

 

The recovery of Holders of unsecured claims against GLBR that arose prior to the bankruptcy will be paid in full in cash or Reinstated; and

 

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Interests of equity holders shall remain unimpaired.

  

Q: What is chapter 11 bankruptcy?

 

A: Chapter 11 is the principal business reorganization chapter of the Bankruptcy Code. It allows a company to continue to manage and operate its business while restructuring its debt, without the need to liquidate and go out of business. In chapter 11 bankruptcies, the “debtor” formulates a plan of reorganization that includes the company’s proposed new debt and capital structure. The chapter 11 plan is then voted on by the company’s creditors and will be approved by the bankruptcy court if it meets certain criteria under the Bankruptcy Code. Once the chapter 11 plan is approved and the conditions to consummating the chapter 11 plan are met, the company can exit bankruptcy with the new maturities for its obligations that were approved as part of its chapter 11 plan.

 

Q: What is the Plan?

 

A: The Plan attached to this Disclosure Statement as Exhibit 1 is GLBR’s means for implementing the Restructuring Transaction described above.

 

For the Plan to be confirmed by the Bankruptcy Court without invoking the “cramdown” provisions of the Bankruptcy Code, each class of Claims or Interests that is impaired must vote to accept the Plan. An impaired class of claims is deemed to accept a plan of reorganization if (i) the Holders of at least two-thirds in dollar amount and (ii) more than one-half in number, in each instance based on Holders who actually cast ballots with respect to the Plan, vote to accept the Plan. An impaired class of interests is deemed to accept a plan of reorganization if Holders of at least two-thirds in amount of the allowed interests in such class who actually cast ballots vote to accept the plan.

 

The only impaired class of creditors under the Plan is Class 3 – Holders of Existing Notes Claims. Since Holders of more than two-thirds in dollar amount of the Existing Notes Claims have committed to vote in favor of the Plan by signing the Support Agreement, GLBR believes that the class of Existing Notes Claims will vote in favor of the Plan, allowing GLBR to seek approval of the Plan even if it is rejected by other creditors.

 

Q: Why does GLBR need to file for bankruptcy to restructure?

 

A: The Existing Notes Indenture requires unanimous consent from all Holders of Existing Notes Claims to amend the maturity date of all of the Existing Notes.

 

GLBR does not believe it is possible to receive unanimous consent from the numerous Holders of the Existing Notes without filing for bankruptcy. Chapter 11 of the Bankruptcy Code allows GLBR to complete the Restructuring Transaction with less than unanimous support. To confirm a chapter 11 plan, GLBR needs the votes of at least one impaired class of claims who accepts the plan by favorable votes of (i) the Holders of at least two-thirds in dollar amount and (ii) more than one-half in number of Holders of the claims in such class who actually cast ballots. If the Plan is confirmed by the Bankruptcy Court, it will bind all Holders of claims and interests in GLBR regardless of whether they voted for, against, or did not vote at all on the Plan.

 

Therefore, assuming that the Plan satisfies the other requirements of the Bankruptcy Code, a significantly smaller number of claim and interest Holders can bind other claim and interest Holders to the terms of the Plan to accomplish the Restructuring Transaction than would be required outside of a bankruptcy proceeding. The confirmation and effectiveness of the Plan are subject to certain conditions that may not be satisfied. As further discussed in Section 11.1 of this Disclosure Statement, GLBR cannot assure you that all requirements for confirmation and effectiveness of the Plan will be satisfied or that the Bankruptcy Court will conclude that the requirements for confirmation and effectiveness of the Plan have been met.

 

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Q: What are the expected results of the Restructuring Transaction?

 

A: GLBR expects that the Restructuring Transaction, if successful, will extend the maturity on the obligations owed to the Holders of Existing Notes, provide the holders of the New Notes with additional contractual protections with respect to the New Notes, provide for certain permitted payments to be made by FXCM to Holdings and by Holdings to GLBR to fund certain cash interest payments on the New Notes and to ensure certain funds for anticipated expenses of GLBR. The Restructuring Transaction will also extend the maturity of the Leucadia Credit Facility with FXCM to permit an opportunity to refinance that facility, mitigating a risk to the ongoing financial viability of FXCM and in turn the financial viability of Holdings and GLBR. The Restructuring Transaction will leave equity holders unimpaired.

 

Assuming that GLBR is able to complete the Restructuring Transaction, GLBR expects that, for the foreseeable future, cash generated from operations of the FXCM Entities that will be distributed to Holdings and thereafter GLBR will be sufficient to fund GLBR’s limited operations and to support GLBR’s long-term business plan, though there can be no assurance that such cash generated will be sufficient for such purposes.

 

Q: What is the Support Agreement?

 

A: The Support Agreement is a contract that GLBR entered into with Holdings, FXCM and several of its largest stakeholders, whereby the parties agreed to support the Plan on the terms described. The supporting creditors include Holders of more than 68.5% in dollar amount of Existing Notes Claims that have agreed to, among other things, vote all of their Claims against the Debtor in favor of the Plan, support the terms of the Plan, and take all reasonable actions necessary and appropriate to consummate the Plan in a timely manner, so long as the Plan conforms to the terms of the Support Agreement and certain restructuring milestones set forth in the Support Agreement are met. Such milestones include a deadline for consummation of the Plan by February 12, 2018. The Support Agreement is attached to this Disclosure Statement as Exhibit 2 . Holdings is a party to the Support Agreement and is participating in the Plan as a non-debtor affiliate of GLBR. Other parties have the ability to join the Support Agreement in accordance with its terms.

 

Because of the commitments made by the Plan Support Parties to vote in favor of the Plan, GLBR believes that it will receive sufficient votes to confirm the Plan, even if other creditors vote to reject the Plan.

 

Q: What risks should I consider in deciding whether or not to vote in favor of the Plan?

 

A: In deciding whether to vote in favor of the Plan, you should carefully consider the discussion of risks and uncertainties affecting GLBR and its non-debtor affiliates, the Plan, and the New Notes described in Article XI of this Disclosure Statement titled “Certain Risk Factors to be Considered,” which do not represent the only risks that GLBR faces. Additional risks and uncertainties not currently known to GLBR and its non-debtor affiliates, or that GLBR currently deems immaterial, may also affect your investment decision and/or impair GLBR’s business operations. You should carefully consider the other information and data included in this Disclosure Statement and information and data contained in GLBR’s public filings for other risks that may affect you.

 

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Q: Has the board of directors adopted a position on the Plan?

 

A: Yes. GLBR’s board of directors has voted in favor of pursuing the Plan.

 

The Solicitation of the Plan

 

Q: Who is soliciting votes on the Plan?

 

A: GLBR is soliciting votes on the Plan.

 

Q: Who is eligible to vote for the Plan?

 

A: Generally, Holders of claims or equity interests in classes that are impaired (other than classes that receive no distribution under the Plan and are, therefore, deemed to reject the Plan) are eligible to vote on the Plan. As more fully explained in this Disclosure Statement, a claim or equity interest is impaired, generally speaking, if its treatment under a plan of reorganization alters the terms of, or rights associated with, that claim or equity interest. The Holders of the Existing Notes (Class 3 Claims) are deemed to be impaired and, consequently, may vote on the Plan.

 

For the purposes of the Plan, GLBR has organized the claims and interests against GLBR into different classes. Holders of claims impaired by the Plan that are entitled to vote on the Plan will vote on the Plan by class. Under the Plan, members of the same class are treated the same. The Plan categorizes the following parties into separate classes of claims and interests: (i) Holders of Other Priority Claims into Class 1; (ii) Holders of Other Secured Claims into Class 2; (iii) Holders of Existing Notes Claims into Class 3; (iv) Holders of General Unsecured Claims into Class 4; (v) Holders of Intercompany Claims into Class 5; (vi) Holders of Other Subordinated Claims into Class 6; and (vii) Holders of Interests in Class 7.

 

The Holders of Class 3 Claims are impaired and are eligible to vote on the Plan. The Holders of all other Claims and Interests are unimpaired and conclusively presumed to accept the Plan under section 1126(f) of the Bankruptcy Code.

 

Q: What will I receive under the Plan if it is confirmed and consummated?

 

A: Each Holder of an Allowed Existing Notes Claim shall receive its pro rata share of the New Notes.

 

Holders of allowed General Unsecured Claims will be paid in full or have their General Unsecured Claims Reinstated.

 

All other Claims and Interests shall remain unimpaired by the Plan.

 

Q: What are the terms and features of the New Notes that will replace the Existing Notes?

 

A: The New Notes shall be issued in an aggregate principal amount equal to the aggregate principal amount of the Existing Notes plus accrued and unpaid interest as of the Petition Date. The New Notes shall mature five years after the Effective Date of the Plan and shall accrue interest at 7.00% per annum. Certain of the interest payments are subject to being paid in kind with additional notes (“ PIK Notes ”) if cash at GLBR is insufficient to satisfy interest payments owed to the holders of the New Notes. It is anticipated that certain of the interest payments will, in fact, be paid in kind due to the restrictions on cash available to be distributed and paid from FXCM to Holdings and from Holdings to GLBR. GLBR will pledge all of its assets to secure the obligations under the New Notes. The New Notes will not have a “convertible” feature similar to the Existing Notes.

 

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Holdings will issue a guarantee of payment of the New Notes and pledge all of its assets to secure the obligations under the guarantee. Holdings’ security interests and guarantee will be subordinated to the security interests and liens in Holdings’ assets previously granted to secure the obligations of Holdings under the Leucadia Credit Agreement.

 

The indenture for the New Notes (the “ New Notes Indenture ”) will have covenants that place restrictions on GLBR and Holdings to (among other things): enter transactions with its affiliates; sell assets or merge or consolidate with a third party; incur additional debt; grant liens; and engage in sale leaseback transactions. The New Notes will not have a “convertible” feature similar to the Existing Notes.

 

The New Notes Indenture will also provide that distributions made to Holdings (net of payment of reasonable expenses) in excess of interest payments and “Minimum Reserve Cash” (as defined below) will be contributed to a sinking fund (the “ Sinking Fund ”). “ Minimum Reserve Cash ” shall not exceed one semi-annual interest payment ($6.0375 million), plus $250,000.00. Holdings or the Company will use funds available in the Sinking Fund to run a quarterly reverse Dutch auction to repurchase as many of the New Notes as possible at market prices at, or below, par.

 

The New Notes will also benefit from certain “Noteholder Protections” (as defined in the Term Sheet attached to the Support Agreement ( see Exhibit 2 )) that will be added to the Holdings LLC Agreement and shall include, inter alia, the appointment of a “Noteholder Designated Member” who owes fiduciary duties to Holders of the New Notes and whose approval will be required in order for Holdings to approve certain actions in its capacity as a member of FXCM. The identity of the Noteholder Designated Member shall be disclosed prior to the commencement of the Confirmation Hearing. Additionally, the definition of “Permitted Payments” in the FXCM Agreement will be amended to allow, on the next interest payment date for the New Notes, for 2.25% interest payments on the lesser of (1) $172,500,000.00 aggregate principal amount of the New Notes and (2) the original aggregate principal amount of the New Notes that remains outstanding as of such time, after giving effect to any redemptions, repurchases, acquisitions or retirements (in connection with any Sinking Fund auction or otherwise), and without giving effect to the issuance of any PIK interest notes. Redemptions, repurchases, acquisitions or retirement of the New Notes shall reduce the original $172,500,000.00 principal balance before reducing any PIK interest notes.

 

Neither FXCM nor its subsidiaries ( i.e. , the FXCM Entities) have any obligations under, nor are they issuers or guarantors of nor will any of their assets secure, the New Notes.

 

Q: What vote is needed to confirm the Plan?

 

A: The Bankruptcy Code provides that only Holders of Claims and Interests entitled to vote and who actually cast a ballot will be counted for purposes of determining whether acceptances from a sufficient number of Holders of impaired Claims or Interests in an impaired class have been received to allow the Plan to be confirmed under the Bankruptcy Code. Failure by a Holder to deliver an original, duly completed and signed Ballot will not be counted as a vote to accept or reject the Plan.

 

For the Plan to be confirmed by the Bankruptcy Court Class 3 Claims (Holders of Existing Notes) must vote to accept the Plan as Class 3 is the only impaired class of Claims under the Plan. An impaired class of Claims is deemed to accept a plan of reorganization if the Holders of at least two-thirds in dollar amount and more than one-half in number of Holders of the claims in such class who actually cast ballots vote to accept the plan. Under the Plan, Holders Existing Notes Claims constitute an impaired class who are receiving a distribution and therefore are entitled to vote on the Plan. Other classes of Claims against GLBR and interest in GLBR are unimpaired and conclusively presumed to accept the Plan.

 

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The Bankruptcy Court may disagree with GLBR’s classification of Claims and Interests, and any party-in-interest may challenge the classification of Claims and Interests. If the Bankruptcy Court concludes that the classification of Claims and Interests under the Plan does not comply with the requirements of the Bankruptcy Code, the Plan may not be confirmed. See Article XI for a discussion of certain risk factors to be considered.

 

If the Plan is confirmed by the Bankruptcy Court, it will bind all Holders of Claims and Interests in GLBR regardless of whether they voted for, against, or did not vote at all on the Plan. Therefore, assuming that the Plan satisfies the other requirements of the Bankruptcy Code, a significantly smaller number of Holders of Claims and Interests can bind other Holders to the terms of the Plan than would be required to effect the Restructuring Transaction outside of bankruptcy. Additionally, since Claims and Interests are grouped in classes for the purpose of voting on the Plan, Holders of Claims and Interests may be bound by the decisions of other Holders of Claims and Interests in a way that they otherwise would not be bound outside of bankruptcy.

 

Due to the commitments made by the Plan Support Parties under the Support Agreement, GLBR believes that the Plan will receive enough votes from Holders of Existing Notes Claims to confirm the Plan.

 

Q: When is the deadline for submitting Ballots?

 

A: The Ballots must be received by the Voting Agent by 5:00 p.m. (Eastern Prevailing Time) on December 4, 2017 , unless GLBR and the Plan Support Parties extend the date until which Ballots will be accepted. Except to the extent GLBR so determines in its sole discretion or as permitted by the Bankruptcy Court, Ballots that are received after the Voting Deadline will not be counted or otherwise used by GLBR in connection with GLBR’s request for confirmation of the Plan (or any permitted modification thereof).

 

Ballots must be sent by mail, hand delivery or overnight courier to the Voting Agent, at its address on the Ballot and in this Disclosure Statement. Electronic and facsimile Ballots will only be accepted for “Master Ballots .” For Holders of Existing Notes voting through a nominee, Ballots must be submitted to the nominee with sufficient time for the nominee to submit the Ballots to the Voting Agent by the Voting Deadline. See Section 9.3 for additional information.

 

Q: How do I vote on the Plan?

 

Please follow the procedures for voting on the Plan described in Section 9.3 of this Disclosure Statement. For further information, contact the Voting Agent at the following address:

 

Global Brokerage Ballot Processing

c/o Prime Clerk LLC

830 Third Avenue, 3 rd Floor

New York, NY 10022

 

You may also consult your broker, dealer, commercial bank, trust company or other nominee for assistance.

 

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Only the Holders of Existing Notes as of November 8, 2017 are eligible to vote on the Plan.

 

Q: Can I revoke my vote?

 

A: Any party that has previously submitted a properly completed Ballot to the Voting Agent before the Voting Deadline may revoke such Ballot and change its vote by submitting to the Voting Agent, before the Voting Deadline, a subsequent properly completed Ballot for acceptance or rejection of the Plan. However, Plan Support Parties are restricted in their ability to revoke their vote pursuant to the terms of the Support Agreement.

 

Q: Whom do I call if I have any questions about how to submit Ballots or any other questions relating to the Plan?

 

A: Questions and requests for assistance with respect to the procedures for voting on the Plan, as well as requests for additional copies of this Disclosure Statement and the Ballot, may be directed to the Voting Agent at its address and telephone number set forth in this Disclosure Statement.

 

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Q: Does the Plan seek releases for any third parties?

 

The Plan seeks releases for certain third parties. The third-party releases are a fundamental and necessary part of the bargained-for exchange by the Plan Support Parties to obtain, among other things, the concessions made by Leucadia, FXCM, Holdings and the Consenting Noteholders in the Transaction Documents, including the Plan and the New Notes. Specifically, each Holder of a Claim or Interest who votes in favor of the Plan, shall be deemed to have forever waived and released (a) the Debtor and Reorganized Debtor; (b) Holdings, (c) the D&O Releasees; (d) Leucadia; (e) the Consenting Noteholders; (f) the Indenture Trustee; (g) FXCM; and (h) with respect to each of the foregoing entities in clauses (a) through (g), such entities’ predecessors, successors and assigns, subsidiaries, affiliates, managed accounts or funds, current or former officers, directors, principals, shareholders, members, partners, employees, agents, advisory board members, financial advisors, attorneys, accountants, investment bankers, consultants, representatives, management companies, fund advisors and other professionals (including the Retained Professionals), and such entities’ respective heirs, executors, estates, servants and nominees, in each case, solely in their capacity as such from any and all claims, obligations, rights, suits, damages, Causes of Action, remedies, and liabilities whatsoever, including any derivative claims asserted or assertable on behalf of a Debtor, whether known or unknown, foreseen or unforeseen, liquidated or unliquidated, contingent or fixed, existing or hereafter arising, in law, at equity, or otherwise, whether for tort, contract, violations of federal or state securities laws or otherwise, including, those that any of the Debtor, the Reorganized Debtor, the Estate, or their Affiliates would have been legally entitled to assert in their own right (whether individually or collectively) or on behalf of the Holder of any Claim or Interest, based on or relating to, or in any manner arising from, in whole or in part: (i) the Debtor; (ii) the Estate; (iii) the conduct of the Debtor’s business; (iv) the Chapter 11 Case; (v) the purchase, sale, or rescission or the purchase or sale of any security of the Debtor or the Reorganized Debtor; (vi) the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in the Plan; (vii) the Leucadia Credit Agreement, the FXCM Agreement, and any of the agreements, documents, or transactions that in any way relate to such agreements; (viii) the business or contractual arrangements between any of the Debtor and any Released Party; (ix) the restructuring of Claims and Interests prior to or in the Chapter 11 Case; or (x) the negotiation, formulation, or preparation of the Restructuring Support Agreement, the Definitive Documents, or related agreements, instruments or other documents and resulting from any act or omission, transaction, or occurrence taking place on or before the Effective Date of the Plan; provided, that, nothing in the Plan shall limit the liability of professionals to their clients pursuant to N.Y. Comp. Codes R. & Regs. tit. 22 § 1200.8 Rule 1.8(h)(1) (2009); provided, however, that the Exculpation provisions set forth in Article IX.H of the Plan shall not exculpate any Person or Entity from any liability resulting from any act or omission constituting actual fraud, willful misconduct, gross negligence, criminal conduct, malpractice, misuse of confidential information that causes damages, or ultra vires acts as determined by a Final Order; provided, however, that Article IX.J of the Plan shall not release any Released Parties from any Causes of Action held by a Governmental Unit existing as of the Effective Date based under the Internal Revenue Code, the environmental laws, or any criminal laws of the United States or any state and local authority; provided, however, the release in Article IX.G shall not bar any Claim or Cause of Action of an Accepting Noteholder against any D&O Releasee alleged prior to the Petition Date in the Securities Class Action but only to the extent such Claims or Causes of Action are covered by one or more of the D&O Liability Insurance Policies (such Claim or Cause of Action, the “Preserved Accepting Noteholder Claims”), it being understood that the Preserved Accepting Noteholder Claims shall not be released by any GLBR Noteholder, and the right of any Accepting Noteholder to participate in the Securities Class Action or receive a recovery from the proceeds of the D&O Liability Insurance Policies based on the Preserved Accepting Noteholder Claims shall not be affected by the release contained in Article IX.G of the Plan or any other provision of the Plan; provided, that the D&O Releasees shall have no personal liability related to the Preserved Accepting Noteholder Claims in excess of any liability that falls within the coverage and available policy limits of the D&O Liability Insurance Policies and is payable by such policies; provided further , that, it is expressly understood that (a) the Accepting Noteholders will not name the Debtor or Reorganized Debtor as a nominal party to the Securities Class Action based on the parties' understanding and this Court's determination that nothing in the Plan, including this Article IX, shall in any way affect, bar, modify, or release any of the pending claims against the D&O Releasees in the Securities Class Action (including section 20a claims based on the primary or underlying liability of the Debtor) whether or not the Debtor or Reorganized Debtor is a party to the Securities Class Action and (b) counsel for the D&O Releasees/Debtor and Reorganized Debtor has agreed to enter a stipulation to such effect in the Securities Class Action.

 

A vote to accept the Plan constitutes your consent to the releases, injunctions, and exculpation provisions specified in Article IX.F-I of the Plan.

 

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TABLE OF CONTENTS

 

      Page
ARTICLE I. INTRODUCTION 1
  1.1 General 1
  1.2 The Confirmation Hearing 2
  1.3 Classification of Claims and Interests 3
  1.4 Voting; Holders of Claims Entitled to Vote 3
  1.5 Important Matters 5
       
ARTICLE II. SUMMARY OF PLAN AND CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS THEREUNDER 6
   
ARTICLE III. BUSINESS DESCRIPTION AND CIRCUMSTANCES THAT LED TO THE SOLICITATION 11
  3.1 General 11
  3.2 GLBR’s Capital Structure 13
  3.3 Leucadia Financing 15
  3.4 Payments Under Tax Receivable Agreement 15
  3.5 Capital Requirements of FXCM Entities 15
  3.6 Disposition of Non-Core Assets 16
  3.7 February 2017 Events and Sale of U.S.-domiciled Customer Accounts 16
  3.8 Third Amendment to the Leucadia Credit Agreement 17
  3.9 Employees and Officers 18
  3.10 Legal Proceedings 18
       
ARTICLE IV. EVENTS LEADING TO THE SOLICITATION 20
  4.1 Events Leading to the Solicitation 20
  4.2 The Support Agreement 22
  4.3 Funding for the Plan 23
       
ARTICLE V. REASONS FOR THE SOLICITATION 24
   
ARTICLE VI. THE PLAN 24
  6.1 Anticipated Events in a Chapter 11 Case 24
  6.2 Summary of Distributions Under the Plan 25
  6.3 Settlement 29
  6.4 Post-Confirmation Capital Structure of the Reorganized Debtor 29
  6.5 Means for Implementation 31
  6.6 Discharge 39
  6.7 Vesting of Assets in the Reorganized Debtor 40
  6.8 Survival of Certain Indemnification Obligations 40
  6.9 Release, Injunction and Related Provisions 40
  6.10 Objections to Claims and Interests 45
  6.11 Executory Contracts 46
  6.12 Conditions Precedent to Confirmation and Consummation of the Plan 48
  6.13 Retention of Jurisdiction 50
  6.14 Amendments 50

 

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ARTICLE VII. CONFIRMATION OF THE PLAN 51
  7.1 Confirmation Hearing 51
  7.2 Confirmation 52
  7.3 Classification of Claims and Interests 56
  7.4 Consummation 56
       
ARTICLE VIII. ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PLAN 56
  8.1 Alternative Plan(s) of Reorganization 56
  8.2 Liquidation Under the Bankruptcy Code 57
  8.3 Inaction/Maintenance of Status Quo 57
       
ARTICLE IX. SUMMARY OF VOTING PROCEDURES 57
  9.1 The Solicitation Package 57
  9.2 Voting Deadline 58
  9.3 Voting and Revocation Instructions 58
  9.4 Note to Holders of Claims in the Voting Class 61
  9.5 Voting Tabulation 61
       
ARTICLE X. THE CHAPTER 11 CASE 62
  10.1 Continuation of Business After the Petition Date 62
  10.2 First Day Relief 62
  10.3 Case Administration 63
       
ARTICLE XI. CERTAIN RISK FACTORS TO BE CONSIDERED 63
  11.1 Certain Bankruptcy Considerations 63
  11.2 Risks Relating to the New Notes 69
  11.3 Risks Associated with the Business 71
       
ARTICLE XII. SECURITIES LAW MATTERS 76
  12.1 General. 76
  12.2 Issuance and Resale of the New Notes Under the Plan 76
  12.3 Where You Can Find More Information 77
  12.4 The Company Will “Go Dark” After Consummation of Plan 78
       
ARTICLE XIII. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN 78
  13.1 Introduction 78
  13.2 U.S. Federal Income Tax Consequences to GLBR 79
  13.3 U.S. Federal Income Tax Consequences to U.S. Holders of Existing Notes 80
  13.4 Federal Income Tax Consequences to Non-U.S. Holders of Existing Notes Claims 85
  13.5 Information Reporting and Backup Withholding 87
       
ARTICLE XIV. CONCLUSION 88

  

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Annexed as Exhibits to this Disclosure Statement are copies of the following documents: 

 

Plan ( Exhibit 1 );

 

Restructuring Support Agreement ( Exhibit 2 );

 

Prepetition Organizational Chart ( Exhibit 3 );

 

Audited Consolidated Financial Statements for GLBR and its non-debtor Affiliates for the fiscal year ended December 31, 2016 ( Exhibit 4 );

 

Liquidation Analysis ( Exhibit 5 ); and

 

Reorganized Debtor’s Projected Financial Information ( Exhibit 6 ).

 

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ARTICLE I.

 

INTRODUCTION

 

1.1 General.

 

GLBR hereby transmits this Disclosure Statement pursuant to section 1126(b) of the Bankruptcy Code, in connection with the Solicitation of votes with respect to the Plan. All capitalized terms in this Disclosure Statement not otherwise defined herein have the meanings given to them in the Plan attached hereto as Exhibit 1

 

The purpose of this Disclosure Statement is to provide Holders of Claims that are entitled to vote on the Plan ( i.e. , Holders of Existing Notes Claims) with sufficient information to allow them to make an informed decision on whether to accept or reject the Plan. The overall purpose of the Plan is to extend the maturity of GLBR’s debt obligations and enhance the likelihood of distributions and payments being made from FXCM to Holdings and Holdings to GLBR to permit GLBR to pay its obligations. If GLBR obtains the requisite votes accepting the Plan, GLBR anticipates commencing the Chapter 11 Case and seeking approval of this Disclosure Statement and the Plan from the Bankruptcy Court within 30 to 45 days of the filing of the Chapter 11 Case. Holdings will participate in the Plan as a non-debtor affiliate of GLBR. As set forth more fully herein and in the Plan, GLBR believes that the provisions of section 1145(a)(1) of the Bankruptcy Code render the issuance, guarantee, exchange and distribution of the New Notes on the Effective Date under the Plan exempt from federal and state securities registration. 

 

GLBR has not commenced a case under chapter 11 of the Bankruptcy Code at this time .

 

GLBR has fixed 5:00 P.M . ( prevailing Eastern Time ) on December 4, 2017 as the voting record date (the “ Voting Record Date ”). Accordingly, only Holders of record of Claims as of the Voting Record Date that are entitled to vote on the Plan will receive a Ballot and may vote on the Plan. In addition, a Ballot for voting to accept or reject the Plan is enclosed with this Disclosure Statement for the Holders of Claims that are entitled to vote to accept or reject the Plan. If you are a Holder of a Claim entitled to vote on the Plan and did not receive a Ballot, received a damaged Ballot or lost your Ballot, or if you have any questions concerning the procedures for voting on the Plan, please contact the Voting Agent: Prime Clerk (a) by phone at 844-721-3899; (b) by accessing the Debtor’s restructuring website at https://cases.primeclerk.com/globalbrokerage, or (c) send your written inquiry to: 

 

Global Brokerage Ballot Processing
c/o Prime Clerk LLC 

830 Third Avenue, 3 rd Floor 

New York, NY 10022

 

Although the solicitation of votes on the Plan relates to the Chapter 11 Case and a voluntary petition for relief under chapter 11 of the Bankruptcy Code, no filing has yet occurred. GLBR expressly reserves the right to extend the Voting Deadline by oral or written notice to the Voting Agent.

 

Each Holder of a Claim entitled to vote on the Plan should read this Disclosure Statement and the Exhibits hereto, including the Plan, as well as the instructions accompanying the Ballot in their entirety before voting on the Plan. These documents contain important information concerning the classification of Claims and Interests for voting purposes and the tabulation of votes. No solicitation of votes may be made except pursuant to this Disclosure Statement and section 1126(b) of the Bankruptcy Code. In voting on the Plan, Holders of Claims entitled to vote should not rely on any information relating to GLBR and its business other than the information contained in this Disclosure Statement, the Plan and all Exhibits hereto and thereto.

 

 

Additional copies of this Disclosure Statement (including the Exhibits hereto) are available upon request made to the office of GLBR’s counsel, King & Spalding LLP, 1180 Peachtree Street, NE Atlanta, GA 30309, Attention: Sarah R. Borders, Esq. and Thaddeus D. Wilson, Esq., (404) 572- 4600 (phone) or (404) 572-3401 (facsimile). Additional copies of this Disclosure Statement (including the Exhibits hereto) can also be accessed free of charge from the following website https://cases.primeclerk.com/globalbrokerage.

 

1.2 The Confirmation Hearing.

 

If GLBR receives the requisite votes in favor of the Plan, then GLBR intends to file a voluntary petition for relief under chapter 11 of the Bankruptcy Code. Upon the commencement of the Chapter 11 Case, GLBR intends to request that the Bankruptcy Court schedule, as promptly as practicable, a hearing to approve this Disclosure Statement as containing adequate information within the meaning of section 1125(a) of the Bankruptcy Code and the solicitation of votes on the Plan as being in compliance with section 1126(b) of the Bankruptcy Code, and to confirm the Plan. Even if GLBR does not receive the requisite votes in favor of the Plan prior to filing its petition, GLBR may decide to file for chapter 11 relief and seek confirmation of the Plan or a modified plan. 

 

Section 1128(a) of the Bankruptcy Code requires that the Bankruptcy Court, after notice, hold a hearing to confirm a plan. Section 1128(b) provides that a party-in-interest may object to confirmation of a plan. Objections to confirmation must be filed with the Bankruptcy Court and served on the Debtor as well as the other parties set forth in the notice of the Confirmation Hearing (the Notice of Confirmation Hearing ) by the objection deadline, as will be set forth therein. The Notice of Confirmation Hearing shall be provided to, among others, Holders of Claims entitled to vote on the Plan, or their representatives, as set forth in an order of the Bankruptcy Court and governed by the Bankruptcy Rules and local rules of the Bankruptcy Court. At the Confirmation Hearing, the Bankruptcy Court will:

 

determine whether the solicitation of votes on the Plan was in compliance with section 1126 of the Bankruptcy Code;

  

determine whether the Plan has been accepted by a sufficient number and amount of Class 3 Claims;

  

determine whether this Disclosure Statement contains adequate information within the meaning of section 1125(a) of the Bankruptcy Code;

  

hear and determine objections, if any, to confirmation of the Plan that have not been previously disposed of;

  

determine whether the Plan meets the confirmation requirements of the Bankruptcy Code; and

  

determine whether to confirm the Plan.

 

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1.3 Classification of Claims and Interests

  

The following table designates the Classes of Claims against and Interests in GLBR, and specifies which Classes are (a) impaired or unimpaired by the Plan, (b) entitled to vote to accept or reject the Plan in accordance with section 1126 of the Bankruptcy Code, or (c) deemed to accept or reject the Plan.

 

 

Class

 

Designation

Impairment

Entitled to Vote

Class 1 Other Priority Claims No No (Deemed to accept)
Class 2 Other Secured Claims No No (Deemed to accept)
Class 3 Existing Notes Claims Yes Yes
Class 4 General Unsecured Claims No No (Deemed to accept)
Class 5 Intercompany Claims No No (Deemed to accept)
Class 6 Other Subordinated Claims No No (Deemed to accept)
Class 7 Interests in GLBR No No (Deemed to accept)

 

1.4 Voting; Holders of Claims Entitled to Vote.

 

Pursuant to the provisions of the Bankruptcy Code, only Holders of allowed Claims or Interests in classes of Claims or equity Interests that are impaired and that are not deemed to have rejected a plan of reorganization are entitled to vote to accept or reject such proposed plan. Generally, a claim or equity interest is impaired under a plan if the Holder’s legal, equitable or contractual rights are altered under such plan. Classes of claims or equity interests under a chapter 11 plan in which the Holders of claims or equity interests are unimpaired are conclusively presumed to have accepted such plan and are not entitled to vote to accept or reject the proposed plan. In addition, classes of claims or equity interests in which the Holders of claims or equity interests will not receive or retain any property on account of their claims or equity interests are deemed to have rejected the plan and are not entitled to vote to accept or reject the plan.

 

In connection with the Plan:

 

Claims in Class 3 are impaired and the Holders of such Claims will receive distributions under the Plan. As a result, Holders of Claims in Class 3 are entitled to vote to accept or reject the Plan; and

 

Claims and Interests in Classes 1, 2, 4, 5, 6, and 7 are unimpaired. As a result, Holders of Claims and Interests in those Classes are deemed to have accepted the Plan and are not entitled to vote to accept or reject the Plan.

 

Your vote on the Plan is important . The Bankruptcy Code requires as a condition to confirmation of a plan of reorganization that each class that is impaired under a plan vote to accept such plan, unless the provisions of section 1129(b) of the Bankruptcy Code are met. For a class of impaired Claims to accept the Plan, section 1126 of the Bankruptcy Code requires acceptance by (i) Holders of at least two-thirds in dollar amount and (ii) more than one-half in number of Holders of Claims of such class who cast ballots to vote on the Plan. An impaired class of Interests is deemed to accept a plan of reorganization if Holders of at least two-thirds in amount of the Allowed Interests in such class who actually cast Ballots vote to accept the plan.

 

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If a Class of Claims entitled to vote on the Plan rejects the Plan, GLBR reserves the right to amend the Plan and/or to request confirmation of the Plan pursuant to section 1129(b) of the Bankruptcy Code. Section 1129(b) of the Bankruptcy Code permits the confirmation of a plan of reorganization, notwithstanding the non-acceptance of a plan by one or more impaired classes of claims or equity interests, so long as at least one impaired class of claims or equity interests votes to accept the plan. Under that section, a plan may be confirmed by a bankruptcy court if it does not “discriminate unfairly” and is “fair and equitable” with respect to each non-accepting class. 

 

If you are entitled to vote to accept or reject the Plan, a Ballot is enclosed for the purpose of voting on the Plan. This Disclosure Statement, the Plan and their respective exhibits and related documents are the only materials GLBR is providing to creditors for their use in determining whether to vote to accept or reject the Plan. Such materials may not be relied upon or used for any purpose other than to vote to accept or reject the Plan.

 

If you are the Holder of an Existing Notes Claim, please complete, execute and return your Ballot(s) based on the instructions provided by your nominee so that your vote can be recorded on the Master Ballot and returned to the Voting Agent on or before the Voting Deadline. All correspondence in connection with voting on the Plan should be directed to the Voting Agent at the following address: 

 

Global Brokerage Ballot Processing

c/o Prime Clerk LLC 

830 Third Avenue, 3 rd Floor 

New York, NY 10022

 

TO BE COUNTED, MASTER BALLOTS (OR PRE-VALIDATED BALLOTS) INDICATING ACCEPTANCE OR REJECTION OF THE PLAN MUST BE ACTUALLY RECEIVED BY THE VOTING AGENT NO LATER THAN 5:00 P.M., PREVAILING EASTERN TIME, ON DECEMBER 4, 2017 , UNLESS EXTENDED BY GLBR.

 

MASTER BALLOTS MAY BE SENT VIA MAIL, OVERNIGHT COURIER OR MESSENGER. NOMINEES MAY ALSO RETURN MASTER BALLOTS VIA EMAIL AT GLOBALBROKERAGEBALLOTS@PRIMECLERK.COM. ALL BALLOTS MUST BE SIGNED. 

 

The Ballots have been specifically designed for the purpose of soliciting votes on the Plan from the Class entitled to vote with respect thereto. Accordingly, in voting on the Plan, please use only the Ballots sent to you by your nominee. Only Holders of record of Claims and Interests as of the Voting Record Date that are entitled to vote on the Plan will receive a Ballot and may vote on the Plan.

 

All properly completed Ballots received prior to the Voting Deadline will be counted for purposes of determining whether a voting Class of impaired Claims has accepted the Plan. The Voting Agent will prepare and file with the Bankruptcy Court a certification of the results of the balloting with respect to the Class entitled to vote. 

 

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1.5 Important Matters.

 

This Disclosure Statement contains projected financial information and certain other forward- looking statements, all of which are based on various estimates and assumptions and will not be updated to reflect events occurring after the date hereof. Such information and statements are subject to inherent uncertainties and to a wide variety of significant business, economic and competitive risks, including, among others, those described herein. Consequently, actual events, circumstances, effects and results may vary significantly from those included in or contemplated by such projected financial information and such other forward-looking statements. The projected financial information contained herein and in the Exhibits annexed hereto is, therefore, not necessarily indicative of the future financial condition or results of operations of GLBR, which in each case may vary significantly from those set forth in such projected financial information. Consequently, the projected financial information and other forward-looking statements contained herein should not be regarded as representations by GLBR, its advisors, or any other person that the projected financial conditions or results of operations can or will be achieved.

 

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ARTICLE II.

 

SUMMARY OF PLAN AND CLASSIFICATION AND

TREATMENT OF CLAIMS AND INTERESTS THEREUNDER

 

The following table briefly summarizes the classification and treatment of Claims and Interests under the Plan. The summaries in this table are qualified in their entirety by the description of the treatment of such Claims in Articles IV and V of the Plan. In accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative Claims, U.S. Trustee Fees, Fee Claims and Priority Tax Claims have not been classified.

                         
Class   Claims and
Interests
  Treatment   Status   Voting
Rights
  Estimated
Allowed
Amount
  Projected
Recovery
Class 1   Other Priority Claims   On the Effective Date or as soon as reasonably practicable thereafter, except to the extent a Holder of an Allowed Other Priority Claim has already been paid during the Chapter 11 Case or such Holder of an Allowed Other Priority Claim, together with the Debtor, agrees to less favorable treatment, in full and final satisfaction, settlement, release, and discharge of and in exchange for its Allowed Other Priority Claim, each Holder of an Allowed Other Priority Claim shall receive payment in full, in Cash, of the unpaid portion of its Allowed Other Priority Claim.   Unimpaired   Not Entitled to Vote (Deemed to Accept)   $100,000.00  

100%

 

 

  6

 

                         
Class   Claims and
Interests
  Treatment   Status   Voting
Rights
  Estimated
Allowed
Amount
  Projected
Recovery
Class 2   Other Secured Claims   On the Effective Date or as soon as reasonably practicable thereafter, except to the extent that a Holder of an Allowed Other Secured Claim has already been paid during the Chapter 11 Case or such Holder, together with the Debtor, agrees to less favorable treatment, in full and final satisfaction, settlement, release, and discharge of and in exchange for its Allowed Other Secured Claim, each Holder of an Allowed Other Secured Claim shall receive, at the option of the Debtor, with the consent of the Required Consenting Noteholders and Leucadia: (i) payment in full, in Cash, of the unpaid portion of its Allowed Other Secured Claim; (ii) delivery of the collateral securing such Allowed Other Secured Claim; (iii) Reinstatement of its Allowed Other Secured Claim in accordance with Section 1124(2) of the Bankruptcy Code (including any Cash necessary to satisfy the requirements for Reinstatement), and/or such other distribution as necessary to satisfy the requirements of section 1129 of the Bankruptcy Code or (iv) other treatment, as decided by the Debtor and the Holder of an Other Secured Claim to their mutual satisfaction, such that the Other Secured Claim shall be rendered Unimpaired. Any cure amount that the Debtor may be required to pay pursuant to section 1124(2) of the Bankruptcy Code on account of any such Reinstated Other Secured Claim or any distributions due pursuant to clause (i) or (iv) above shall be paid or made, as applicable, either on or as soon as practicable after, the latest of (1) the Effective Date; (2) the date on which such Other Secured Claim becomes Allowed; (3) the date on which such Other Secured Claim becomes due and payable; and (4) such other date as may be mutually agreed to by such Holder and the Debtor or Reorganized Debtor, as applicable.   Unimpaired   Not Entitled to Vote (Deemed to Accept)   $0.00   100%

 

  7

 

                         
Class   Claims and
Interests
  Treatment   Status   Voting
Rights
  Estimated
Allowed
Amount
  Projected
Recovery
        The failure of the Debtor or any other party in interest to file an objection, prior to the Effective Date, with respect to any Other Secured Claim that is Reinstated by the Plan shall be without prejudice to the rights of the Reorganized Debtor or any other party in interest to contest or otherwise defend against such Claim in an appropriate forum (including the Bankruptcy Court, if applicable) when and if such Claim is sought to be enforced.                
                         
Class 3   Existing Notes Claims   On the Effective Date, all of the Existing Notes shall be cancelled and discharged, and except to the extent that a Holder of an Allowed Existing Notes Claim agrees to less favorable treatment, in full and final satisfaction, settlement, release, and discharge of and in exchange for its Allowed Existing Notes Claim, each Holder of an Allowed Existing Notes Claim shall receive its pro rata share of the New Notes. The terms and conditions of the New Notes are fully set forth in the New Notes Indenture.   Impaired   Entitled to Vote   $172,500,000.00 (plus accrued and unpaid interest as of the Petition Date)   100%

 

  8

 

                         
Class   Claims and
Interests
  Treatment   Status   Voting
Rights
  Estimated
Allowed
Amount
  Projected
Recovery
Class 4   General Unsecured Claims   On the Effective Date or as soon as reasonably practicable thereafter, except to the extent that a Holder of an Allowed General Unsecured Claim has already been paid during the Chapter 11 Case or such Holder, together with the Debtor, agrees to less favorable treatment, in full and final satisfaction, settlement, release, and discharge of and in exchange for its Allowed General Unsecured Claim, each Holder of an Allowed General Unsecured Claim shall receive, at the option of the Debtor, with the consent of the Required Consenting Noteholders and Leucadia: (i) payment in full, in Cash, of the unpaid portion of its Allowed General Unsecured Claim; (ii) Reinstatement of its Allowed General Unsecured Claim in accordance with Section 1124(2) of the Bankruptcy Code (including any Cash necessary to satisfy the requirements for Reinstatement), (iii) such other distribution as necessary to satisfy the requirements of section 1129 of the Bankruptcy Code, or (iv) other treatment, as decided by the Debtor and the Holder to their mutual satisfaction, such that the General Unsecured Claim shall be rendered Unimpaired. Any cure amount that the Debtor may be required to pay pursuant to section 1124(2) of the Bankruptcy Code on account of any such Reinstated General Unsecured Claim or any distributions due pursuant to clause (i) or (iv) above shall be paid or made, as applicable, either on or as soon as practicable after, the latest of (1) the Effective Date; (2) the date on which such General Unsecured Claim becomes Allowed; (3) the date on which such General Unsecured Claim becomes due and payable; and (4) such other date as may be mutually agreed to by such Holder and the Debtor or Reorganized Debtor, as applicable. The failure of the Debtor or any other party in interest to file an objection, prior to the Effective Date, with respect to any General Unsecured Claim that is Reinstated by the Plan shall be without prejudice to the rights of the Reorganized Debtor or any other party in interest to contest or otherwise defend against such Claim in an appropriate forum (including the Bankruptcy Court, if applicable) when and if such Claim is sought to be enforced.   Unimpaired   Not Entitled to Vote (Deemed to Accept)   $95,000.00   100%

 

  9

 

                         
Class   Claims and
Interests
  Treatment   Status   Voting
Rights
  Estimated
Allowed
Amount
  Projected
Recovery
Class 5   Intercompany Claims   On the Effective Date, all Intercompany Claims shall be paid, adjusted, continued, settled, reinstated, discharged, or eliminated, in each case to the extent determined to be appropriate by the Debtor or the Reorganized Debtor, as applicable, with the reasonable consent of the Required Consenting Noteholders and Leucadia.   Unimpaired   Not Entitled to Vote (Deemed to Accept)   $12,145,534   100%
                         
Class 6   Other Subordinated Claims   As of the Effective Date, litigation asserting Other Subordinated Claims shall be permitted to proceed, and any Claims or causes of action covered thereby shall not be affected or discharged by virtue of the Chapter 11 Case.   Unimpaired   Not Entitled to Vote (Deemed to Accept)   $0   100%
                         
Class 7   Interests   To preserve the Debtor’s corporate structure, on the Effective Date, all Interests shall remain unaffected and the Holders thereof shall retain all legal, equitable and contractual rights to which Holders of such Interest are otherwise entitled.   Unimpaired   Not Entitled to Vote (Deemed to Accept)   N/A   N/A

 

The recoveries set forth above are estimates and are contingent upon approval of the Plan as proposed.

 

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ARTICLE III.

BUSINESS DESCRIPTION AND

CIRCUMSTANCES THAT LED TO THE SOLICITATION

 

3.1 General.

 

GLBR is a publicly traded holding company that was incorporated as a Delaware corporation on August 10, 2010. The Class A common shares of GLBR are publicly traded. GLBR is managed by a seven member board of directors that includes: Robin E. Davis, Ken Grossman, Arthur Gruen, Eduard Yusupov, Bryan Reyhani, David Sakhai, and Ryan Silverman. GLBR’s primary asset is its 74.5% equity interests in Holdings. GLBR is the sole managing member of Holdings.

 

The primary asset of GLBR is its ownership interest in Holdings, representing 74.5% of the equity ownership of Holdings. Holdings is also a holding company whose primary asset is its membership interest in FXCM. The only revenues of GLBR are derived from distributions and payments made by FXCM to Holdings, and distributions and payments made by Holdings to GLBR.

 

Fifty and one tenth percent (50.1%) of FXCM’s Class A membership interests are held by Holdings. The remaining forty-nine and nine tenths percent (49.9%) membership interest in FXCM is held by LUK-FX Holdings, LLC. The FXCM Agreement sets forth the economic and governance rights of FXCM’s members, including Holdings. In particular, it provides for FXCM to have its own board of directors, of which three directors are designees of Holdings and the other three are designees of LUK-FX Holdings, LLC. The FXCM Agreement also restricts, subject to certain exceptions, the ability of FXCM to, among other things, make distributions on account of FXCM’s equity interests until the Leucadia Credit Agreement is repaid in full. In addition, following the repayment of the Leucadia Credit Agreement, the FXCM Agreement provides for an allocation of distributions and sales proceeds under a waterfall provision pursuant to which the economic interests of Holdings are effectively less than 50.1%.

 

FXCM, through its operating subsidiaries, is an online provider of FX trading, contracts for difference trading, spread betting and related services to retail and institutional customers worldwide. FXCM and the other FXCM Entities are separate entities from the Company. They are not debtors and not anticipated to be debtors under the Bankruptcy Code. The assets of the FXCM Entities are not available to satisfy the claims of creditors of the Company. However, because all of the revenue of the Company is derived from distributions and payments made by FXCM to Holdings and by Holdings to the Company, this Disclosure Statement includes the following disclosures:

 

The FXCM Entities are regulated in a number of jurisdictions outside the United States (“ U.S. ”), including the United Kingdom (“ U.K. ”), where regulatory passport rights have been exercised to operate in a number of European Economic Area jurisdictions, and Australia. The FXCM Entities maintain offices in these jurisdictions, among others. The FXCM Entities offer their trading software in 17 languages and provides customer support in 15 languages. In early 2017, as described further below, FXCM withdrew from business in the U.S. and, on February 7, 2017, agreed to sell all of its U.S.-domiciled customer accounts to Gain Capital Group, LLC (“ Gain Capital ”). For the year ended December 31, 2016, approximately 81.8% of FXCM’s retail customer trading volume was derived from customers residing outside the U.S.

 

FXCM (through the FXCM Entities) deploys two types of execution models in order to optimize customer experience, enhance its risk management program and increase trading revenue. For clients with high balances and aggressive or high risk trading strategies, FXCM offers no dealing desk (NDD), or agency, execution, where when FXCM’s customer executes a trade on the best price quotation offered by FXCM’s FX market makers, FXCM acts as a credit intermediary, or riskless principal, simultaneously entering into offsetting trades with both the customer and the FX market maker. The agency model has the effect of hedging FXCM’s positions and eliminating market risk exposure. FXCM offers a dealing desk, or principal, execution model to smaller retail clients. Under the dealing desk model, FXCM maintains its trading position and does not offset the trade with another party on a one for one basis. CFDs are primarily a dealing desk offering. By combining smaller positions and trading them out on an aggregate basis, FXCM is able to optimize revenues from accounts that are less actively traded. Generally, under both models, FXCM earns trading fees through commissions or by adding a markup to the price provided by the FX market makers. In certain geographic locations, FXCM provides its customers with the price provided by the FX market makers and display trading fees and commissions separately. Revenues earned under the dealing desk model also include FXCM’s realized and unrealized foreign currency trading gains or losses on FXCM’s positions with customers.

 

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FXCM also earns other forms of revenue such as fees earned from: white label arrangements with other financial institutions to provide platform, back office and trade execution services, FX market prices and other various ancillary FX related services and joint ventures.

 

FXCM operates its business in a single segment, retail trading. In addition, the Company owns a 50.1% controlling interest in Lucid Markets Trading Limited (“ Lucid ”), an electronic market-maker and trader in the institutional FX spot and futures market. Lucid is reflected as held for sale in the Company’s Consolidated Financial Statements.

 

3.2 GLBR’s Capital Structure.

 

In June 2013, GLBR issued $172.5 million aggregate principal amount of the Existing Notes. None of Holdings, FXCM, nor any of GLBR’s indirect subsidiaries is an obligor under the Existing Notes. Additionally, none of Holdings, FXCM, or any of GLBR’s direct or indirect subsidiaries guarantee GLBR’s obligations under the Existing Notes.

 

GLBR finances its obligations to pay the Existing Notes through its receipt of payments from Holdings on account of certain mirror notes issued by Holdings to GLBR as part of the existing GLBR structure (the “ Mirror Notes ”). Other than the Existing Notes, GLBR has no other long-term outstanding debt obligations. Holdings is the issuer of $172.5 million aggregate principal amount of the Mirror Notes, which were executed in consideration for Holdings’ receipt of the proceeds of the funds raised by the Existing Notes Indenture. The Mirror Notes are held by GLBR and contain identical terms to the Existing Notes such that any obligation of GLBR under the Existing Notes creates a corresponding obligation of Holdings under the Mirror Notes on a dollar-for-dollar basis. Such obligations are owed by Holdings to GLBR and not to any holder of Existing Notes. GLBR uses payments received from Holdings under the Mirror Notes to pay its obligations under the Existing Notes.

 

The Existing Notes require payments of interest semi-annually on June 15 and December 15 at a rate of 2.25% per year. The Existing Notes Indenture does not prohibit GLBR from incurring additional senior debt or secured debt, nor does it prohibit any of GLBR’s subsidiaries from incurring additional liabilities.

 

The Existing Notes are convertible at an initial conversion rate of 5.32992 shares of GLBR’s Class A common stock per $1,000 principal amount of the Existing Notes, which is equivalent to an initial conversion price of approximately $187.62.

 

As of September 30, 2017, there were 6,143,297 shares outstanding of GLBR’s Class A common stock, par value of $0.01 per share, and 8 shares outstanding of GLBR’s Class B common stock, par value $0.01 per share.

 

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3.3 Leucadia Financing

 

Prior to January 2015, the business and operations of FXCM were conducted by Holdings. On January 15, 2015, the customers of Holdings and the FXCM Entities who were subsidiaries of Holdings suffered significant losses and generated negative equity balances (“ debit balances ”) owed to it of approximately $275.1 million. This was due to the unprecedented volatility in the EUR/CHF currency pair after the Swiss National Bank (“ SNB ”) discontinued its currency floor of 1.2 CHF per EUR on that date. These debit balances resulted in a temporary breach of certain regulatory capital requirements and subjected operations to being immediately shut down.

 

On January 16, 2015, to address the deficit capital requirements, Holdings formed FXCM and contributed all of the equity interests owned by Holdings in its operating subsidiaries to FXCM. Holdings and FXCM then entered into the Leucadia Credit Agreement, with Leucadia National Corporation, as administrative agent, and certain lenders thereto, pursuant to which Leucadia provided a $300 million, two year term loan to Holdings and FXCM.

 

The financing provided to FXCM and Holdings by Leucadia enabled FXCM to maintain compliance with regulatory capital requirements and continue operations. On January 16, 2015, GLBR, Holdings, FXCM and Leucadia also entered into an agreement (as subsequently amended, the “ Letter Agreement ”) that set the terms and conditions upon which GLBR, Holdings and FXCM would pay Leucadia and its assignees a percentage of the proceeds received in connection with certain transactions.

 

The September 2016 Restructuring Transaction and FXCM Agreement

 

On September 1, 2016, FXCM, Holdings and Leucadia agreed to amend the terms of the Leucadia Credit Agreement and to terminate the Letter Agreement. FXCM Newco, LLC was renamed FXCM Group, LLC (i.e., FXCM), and the Letter Agreement was replaced with an Amended and Restated Limited Liability Company Agreement of FXCM Group, LLC (the “ FXCM Agreement ”). Pursuant to the FXCM Agreement, Leucadia acquired a 49.9% of the Class A Units of FXCM, with Holdings owning the remaining 50.1% of the Class A Units. FXCM and Holdings also entered into a Management Agreement (the “ Management Agreement ”) pursuant to which Holdings managed the assets and day-to-day operations of FXCM and thereby retains control of FXCM. Additionally, FXCM adopted the 2016 Incentive Bonus Plan for Founders and Executives (the “ Management Incentive Plan ”), under which participants were entitled to certain distributions made after the principal and interest under the Leucadia Credit Agreement are repaid. The events described herein are collectively referred to as the “ September 2016 Restructuring Transaction .

 

Principal Changes to the Leucadia Credit Agreement

 

In connection with the September 2016 Restructuring Transaction, the First Amendment to Amended and Restated Credit Agreement (the “ First Amendment ”) became effective on September 1, 2016. The First Amendment extended the maturity date of the Leucadia Credit Agreement by one year to January 16, 2018. Additionally, the First Amendment permitted FXCM and Holdings to defer any three of the remaining interest payments by paying interest in kind. The First Amendment also provided that, until the Leucadia Credit Agreement, as amended, is fully repaid, all FXCM distributions (with limited exceptions) and sales proceeds would continue to be used by FXCM solely to repay the principal plus interest due under the Leucadia Credit Agreement.

 

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Principal Changes to the Letter Agreement

 

Pursuant to the September 2016 Restructuring Transaction, the Letter Agreement was terminated effective September 1, 2016 and the parties signed the FXCM Agreement. The FXCM Agreement provided that FXCM would be governed by a six-member board of directors, comprised of three directors appointed by Leucadia and three directors appointed directly by Holdings (and indirectly by GLBR as Holdings’ sole managing member). The FXCM Agreement specified the terms according to which the cash distributions and earnings or losses of FXCM are to be allocated to its members, which is described below. Pursuant to the FXCM Agreement, Leucadia and Holdings each have the right to request the sale of FXCM after January 16, 2018, subject to both Leucadia and Holdings accepting the highest reasonable sales price.

 

Management Agreement

 

Leucadia agreed to the Management Agreement with Holdings with an initial term through January 15, 2018, renewable automatically for successive one-year periods, unless terminated. In the Management Agreement, a number of rights were granted unilaterally to Holdings as the manager of FXCM, including the right to create and implement a detailed budget for FXCM, appoint and terminate the executive officers of FXCM and make day-to-day decisions for FXCM in the ordinary course.

 

On February 2, 2017, the Management Agreement was amended to provide for additional rights of termination. Specifically, as a result, the Management Agreement could be terminated by a vote of at least three members of the FXCM Board after the occurrence of certain events, including a change of control.

 

On October 1, 2017, the Management Agreement was terminated.

 

Allocations of FXCM Distributions (Existing Waterfall)

 

The FXCM Agreement restricts (with certain exceptions) distributions on account of FXCM’s equity Interests until the Leucadia Credit Agreement is repaid in full. The FXCM Agreement further specifies how certain potential distributions from FXCM (the “ Existing Waterfall ”) are to be allocated among Leucadia and Holdings. The potential distributions include net proceeds received in connection with certain transactions, including sales of assets, dividends or other capital distributions, the sale of FXCM (whether by merger, stock purchase, sale of all or substantially all of FXCM’s assets or otherwise), the issuance of any debt or equity securities, and other specified non-ordinary course events, such as certain tax refunds and litigation proceeds. The Existing Waterfall, which was modified following the termination of the Management Incentive Plan (as discussed below), provides for distribution rights as follows:

 

Distributable Amount     Existing Waterfall  
     
Repayment of Amounts due under the Leucadia Credit Agreement   100% Leucadia
   
Next $350 million   50.0% Leucadia / 50.0% Holdings
     
Next $500 million   90.0% Leucadia / 10.0% Holdings
     
All aggregate amounts thereafter   60.0% Leucadia / 40.0% Holdings

 

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The distribution percentages for the Existing Waterfall set forth above reflect the fact that there are no members of management sharing in distributions from FXCM under the FXCM Agreement or otherwise, and therefore, all distributions by FXCM shall be distributed to either Leucadia or Holdings.

 

Management Incentive Plan

 

On September 1, 2016, FXCM adopted the 2016 Incentive Bonus Plan for Founders and Executives (the “ Management Incentive Plan ”), under which participants were entitled to certain distributions made after they are entitled to certain distributions made after the principal and interest under the amended Leucadia Credit Agreement are repaid. The Management Incentive Plan was a long-term incentive program with a five-year vesting period, with 25% vesting on the second anniversary of the Effective Date and each of the next three anniversaries thereafter.

 

On February 2, 2017, FXCM and Leucadia entered into an acknowledgment pursuant to which those parties agreed that Leucadia may terminate the Management Incentive Plan on behalf of FXCM at any time and for any reason in its sole discretion. Pursuant to the aforementioned acknowledgment, Leucadia terminated the Management Incentive Plan on November 8, 2017.

 

3.4 Payments Under Tax Receivable Agreement

 

GLBR entered into a tax receivable agreement (the “ TRA ”) with the members of Holdings, including former members of Holdings (other than GLBR) that will provide for the payment by GLBR to Holdings’ members (other than the GLBR) as defined therein. The TRA provides that all payments are due if there has been a “Change of Control” (as defined therein) with regard to GLBR. However, the transactions to be consummated under the Plan do not constitute a “Change of Control,” and the Plan provides that the Confirmation Order shall contain a finding that the TRA shall be reinstated and/or assumed in its entirety and that there has been no “Change of Control.” Assuming sufficient taxable income is generated such that GLBR fully realizes the tax benefits of the amortization specified in the TRA, the aggregate payments currently estimated that would be due are $145.6 million as of both June 30, 2017 and December 31, 2016. Obligations under the TRA are subordinated to the New Notes.

 

During the first quarter of 2015, GLBR determined that it was not more likely than not that it would benefit from the tax deduction attributable to the tax basis step-up for which a portion of the benefit would be owed to the non-controlling members of Holdings under the TRA and reduced the contingent liability under the TRA to zero. As of June 30, 2017, GLBR continues to believe it will not benefit from the tax deduction and the contingent liability remains zero. There were no payments required to be made during the six (6) months ended June 30, 2017, pursuant to the TRA. During the six (6) months ended June 30, 2016, a payment of $0.2 million was made pursuant to the TRA for the 2014 tax year.

 

3.5 Capital Requirements of FXCM Entities.

 

In addition to its capital structure, certain of the FXCM Entities are subject to jurisdictional specific minimum net capital requirements, designed to maintain the general financial integrity and liquidity of a regulated entity. In general, net capital requirements require that at least a minimum specified amount of a regulated entity’s assets be kept in relatively liquid form, usually cash or cash equivalents. Net capital is generally defined as net worth, assets minus liabilities, plus qualifying subordinated borrowings and discretionary liabilities, and less mandatory deductions that result from excluding assets that are not readily convertible into cash and from valuing conservatively other assets.

 

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If a firm fails to maintain the minimum required net capital, its regulator and the self-regulatory organization may suspend or revoke its registration and ultimately could require its liquidation. The net capital requirements may prohibit payment of dividends, redemption of stock, prepayment of subordinated indebtedness and issuance of any unsecured advance or loan to a stockholder, employee or affiliate, if the payment would reduce the firm’s net capital below minimum required levels.

 

Global regulatory bodies continue to evaluate and modify regulatory capital requirements in response to market events in an effort to improve the stability of the international financial system. As of December 31, 2016, on a separate company basis, the FXCM Entities were required to maintain approximately $60.6 million of minimum capital in the aggregate across all non-U.S. jurisdictions. As of December 31, 2016, the Company had approximately $97.1 million of excess adjusted net capital over this required regulated capital in all jurisdictions, including $14.2 million of excess capital in Forex US (defined below).

 

3.6 Disposition of Non-Core Assets

 

FXCM and the other FXCM Entities are separate entities from the Company. They are not debtors in chapter 11 and not anticipated to commence bankruptcy cases. Their assets are not available to satisfy the claims of creditors of the Company. However, because all of the revenue of GLBR is derived from distributions and payments made by FXCM to Holdings and by Holdings to the Company, this Disclosure Statement includes the following disclosures:

 

Subsequent to the events of January 15, 2015, FXCM undertook a strategic initiative to sell non-core assets. Throughout 2015, FXCM completed or entered into agreements for the disposition of non-core assets including the sales of the equity trading business of FXCM Securities Limited, FXCM Asia Limited, FXCM Japan Securities, Co., Ltd., and the operations of Faros Trading, LLC.

 

On May 23, 2017, FXCM entered into a sale agreement pursuant to which FXCM and the other shareholders of FastMatch Inc. (“ FastMatch ”) agreed to sell their shares in FastMatch to Euronext US Inc. (“ Euronext ”). On August 14, 2017, FXCM completed the sale to Euronext in exchange for $55.4 million in consideration, (i) $8.7 million of which is to be held in escrow and is subject to future adjustments, including an ~$7.1 million share of a $10 million earnout if certain FastMatch performance targets are met for the twelve-month period from June 1, 2017 to May 31, 2018 pursuant to the terms of the sale agreement The proceeds of these sales were used to reduce the obligations owed by FXCM under the Leucadia Credit Agreement.

 

3.7 February 2017 Events and Sale of U.S.-domiciled Customer Accounts

 

FXCM and the other FXCM Entities are separate entities from the Company. They are not debtors and not anticipated to be debtors. Their assets are not available to satisfy the claims of creditors of the Company. However, because all of the revenue of the Company is derived from distributions and payments made by FXCM to Holdings and by Holdings to the Company, this Disclosure Statement includes the following disclosures:

 

On February 6, 2017, the Company announced simultaneous regulatory settlements with the National Futures Association (“ NFA ”) and the Commodity Futures Trading Commission (“ CFTC ”) against its U.S. subsidiary, Forex Capital Markets LLC (“ Forex US ”), Holdings and certain of its principals (the “ Respondents ”). The NFA settlement had no monetary fine, and the CFTC settlement had a $7.0 million fine imposed jointly and severally against the Respondents, which Holdings and Forex US paid on February 16, 2017. Pursuant to the regulatory settlement agreements, GLBR and FXCM withdrew from business in the United States and terminated their registrations with the CFTC and the NFA.

 

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Specifically, on February 7, 2017, Forex US, a wholly-owned subsidiary of FXCM entered into an Asset Purchase Agreement, pursuant to which Forex US agreed to sell substantially all of its U.S.-domiciled customer accounts to Gain Capital. In consideration for the purchase of the accounts, Gain Capital agreed, during the 153-day period following the closing date of the transaction (the “ 153-Day Period ”), to pay FXCM (i) five hundred ($500) dollars for each transferred client account for which the transferred client account opens at least one new trade during the first 76 calendar days of the 153-Day Period, and (ii) two hundred and fifty ($250) dollars for each transferred client account for which the transferred client opens at least one new trade during the period from the 77th day through the 153rd day of the 153-Day Period. The closing took place on February 24, 2017.

 

In connection with the CFTC action, Leucadia consented to waive compliance with provisions of the Leucadia Credit Agreement and the FXCM Agreement regarding “Restricted Payments” (as defined in the Leucadia Credit Agreement) to permit the distribution of $3.5 million of funds from FXCM to Holdings with respect to the payment of the fine (the “ CFTC Fine ”). Furthermore, the members of FXCM consented to waive compliance with provisions of the FXCM Agreement regarding distributions (as defined in the FXCM Agreement) with respect to the CFTC Fine. In consideration for entering into the waiver, FXCM agreed to pay a fee to Leucadia in the amount of $3.5 million. On February 22, 2017, FXCM, Holdings and Leucadia entered into a Second Amendment to the Amended and Restated Credit Agreement (the “ Second Amendment ”), which amended the Leucadia Credit Agreement. Pursuant to the Second Amendment, the aggregate principal outstanding balance of the Leucadia Credit Agreement was increased by $3.5 million.

 

3.8 Third Amendment to the Leucadia Credit Agreement

 

Leucadia consented to waive compliance with provisions in the Leucadia Credit Agreement and the FXCM Agreement regarding Restricted Payments (as defined in the Leucadia Credit Agreement) to permit the distribution of funds from FXCM to Holdings on occasion with respect to the payment of certain expenses associated with the restructuring of the Existing Notes (not to exceed $5.0 million in the aggregate). The members of FXCM also consented to waive compliance with provisions of the FXCM Agreement regarding distributions (as defined in the FXCM Agreement) to permit such payments. Additionally, Leucadia has previously consented to waive compliance with the minimum fixed charge coverage ratio (as defined in the Leucadia Credit Agreement) to permit FXCM to distribute the necessary funds to Holdings to make the interest payments due on the Existing Notes. The above described consents and waivers are collectively referred to as the “ Waiver ”.

 

In consideration for entering into the Waiver, Holdings and FXCM agreed to pay a fee to Leucadia for each payment made to Holdings equal to the amount of such payment through an increase to the aggregate principal outstanding balance of the Leucadia Credit Agreement. On May 12, 2017, FXCM, Holdings and Leucadia entered into a Third Amendment to the Amended and Restated Credit Agreement (the “ Third Amendment ”), which amended the Leucadia Credit Agreement, to effect this agreement. Through September 30, 2017, GLBR paid $2.4 million of such fees. Pursuant to the Third Amendment, the aggregate principal outstanding balance of the Leucadia Credit Agreement was increased by $2.4 million.

 

As of November 10, 2017, Holdings’ and FXCM’s total indebtedness under the Leucadia Credit Agreement is anticipated to be approximately $67.6 million, which is expected to increase to approximately $72.5 as of January 1, 2018.

 

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3.9 Employees and Officers

 

As of the date hereof, GLBR’s officers are as follows: (1) Ken Grossman, Chief Executive Officer; (2) Robert Lande, Chief Financial Officer; (3) Margaret Deverell, Chief Accounting Officer; (4) David Sakhai, Chief Operating Officer; and (5) David Sassoon, Secretary and General Counsel.

 

As of December 31, 2016, the FXCM Entities had a total of 787 full-time employees and 72 full-time contractors, 488 of which were based in the U.S.

 

It is anticipated that, as of the Effective Date, all of the officers of GLBR will resign with the exception of Mr. Grossman, GLBR’s Chief Executive Officer, who at such time will continue to be GLBR’s only employee.

 

3.10 Legal Proceedings

 

On January 15, 2015, as a result of the unprecedented volatility in the EUR/CHF currency pair after the SNB discontinued its currency floor of 1.2 CHF per EUR, Forex US suffered a temporary breach of certain regulatory capital requirements. On August 18, 2016, the CFTC filed a complaint, U.S. Commodity Futures Trading Commission v. Forex Capital Markets, LLC , in the U.S. District Court for the Southern District of New York, alleging that Forex US was undercapitalized following the SNB’s decision to remove the currency peg, that Forex US failed to notify the CFTC of its undercapitalization, and that US guaranteed customer losses. On December 8, 2016, the CFTC filed an amended complaint. On or about February 13, 2017, Forex US settled with the CFTC without admitting or denying any of the allegations, and pursuant to a consent order entered by the court, agreed to pay a civil monetary penalty in the amount of $7.0 million to the CFTC.

 

On May 8, 2015, the International Union of Operating Engineers Local No. 478 Pension Fund filed a complaint against GLBR, its former Chief Executive Officer and its Chief Financial Officer in the United States District Court for the Southern District of New York, individually and on behalf of all purchasers of the GLBR’s common stock between June 11, 2013 and January 20, 2015. The complaint alleges that the defendants violated certain provisions of the federal securities laws and seeks compensatory damages as well as reasonable costs and expenses. An amended and consolidated complaint was filed on January 11, 2016. GLBR filed a motion to dismiss the consolidated complaint on February 25, 2016 which was granted by the Court on August 18, 2016. On October 7, 2016, the District Court entered an order of final judgment closing the case. On November 3, 2016, plaintiffs filed a notice of appeal in the U.S. Court of Appeals for the Second Circuit to challenge the district court’s order and final judgment that dismissed the case with prejudice. On February 28, 2017, plaintiffs filed a motion in the district court to alter the final judgment and allow them the opportunity to file an amended complaint to add new facts they contended were relevant to the matter, but did not become known until after the district court’s final judgment and their appeal filing. On July 27, 2017, while not ruling on the merits of plaintiffs’ appeal, the Second Circuit vacated the lower court’s judgment and remanded the case back to the district court to decide whether to allow plaintiffs the opportunity to amend the complaint. On July 28, 2017, the district court entered an order permitting the plaintiffs to file an amended complaint by August 28, 2017, which they did. On September 28, 2017, GLBR filed a motion to dismiss the second amended complaint.

 

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On December 15, 2015, Brett Kandell, individually and on behalf of nominal defendant, GLBR, filed a shareholder derivative complaint against the members of GLBR’s board of directors (the “ GLBR Board ”) in the Delaware Court of Chancery. The case is captioned Brett Kandell v. Dror Niv et al. , C.A. No. 11812-VCG. On March 4, 2016, plaintiff filed an amended shareholder derivative complaint, which alleges breach of fiduciary duty, contribution and indemnification, waste of corporate assets and unjust enrichment and seeks compensatory damages, rescission of certain agreements as well as reasonable costs and expenses. A second amended shareholder derivative complaint was filed on May 31, 2016 and the GLBR Board filed a motion to dismiss on July 15, 2016. Subsequently, plaintiff filed a third amended shareholder derivative complaint on September 1, 2016, and the GLBR Board filed a motion to dismiss on October 17, 2016. On September 29, 2017, the Delaware Chancery Court issued its ruling granting in part and denying in part the GLBR Board’s motion to dismiss the third amended complaint. The Court dismissed in its entirety the claims for waste of corporate assets and unjust enrichment. The Court dismissed, in part, the claims for breach of fiduciary duty and contribution and indemnification to the extent they related to the GLBR Board’s approval of a shareholder rights plan in January 2015 and new severance and executive bonus plans in March 2015 and April 2016. The Court, however, did not dismiss the breach of fiduciary duty and contribution and indemnification claims to the extent they related to the GLBR Board’s approval of the Leucadia Credit Agreement and subsequent memorandum of understanding and the GLBR Board’s approval of the Company’s purported “no-debit” policy which the CFTC claimed violated CFTC Regulation 5.16.

 

On February 6, 2017, Forex US, Holdings, Dror Niv and William Ahdout entered into a settlement with the CFTC, and Forex US, Messrs. Niv, Ahdout and Ornit Niv entered into a settlement with the NFA. During the relevant times, Mr. Niv was GLBR’s CEO, a member of Holdings, and/or the CEO of Forex US; Mr. Ahdout was a member of Holdings and a Managing Director of Forex US. Both settlements concerned allegations that aspects of Forex US’s relationship with one of its liquidity providers had not been disclosed to customers and regulators. The NFA settlement included additional, unrelated allegations of violations of certain NFA Rules and Requirements. The FXCM Entities are cooperating with regulatory authorities outside the U.S. in relation to their requests for information arising from the settlements announced on February 6, 2017.

 

Under the settlement with the CFTC, the named entities and individuals were required, jointly and severally, to pay a civil monetary penalty of $7.0 million, agreed to withdraw from CFTC registration and agreed not to apply for or claim exemption from CFTC registration in the future. Under the settlement with the NFA, no monetary fine was imposed and the named individuals and entities agreed to withdraw from NFA membership and not to reapply for membership in the future. The named entities and individuals did not admit or deny the allegations associated with the settlements. Forex US and Holdings each paid $3.5 million of the $7.0 million fine on February 16, 2017. In connection with the regulatory settlements, FXCM has withdrawn from business in the U.S. and sold substantially all of its U.S.-domiciled customer accounts to Gain Capital in the first quarter of 2017 as described above.

 

In response to Global Brokerage’s announcement on February 6, 2017 regarding settlements with the NFA and the CFTC, several putative securities class action lawsuits have been filed against GLBR, the Board, and certain officers of GLBR in the U.S. District Court for the Southern District of New York. The complaints in these actions allege that the defendants violated certain provisions of the federal securities laws and seek compensatory damages as well as reasonable costs and expenses. These actions have been consolidated and the court has appointed a lead plaintiff and lead counsel. On June 19, 2017, lead counsel filed a consolidated amended complaint on behalf of the class. On August 3, 2017, GLBR and individual defendants filed a motion to strike and dismiss the consolidated amended complaint. The motions are fully briefed and awaiting decision. In addition, a related shareholder derivative action has been filed against the board of directors of GLBR in the same court alleging a violation of the federal securities laws. This shareholder derivative action was stayed on April 27, 2017, pending dismissal or discovery in the aforementioned related securities class action. On August 4, 2017, another shareholder filed a similar derivative action against the board and other officers of the Company in Delaware federal court. The case has been transferred to the Pennsylvania federal court.

 

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Also, on April 14, 2017, a customer of Forex US filed a class action on behalf of customers who traded on the No Dealing Desk platform during the 2010-2016 period and alleges that such customers were harmed as a result of the Company’s relationship and use of Effex Capital, LLC (“ Effex ”) as a liquidity provider. The class action was filed in the U.S. District Court for the Southern District of New York and alleges, among other things, breach of contract and breach of fiduciary duty by US and other related claims against the Company, Holdings, Dror Niv, William Ahdout, and Effex and its principal. On August 3, 2017, the district court entered an order staying the matter with respect to the claims against the Company, Holdings, Dror Niv and William Ahdout pending resolution of an individual arbitration proceeding by the customer. A similar class action asserting substantially the same claims was filed by another customer on June 21, 2017. These two actions have been consolidated and are stayed pending resolution of individual arbitration. The Company and other named Global Brokerage defendants intend to vigorously defend against the claims asserted against them by these customers.  

 

ARTICLE IV.  

EVENTS LEADING TO THE SOLICITATION   

 

4.1 Events Leading to the Solicitation.

   

GLBR is a holding company with limited business operations. Its primary asset is its ownership of limited liability company membership interests in Holdings, which represent 74.5% of the outstanding Class A membership interests in Holdings.  

 

Holdings is also a holding company with limited business operations. Holdings’ primary asset is its ownership of limited liability company interests in FXCM, which represent 50.1% of the Class A membership interests in FXCM. The FXCM Agreement sets forth the economic and governance rights of FXCM’s members, including Holdings. The FXCM Agreement provides for an allocation of distributions and sales proceeds under a waterfall provision pursuant to which the economic interests of Holdings are effectively less than 50.1%. 

 

The FXCM Entities are operating companies who provide online foreign exchange (forex) trading, CFD trading, spread betting and related services. Neither Holdings, FXCM or any FXCM Entity is or is expected to be a debtor under the Bankruptcy Code nor has any obligation with respect to the Existing Notes. 

 

GLBR derives all of its revenue from distributions and payments made by Holdings to it. Holdings derives all of its revenue from distributions and payments made by FXCM to Holdings. FXCM is an operating company whose revenues are used to pay expenses incurred in its operations, to maintain required regulatory reserves, to maintain margin deposits with liquidity providers, to pay debt service and for other corporate purposes of FXCM. Excess revenues are available for distribution to members of FXCM, including Holdings. Holdings has no source of revenues other than from distributions and payments made by FXCM to it, and in turn, GLBR has no source of revenue other than from distributions and payments made by Holdings to GLBR.

 

GLBR’s Class A common stock trades on the NASDAQ under the symbol “GLBR.” On May 2, 2017, NASDAQ notified GLBR that, for the prior thirty (30) consecutive business days, the market value of GLBR’s publicly held shares was less than $15.0 million, and as a result, GLBR did not meet the requirement for continued listing under NASDAQ’s listing rules. NASDAQ further notified GLBR that the market value of GLBR’s Class A common stock must exceed $15.0 million for ten (10) consecutive business days between May 2, 2017 and October 30, 2017 to avoid such stock being delisted by NASDAQ.

 

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The market value of GLBR’s Class A common stock did not exceed $15.0 million for ten (10) consecutive business days between May 2, 2017 and October 30, 2017. On November 6, 2017, NASDAQ provided written notice to GLBR that its Class A common stock would be delisted effective November 15, 2017. Upon GLBR’s application, NASDAQ has approved GLBR’s shares to trade on a different NASDAQ exchange tier, NASDAQ Capital Market, through the end of calendar year 2017.

 

Although GLBR shares will be traded on NASDAQ Capital Market through the end of calendar year 2017, the failure of GLBR to remain listed on NASDAQ Global Market is a “Fundamental Change,” under the Existing Notes Indenture, which will result in each holder of the Existing Notes having the right, at such holder’s option, to require GLBR to purchase for cash all of such holder’s Existing Notes at a purchase price equal to 100% of the principal amount thereof, plus any accrued and unpaid interest. GLBR does not have sufficient funds to repurchase the Existing Notes should one or more of the holders require repurchase. The failure to satisfy the repurchase obligations constitutes an event of default under the Existing Notes Indenture.

 

GLBR is also obligated to make a scheduled interest payment to Holders of the Existing Notes on December 15, 2017, subject to a thirty (30) day grace period. GLBR does not have and does not anticipate having sufficient liquidity to make the December 15, 2017 interest payment. Absent a waiver or forbearance from the Holders of the Existing Notes, the failure by GLBR to make this interest payment could result in the acceleration of the maturity of the Existing Notes after a 30-day grace period. GLBR does not currently have sufficient liquidity, nor does it anticipate having sufficient liquidity on or before January 14, 2018, to repay the Existing Notes in full if the Holders of the Existing Notes elected to accelerate the maturity of the Existing Notes.  

 

The Existing Notes mature by their own terms in June 2018. GLBR does not have sufficient funds and does not anticipate having sufficient funds to repay the Existing Notes at maturity. GLBR does not believe that it will be able to refinance the Existing Notes prior to maturity, other than on the terms set forth in the Plan.

 

In light of the delisting notice received from NASDAQ, the impending December 15, 2017 interest payment and the impending June 2018 maturity of the Existing Notes, GLBR engaged the Plan Support Parties in arms’ length negotiations regarding a potential restructuring of GLBR’s obligations under the Existing Notes. Those negotiations resulted in the execution of the Support Agreement, which established the framework and agreements necessary to proceed with the Plan.

 

The Plan provides for the following:  

 

Issuance of new notes to replace the Existing Notes. The New Notes have a five-year maturity, are secured, will be guaranteed by Holdings, lack a conversion feature, and contain certain additional covenants as more fully described therein;

 

Amendment of the limited liability company agreement of Holdings to provide the holders of the New Notes with additional contractual protections;

 

Amendment of the limited liability company agreement of FXCM to provide for certain permitted payments to fund certain cash interest payments on the New Notes and to ensure certain funds for anticipated expenses of GLBR;

   

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Amendment of the Leucadia Credit Agreement to extend the maturity of the Leucadia Credit Agreement from January 2018 to January 2019 to enhance the prospects for a refinancing of the facility, mitigating a risk to the ongoing financial viability of FXCM and in turn the financial viability of Holdings and GLBR.

   

Third-party releases for parties to the Support Agreement, which were required to induce such parties to grant the concessions provided for in the Plan and the Plan Documents.

 

No impairment of the interest held by equityholders in GLBR.

 

To implement the restructuring, the Company is soliciting votes from Holders of Existing Notes Claims to accept or reject the Plan.

 

GLBR expects to file a voluntary proceeding under chapter 11 of the Bankruptcy Code, and request that the Bankruptcy Court approve the Plan. If the Bankruptcy Court approves the Plan, GLBR can exit bankruptcy once it satisfies all conditions to the effectiveness of the Plan and can then emerge from bankruptcy with the New Notes having a five-year maturity. 

 

4.2 The Support Agreement.

   

Pursuant to the Support Agreement, the Plan Support Parties have agreed to, among other things, vote (as applicable) all of their Claims against the Debtor in favor of the Plan, to support the terms of the Plan and to take all reasonable actions necessary and appropriate to consummate the Plan in a timely manner, so long as certain restructuring milestones set forth in the Support Agreement are met. Such milestones include a deadline for consummation of the Plan by February 12, 2018, as may be further extended with the consent of the Plan Support Parties. 

 

(a) Additional Agreements.

 

Each of the parties to the Support Agreement has agreed that, unless the Support Agreement is terminated in accordance with the terms thereof, it will not take any action that is inconsistent with, or that would materially delay or impede approval, confirmation or consummation of the Plan, and not directly or indirectly propose, support, solicit, encourage or participate in the formulation of any restructuring for GLBR other than the Plan. 

 

GLBR has agreed that it will: (1) issue the New Notes, (2) duly execute and deliver all Transaction Documents to which GLBR is party and take necessary steps to give effect to and make legal, valid, and binding such Transaction Documents, and (3) in its capacity as sole managing member of Holdings, cause Holdings to (w) issue Holdings’ Guarantee (as defined in the New Notes Indenture), (x) execute and deliver the Transaction Documents to which Holdings is party, and (y) take necessary steps make legal, valid, and binding such Transaction Documents and give effect to the Noteholder Protections therein.  

 

(b) Fiduciary Duties.

 

Nothing in the Support Agreement shall require GLBR or its board of directors to breach any fiduciary obligations it has under applicable law, and to the extent that such fiduciary obligations require GLBR or its board of directors to terminate its obligations under the Support Agreement, it may do so without incurring any liability to the Plan Support Parties.

 

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4.3 Funding for the Plan.

 

Pursuant to the FXCM Agreement and the Leucadia Credit Agreement, FXCM will be permitted to distribute cash to Holdings in the amount necessary to pay cash interest payments on New Notes, on the next interest payment date for the New Notes, at a rate of 2.25% interest payments on the lesser of (1) $172,500,000.00 aggregate principal amount of the New Notes and (2) the original aggregate principal amount of the New Notes that remains outstanding as of such time, after giving effect to any redemptions, repurchases, acquisitions or retirements (in connection with any Sinking Fund auction or otherwise), and without giving effect to the issuance of any PIK interest notes. Redemptions, repurchases, acquisitions or retirements of the New Notes shall reduce the original $172,500,000.00 principal balance before reducing any PIK interest notes. Such distributions will not require FXCM to make any corresponding distributions to LUK-FX Holdings, LLC pursuant to the FXCM Agreement or to repay any outstanding indebtedness under the Leucadia Credit Agreement.  

 

Pursuant to the Support Agreement, the FXCM Agreement and the Leucadia Credit Agreement, FXCM will pay to Holdings on one or more occasions amounts not to exceed an amount that equals $5 million minus any Payments (as defined in the consent and waiver, dated as of May 8, 2017, by and among Leucadia, GLBR, Holdings, FXCM and the other parties thereto (the “ Restructuring Consent ”)) paid by FXCM to Holdings pursuant to the Restructuring Consent prior to the date hereof, in the aggregate (the “ Initial Restructuring Payments ”), solely to enable Holdings to pay the amount of such Initial Restructuring Payments to GLBR to enable GLBR to pay fees and expenses of legal and financial advisors engaged by GLBR or related expenses in connection with the contemplated restructuring of the Existing Notes and related transactions (including, for the avoidance of doubt, GLBR’s obligations under the Fee Letters (as defined in the Support Agreement) and premiums under its D&O Insurance policies) (collectively, the “ Restructuring Expenses ”). Pursuant to Section 6.4(b) of the FXCM Agreement, any Initial Restructuring Payments paid by FXCM to Holdings are “Restricted Payments” (as defined in the FXCM Agreement) and, therefore, entitle Leucadia to receive an amount of cash approximately equal to such distribution pursuant to Section 6.4(b) of the FXCM Agreement. In lieu of FXCM paying to Leucadia such amounts in cash pursuant to Section 6.4(b) of the FXCM Agreement, such cash shall be retained by and loaned to FXCM and the amount thereof shall increase the principal amount of “Loans” (as defined in the Leucadia Credit Agreement) outstanding under the Leucadia Credit Agreement in an amount equal to the amount of such Initial Restructuring Payments. In addition, FXCM shall pay an amount not to exceed an additional $2,000,000 in the aggregate to Holdings, solely to enable Holdings to pay the amount of such distributions to GLBR to enable GLBR to pay Restructuring Expenses (the “ Additional Restructuring Payments ” and, together with the Initial Restructuring Payments, the “ Restructuring Payments ”). After payment by FXCM of all Initial Restructuring Payments, distributions of the Additional Restructuring Payments from FXCM to Holdings shall not result in any increase to the “Loans” outstanding under the Leucadia Credit Agreement. 

 

Additionally, if the Plan is confirmed, pursuant to the FXCM Agreement and the Leucadia Credit Agreement, FXCM will be permitted to distribute cash to Holdings to pay ordinary course expenses of GLBR and Holdings not to exceed $1.0 million annually, subject to certain exceptions that exceed the $1.0 million annual cap. Moreover, if the Plan is confirmed, FXCM will upon written request by Holdings pay on one or more occasions amounts not to exceed $6 million in the aggregate (“ Additional Expense Payments ”), solely to enable Holdings to pay restructuring expenses in excess of the Restructuring Expenses paid by GLBR with the proceeds of the Restructuring Payments and other expenses (“ Additional Expenses ”). Pursuant to Section 6.4(b) of the FXCM Agreement, any Additional Expense Payments paid by FXCM to Holdings are “Restricted Payments (as defined in the FXCM Agreement) and, therefore, entitle Leucadia to receive an amount of cash approximately equal to such distribution pursuant to Section 6.4(b) of the FXCM Agreement. In lieu of FXCM paying to Leucadia such amounts in cash pursuant to Section 6.4(b) of the FXCM Agreement, such cash will be retained by and loaned to FXCM and the amount thereof will increase the principal amount of “Loans” (as defined in the Leucadia Credit Agreement) outstanding under the Leucadia Credit Agreement in an amount equal to the amount of such Additional Expense Payments.

 

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ARTICLE V.  

REASONS FOR THE SOLICITATION

  

GLBR is pursuing a restructuring through solicitation and confirmation of the Plan to enable GLBR to restructure its obligations under the Existing Notes by effecting an exchange of such notes for new notes with an extended maturity. As of November 10, 2017, GLBR has approximately $172,500,000 million of long term indebtedness outstanding, which has accrued but unpaid interest in the amount of $1,563,302. Further, GLBR had approximately $24,700.00 of cash on hand. 

 

GLBR expects that the Plan, if successfully confirmed, will extend the maturity of GLBR’s long- term indebtedness by approximately five years upon consummation of the Plan. Following the consummation of the Plan, GLBR projects that it will have approximately $30,000.00 in cash on its balance sheet and a commitment to distribute up to $6 million. However, there can be no assurance actual results will comport materially with GLBR’s projections.  

 

Chapter 11 of the Bankruptcy Code provides that unless the terms of section 1129(b) of the Bankruptcy Code are satisfied, for the Bankruptcy Court to confirm the Plan as a consensual plan, the Holders of impaired Claims against, and Interests in, GLBR in each Class of impaired Claims and Interests must accept the Plan by the requisite majorities set forth in the Bankruptcy Code. For a class of impaired claims to accept the Plan, section 1126 of the Bankruptcy Code requires acceptance by (i) Holders of claims that hold at least two-thirds in dollar amount and (ii) more than one-half in number of Holders of claims of such class who vote on the Plan. An impaired class of interests is deemed to accept a plan of reorganization if Holders of at least two-thirds in amount of the allowed interests in such class who actually cast ballots vote to accept the plan.  

 

In the event that the Plan does not receive sufficient votes for confirmation, GLBR would likely commence a chapter 7 or chapter 11 case on terms other than as contemplated by the Plan. If GLBR commences such a bankruptcy filing, Holders of the Existing Notes Claims may receive consideration that is substantially less than what is being offered under the Plan, or, under certain circumstances, no recovery at all. 

 

GLBR believes that a bankruptcy filing (other than pursuant to the Plan) could result in recoveries to its creditors substantially below those expected to result from the Plan, and could materially adversely affect its business and prospects. As a result, GLBR is pursuing solicitation of the Plan because it believes that the Plan is superior to any existing alternative. For all of these reasons, GLBR’s board of directors supports the Plan and urges the Holders of Existing Notes Claims to accept and support it. 

 

ARTICLE VI.
THE PLAN   

 

6.1 Anticipated Events in a Chapter 11 Case.

 

Chapter 11 is the principal business reorganization chapter of the Bankruptcy Code. Pursuant to chapter 11, a debtor may remain in possession of its assets, continue to manage its business and attempt to reorganize its business for the benefit of the debtor, its creditors and other parties-in-interest. The commencement of a chapter 11 case creates an estate comprising all the legal and equitable interests of a debtor in its property as of the date the petition is filed. Sections 1107 and 1108 of the Bankruptcy Code provide that a debtor may continue to operate its business and remain in possession of its property as a “debtor in possession,” unless the Bankruptcy Court orders the appointment of a trustee. The commencement of a chapter 11 case also triggers the automatic stay provisions of section 362 of the Bankruptcy Code. Section 362 of the Bankruptcy Code provides, among other things, for an automatic stay of all attempts to collect prepetition claims from the debtor or otherwise interfere with its property or business. Except as otherwise ordered by the Bankruptcy Court, the automatic stay generally remains in full force and effect until confirmation of a plan of reorganization.

 

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Pursuant to section 1102 of the Bankruptcy Code, upon the commencement of a chapter 11 case, the Office of the United States Trustee (the “ U.S. Trustee ”) is required to appoint a committee of creditors holding unsecured claims and may appoint additional committees of creditors or of equity security Holders as the U.S. Trustee deems appropriate. However, it is not uncommon for the U.S. Trustee to not appoint a creditors’ committee in cases where solicitation of a Plan has been conducted before the Petition Date and Holders of unsecured claims are unimpaired.

 

Pursuant to section 1103 of the Bankruptcy Code, a committee appointed under section 1102 of the Bankruptcy Code may:

 

consult with the trustee or debtor in possession concerning the administration of the chapter 11 case;

 

investigate the acts, conduct, assets, liabilities and financial condition of the debtor, the operation of the debtor’s business and the desirability of the continuance of such business and any other matter relevant to the case or to the formulation of a plan;

 

participate in the formulation of a plan, advise those represented by such committee of such committee’s determinations as to any plan formulated and collect and file with the court acceptances or rejections of a plan;

 

request the appointment of a trustee or examiner under section 1104 of the Bankruptcy Code;and

 

perform such other services as are in the interest of those represented by the committee.

 

Further, pursuant to section 1109(b) of the Bankruptcy Code, upon the commencement of the chapter 11 case, any party-in-interest, including the debtor, a creditors’ committee, an equity security Holders’ committee, a creditor, an equity security holder or any indenture trustee may raise and may appear and be heard on any issue in the chapter 11 case. 

 

6.2 Summary of Distributions Under the Plan.

   

If the Plan is confirmed by the Bankruptcy Court, each Holder of an Allowed Claim or Allowed Interest in a particular Class will receive the same treatment as the other Holders in the same Class of Claims or Interests, whether or not such Holder voted to accept the Plan, unless such Holder agrees to accept less favorable treatment by settlement or otherwise. Moreover, upon confirmation, the Plan will be binding on all of the Debtor’s creditors and equity Holders regardless of whether such creditors or equity Holders voted to accept the Plan. Such treatment will be in full satisfaction, release and discharge of and in exchange for such Holder’s Claims against, or Interests in, the Debtor, except as otherwise provided in the Plan.

 

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(a) Treatment of Unclassified Claims.

   

The Bankruptcy Code does not require classification of certain priority claims against a debtor. In this case, these unclassified claims include Administrative Claims, Priority Tax Claims and Professional Fee Claims as set forth below.  

 

(1) Administrative Claims.

 

Under the Plan, Administrative Claims include any Claim for costs and expenses of administration of the Debtor’s Estate pursuant to sections 503(b), 507(a)(2), 507(b), or 1114(e)(2) of the Bankruptcy Code, other than a Professional Fee Claim, including: (a) the actual and necessary costs and expenses incurred after the Petition Date and through the Effective Date of preserving the Estate and operating the business of the Debtor; and (b) all Allowed requests for compensation or expense reimbursement for making a substantial contribution in the Chapter 11 Case pursuant to sections

 

503(b)(3), (4), and (5) of the Bankruptcy Code. Except with respect to Administrative Claims that are Professional Fee Claims and except to the extent that an Administrative Claim has already been paid during the Chapter 11 Case or a Holder of an Allowed Administrative Claim and the Debtor agree to less favorable treatment, each Holder of an Allowed Administrative Claim shall be paid in full in Cash on the unpaid portion of its Allowed Administrative Claim on the latest of: (a) on or as soon as reasonably practicable after the Effective Date if such Administrative Claim is Allowed as of the Effective Date; (b) on or as soon as reasonably practicable after the date such Administrative Claim is Allowed; and (c) the date such Allowed Administrative Claim becomes due and payable, or as soon thereafter as is reasonably practicable; provided that Allowed Administrative Claims that arise in the ordinary course of the Debtor’s businesses shall be paid in the ordinary course of business in accordance with the terms and subject to the conditions of any agreements governing, instruments evidencing, or other documents relating to such transactions. 

 

(2) Priority Tax Claims.

 

Under the Plan, Priority Tax Claims include any Claim by a Governmental Unit of the kind specified in sections 502(i) or 507(a)(8) of the Bankruptcy Code. Except to the extent that a Holder of an Allowed Priority Tax Claim agrees to a less favorable treatment, in full and final satisfaction, compromise, settlement, release, and discharge of, and in exchange for, each Allowed Priority Tax Claim, each Holder of such Allowed Priority Tax Claim shall be treated in accordance with the terms set forth in section 1129(a)(9)(C) of the Bankruptcy Code.  

 

(b) Treatment of Classified Claims.

   

The following describes the Plan’s classification of the Claims and Interests that are required to be classified under the Bankruptcy Code and the treatment each Holder of Allowed Claims or Allowed Interests will receive for such Claims or Interests: 

 

(1) Class 1 — Other Priority Claims.

 

The Claims in Class 1 consist of Other Priority Claims against the Debtor.

  

Treatment:  On the Effective Date or as soon as reasonably practicable thereafter, except to the extent a Holder of an Allowed Other Priority Claim has already been paid during the Chapter 11 Case or such Holder of an Allowed Other Priority Claim, together with the Debtor, agrees to less favorable treatment, in full and final satisfaction, settlement, release, and discharge of and in exchange for its Allowed Other Priority Claim, each Holder of an Allowed Other Priority Claim shall receive payment in full, in Cash, of the unpaid portion of its Allowed Other Priority Claim.

 

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Voting : Class 1 is Unimpaired. Each Holder of an Allowed Other Priority Claim will be conclusively presumed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, each Holder of an Allowed Other Priority Claim will not be entitled to vote to accept or reject the Plan.

 

(2) Class 2 — Other Secured Claims.

 

Class 2 consists of Other Secured Claims against the Debtor.

 

Treatment : On the Effective Date or as soon as reasonably practicable thereafter, except to the extent that a Holder of an Allowed Other Secured Claim has already been paid during the Chapter 11Case or such Holder, together with the Debtor, agrees to less favorable treatment, in full and final satisfaction, settlement, release, and discharge of and in exchange for its Allowed Other Secured Claim, each Holder of an Allowed Other Secured Claim shall receive, at the option of the Debtor, with the consent of the Required Consenting Noteholders and Leucadia: (i) payment in full, in Cash, of the unpaid portion of its Allowed Other Secured Claim; (ii) delivery of the collateral securing such Allowed Other Secured Claim; (iii) Reinstatement of its Allowed Other Secured Claim in accordance with Section 1124(2) of the Bankruptcy Code (including any Cash necessary to satisfy the requirements for Reinstatement), and/or such other distribution as necessary to satisfy the requirements of section 1129 of the Bankruptcy Code or (iv) other treatment, as decided by the Debtor and the Holder of an Other Secured Claim to their mutual satisfaction, such that the Other Secured Claim shall be rendered Unimpaired. Any cure amount that the Debtor may be required to pay pursuant to section 1124(2) of the Bankruptcy Code on account of any such Reinstated Other Secured Claim or any distributions due pursuant to clause (i) or (iv) above shall be paid or made, as applicable, either on or as soon as practicable after, the latest of (1) the Effective Date; (2) the date on which such Other Secured Claim becomes Allowed; (3) the date on which such Other Secured Claim becomes due and payable; and (4) such other date as may be mutually agreed to by such Holder and the Debtor or Reorganized Debtor, as applicable. 

 

The failure of the Debtor or any other party in interest to file an objection, prior to the Effective Date, with respect to any Other Secured Claim that is Reinstated by the Plan shall be without prejudice to the rights of the Reorganized Debtor or any other party in interest to contest or otherwise defend against such Claim in an appropriate forum (including the Bankruptcy Court, if applicable) when and if such Claim is sought to be enforced. 

 

Voting : Class 2 is Unimpaired. Each Holder of an Allowed Other Secured Claim will be conclusively presumed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, each Holder of an Allowed Other Secured Claim will not be entitled to vote to accept or reject the Plan. 

 

(3) Class 3 — Existing Notes Claims .

 

Class 3 consists of Existing Notes Claims against the Debtor. 

 

Allowance : The Existing Notes Claims shall be allowed in the aggregate principal amount of $172,500,000.00, plus any accrued but unpaid interest due under the terms of the Existing Notes Indenture as of the Petition Date.

 

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Treatment : On the Effective Date, all of the Existing Notes shall be cancelled and discharged, and except to the extent that a Holder of an Allowed Existing Notes Claim agrees to less favorable treatment, in full and final satisfaction, settlement, release, and discharge of and in exchange for its Allowed Existing Notes Claim, each Holder of an Allowed Existing Notes Claim shall receive its pro rata share of the New Notes. The terms and conditions of the New Notes are fully set forth in the New Notes Indenture. 

 

Voting : Class 3 is Impaired. Each Holder of an Allowed Existing Notes Claim will be entitled to vote to accept or reject the Plan. 

 

(4) Class 4 — General Unsecured Claims.

 

Class 4 consists of General Unsecured Claims against the Debtor. 

 

Treatment . On the Effective Date or as soon as reasonably practicable thereafter, except to the extent that a Holder of an Allowed General Unsecured Claim has already been paid during the Chapter 11 Case or such Holder, together with the Debtor, agrees to less favorable treatment, in full and final satisfaction, settlement, release, and discharge of and in exchange for its Allowed General Unsecured Claim, each Holder of an Allowed General Unsecured Claim shall receive, at the option of the Debtor, with the consent of the Required Consenting Noteholders and Leucadia: (i) payment in full, in Cash, of the unpaid portion of its Allowed General Unsecured Claim; (ii) Reinstatement of its Allowed General Unsecured Claim in accordance with Section 1124(2) of the Bankruptcy Code (including any Cash necessary to satisfy the requirements for Reinstatement), (iii) such other distribution as necessary to satisfy the requirements of section 1129 of the Bankruptcy Code, or (iv) other treatment, as decided by the Debtor and the Holder to their mutual satisfaction, such that the General Unsecured Claim shall be rendered Unimpaired. Any cure amount that the Debtor may be required to pay pursuant to section 1124(2) of the Bankruptcy Code on account of any such Reinstated General Unsecured Claim or any distributions due pursuant to clause (i) or (iv) above shall be paid or made, as applicable, either on or as soon as practicable after, the latest of (1) the Effective Date; (2) the date on which such General Unsecured Claim becomes Allowed; (3) the date on which such General Unsecured Claim becomes due and payable; and (4) such other date as may be mutually agreed to by such Holder and the Debtor or Reorganized Debtor, as applicable. The failure of the Debtor or any other party in interest to file an objection, prior to the Effective Date, with respect to any General Unsecured Claim that is Reinstated by the Plan shall be without prejudice to the rights of the Reorganized Debtor or any other party in interest to contest or otherwise defend against such Claim in an appropriate forum (including the Bankruptcy Court, if applicable) when and if such Claim is sought to be enforced. 

 

Voting : Class 4 is Unimpaired. Each Holder of a General Unsecured Claim will be conclusively presumed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code and will not be entitled to vote to accept or reject the Plan. 

 

(5) Class 5 — Intercompany Claims

 

Class 5 consists of all Intercompany Claims. 

 

Treatment : On the Effective Date, all Intercompany Claims shall be paid, adjusted, continued, settled, reinstated, discharged, or eliminated, in each case to the extent determined to be appropriate by the Debtor or the Reorganized Debtor, as applicable, with the reasonable consent of the Required Consenting Noteholders and Leucadia.

 

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Voting : Class 5 is Unimpaired. Each Holder of an Intercompany Claim will be conclusively presumed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code and will not be entitled to vote to accept or reject the Plan. 

 

(6) Class 6—Other Subordinated Claims

 

Class 6 consists of all Other Subordinated Claims 

 

Treatment : As of the Effective Date, litigation asserting Other Subordinated Claims shall be permitted to proceed, and any Claims or causes of action covered thereby shall not be affected or discharged by virtue of the Chapter 11 Case. 

 

Voting : Class 6 is Unimpaired. Each Holder of an Other Subordinated Claim will be conclusively presumed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code and will not be entitled to vote to accept or reject the Plan. 

 

(7) Class 7 —Interests.

 

Class 7 consists of all Interests.

 

Treatment : To preserve the Debtor’s corporate structure, on the Effective Date, all Interests shall remain unaffected and the Holders thereof shall retain all legal, equitable and contractual rights to which Holders of such Interest are otherwise entitled. 

 

Voting : Class 7 is Unimpaired. Each Holder of an Interest in GLBR will be conclusively presumed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code and will not be entitled to vote to accept or reject the Plan. 

 

6.3 Settlement.

 

Pursuant to Bankruptcy Rule 9019, and in consideration for the classification, distribution and other benefits provided under the Plan, the provisions of the Plan shall constitute a good faith compromise and settlement of all Claims and controversies resolved pursuant to the Plan, and all Claims arising prior to the Petition Date, whether known or unknown, foreseen or unforeseen, asserted or unasserted, by or against any Released Party, or Holders of Claims, arising out of, relating to or in connection with the business or affairs of or transactions with the Debtor. The entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval of each of the foregoing compromises or settlements, and all other compromises and settlements provided for in the Plan, and the Bankruptcy Court’s findings shall constitute its determination that such compromises and settlements are in the best interests of the Debtor, the Estate, creditors and other parties-in-interest, and are fair, equitable and within the range of reasonableness. The provisions of the Plan, including, without limitation, its release, injunction, exculpation and compromise provisions, are mutually dependent and non-severable.  

 

6.4 Post-Confirmation Capital Structure of the Reorganized Debtor.

   

(a) The New Notes

   

The New Notes shall be issued in an aggregate principal amount equal to the aggregate principal amount of the Existing Notes plus accrued and unpaid interest as of the Petition Date. The New Notes shall mature five years after the Effective Date of the Plan and shall accrue interest at 7.00% per annum. Certain of the interest payments are subject to being paid in kind if cash at GLBR is insufficient to satisfy interest payments owed to the holders of the New Notes. It is anticipated that certain interest payments will, in fact, be paid in kind. GLBR will pledge all of its assets to secure the obligations under the New Notes. The New Notes will not have a “convertible” feature similar to the Existing Notes.

 

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The New Notes will have covenants that place restrictions on GLBR and Holdings to (among other things): enter transactions with its affiliates; sell assets or merge or consolidate with a third party; incur additional debt; grant liens; and engage in sale leaseback transactions. Holdings will issue a guarantee of payment of the New Notes and pledge all of its assets to secure the obligations under the guarantee. Those security interests and guarantee will be subordinated to the security interests and liens in Holdings’ assets previously granted to secure the obligations of Holdings under the Leucadia Credit Agreement. 

 

The New Notes Indenture will also provide that distributions made to Holdings (net of payment of reasonable expenses) in excess of interest payments and Minimum Reserve Cash will be contributed to the Sinking Fund. Minimum Reserve Cash shall not exceed one semi-annual interest payment ($6.0375 million), plus $250,000.00. Holdings or the Company will use funds available in the Sinking Fund to run a quarterly reverse Dutch auction to repurchase as many of the New Notes as possible at market prices at, or below, par.

 

For the sake of clarity, neither FXCM nor its subsidiaries (i.e., the FXCM Entities) have any obligations under, nor are they issuers or guarantors of, the New Notes. 

 

(b) Amendment to Holdings LLC Agreement

 

The Holdings LLC Agreement will be amended to provide for a Noteholder-designated special member of Holdings (the “Noteholder Designated Member”) whose affirmative vote will be required as a condition to Holdings agreeing to certain actions as summarized in the Term Sheet attached as Exhibit A to the Support Agreement ( Exhibit 2 ) and subject to the terms reflected in the Holdings LLC Agreement attached as Exhibit B to the Plan ( Exhibit 1 ) as ultimately implemented on the Effective Date. The identity of the Noteholder Designated Member shall be disclosed prior to the commencement of the Confirmation Hearing. 

 

(c) Amendment to FXCM Agreement

 

The FXCM Agreement shall be amended in conjunction with the Restructuring Transaction as summarized generally below and in the Term Sheet attached as Exhibit A to the Support Agreement ( Exhibit 2 ) and subject to the terms reflected in the FXCM Agreement attached as Exhibit A to the Plan ( Exhibit 1 ) as ultimately implemented on the Effective Date: 

 

(1) Revisions to FXCM Agreement Distributions Waterfall

 

The “Waterfall” provisions of Section 6.4 of the FXCM Agreement attached as Exhibit A to the Plan ( Exhibit 1 ) will be amended to permit distributions from FXCM as follows:  

 

Distributable Amount     Revised Waterfall
     
Repayment of Amounts due under the Leucadia Credit Agreement   100% Leucadia
     
Next $350 million    50.0% Leucadia / 50.0% Holdings
     
Next $600 million   90.0% Leucadia / 10.0% Holdings
     
All aggregate amounts thereafter    60.0% Leucadia / 40.0% Holdings

 

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Provided that if any of the interest under the New Notes eligible to be classified as a Permitted Payment (as defined in the FXCM Agreement) has been paid-in-kind (a “ Permitted Payment PIK Interest ”), then the threshold shall be increased by an amount equal to the Permitted Payment PIK Interest divided by Holdings’ allocation under the first tranche of the waterfall, as adjusted for any potential management allocations. 

 

(2) FXCM Excess Cash Distribution Covenant

 

The FXCM Agreement will be amended to require mandatory, quarterly distributions of Group Excess Cash. The mechanics regarding these distributions are described more fully in the Term Sheet attached as Exhibit A to the Support Agreement ( Exhibit 2 ) and subject to the terms reflected in Section 6.4(j) of the FXCM Agreement attached as Exhibit B to the Plan ( Exhibit 1 ) as ultimately implemented on the Effective Date. 

 

(3) Additional FXCM Agreement Amendments

 

Additional amendments to the FXCM Agreement are described more fully in the Term Sheet attached as Exhibit A to the Support Agreement ( Exhibit 2 ) and subject to the terms reflected in the FXCM Agreement attached as Exhibit B to the Plan ( Exhibit 1 ) as ultimately implemented on the Effective Date. 

 

(d) Amendment to Leucadia Credit Agreement

   

The Leucadia Credit Agreement will be amended to extend the date of maturity by twelve (12) months to January 2019. Other amendments to the Leucadia Credit Agreement are summarized generally in the Term Sheet attached as Exhibit A to the Support Agreement ( Exhibit 2 ) and subject to the terms reflected in the Leucadia Credit Agreement attached as Exhibit E to the Plan ( Exhibit 1 ) as ultimately implemented on the Effective Date. 

 

6.5 Means for Implementation.

 

(a) General Settlement of Claims.

 

As discussed herein, pursuant to section 1123 of the Bankruptcy Code and Bankruptcy Rule 9019, and in consideration for the classification, distributions, releases, and other benefits provided under the Plan, upon the Effective Date, the provisions of the Plan shall constitute a good-faith compromise and settlement of all Claims, Interests, Causes of Action, and controversies released, settled, compromised, discharged, or otherwise resolved pursuant to the Plan. The Plan shall be deemed a motion to approve the good-faith compromise and settlement of all such Claims, Interests, Causes of Action, and controversies pursuant to Bankruptcy Rule 9019, and the entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval of such compromise and settlement under section 1123 of the Bankruptcy Code and Bankruptcy Rule 9019, as well as a finding by the Bankruptcy Court that such settlement and compromise is fair, equitable, reasonable, and in the best interests of the Debtor and its Estate. Distributions made to Holders of Allowed Claims in any Class are intended to be and shall be final. The consent of the Required Consenting Noteholders, Leucadia, and FXCM is required regarding any agreement between the Debtor and any Holder of (i) Administrative Claims, (ii) Other Priority Claims, (iii) Other Secured Claims, (iv) Existing Notes Claims, and (v) General Unsecured Claims for treatment of such Claims pursuant to separate agreement or outside the ordinary course of dealing between the Debtor and such parties in interest, which consent shall not be unreasonably withheld. 

 

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(b) Restructuring Transaction.

 

On or as of the Effective Date, the Distributions provided for under the Plan shall be effectuated pursuant to the following transactions (collectively, the “ Restructuring Transaction ”): 

 

(i)          Pursuant to sections 1141(b) and (c) of the Bankruptcy Code, and except as otherwise provided in the Plan, the property of each Estate shall vest in the applicable Reorganized Debtor, free and clear of all Claims, liens, encumbrances, charges, and other Interests, except as provided in the Plan, the New Notes Indenture, the other Plan Documents or the Confirmation Order. The Reorganized Debtor may operate its business and may use, acquire, and dispose of property free of any restrictions of the Bankruptcy Code or the Bankruptcy Rules and in all respects as if there were no pending case under any chapter or provision of the Bankruptcy Code, except as provided herein; all Interests shall remain unaffected as of the Effective Date; 

 

(ii)         Reorganized GLBR shall enter into the New Notes Indenture, which shall be in the form set forth in Exhibit D to the Plan, and issue the New Notes, and Holdings shall execute its Guarantee (as defined in the New Notes Indenture); 

 

(iii)        The Leucadia Credit Agreement shall be amended by that certain Second Amended and Restated Credit Agreement by and among Holdings, FXCM, and Leucadia, which shall be in the form set forth in Exhibit E to the Plan;

  

(iv)       The FXCM Agreement shall be amended by that certain Second Amended and Restated Limited Liability Company Agreement of FXCM Group, LLC, which shall be in the form set forth in Exhibit A to the Plan; 

 

(v)        The operating agreement of Holdings shall be amended by that certain Fourth Amended and Restated Limited Liability Company Agreement of Global Brokerage Holdings, LLC, which shall be in the form set forth in Exhibit B to the Plan; 

 

(vi)       The Debtor shall consummate the Plan by (1) making Distributions of Cash, and (2) entering into the New Notes Indenture;

 

(vii)      The releases provided for herein, which are an essential element of the Restructuring Transaction, shall become effective; and 

 

(viii)     All Transaction Documents shall also be executed by the requisite Persons or Entities on the Effective Date. 

 

(c) Approval of the New Notes

 

The Confirmation Order shall constitute approval of the New Notes Issuance and the New Notes Documents (including all transactions contemplated thereby and all actions to be taken, undertakings to be made, and obligations to be incurred by the Reorganized Debtor in connection therewith, including the payment of all fees, indemnities, and expenses provided for therein) and, subject to the occurrence of the Effective Date, authorization for the Reorganized Debtor to enter into and perform its obligations under the New Notes Documents and such other documents as may be reasonably required or appropriate, in each case, in accordance with the New Notes Documents.

 

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On the Effective Date, the New Notes Documents shall constitute legal, valid, binding, and authorized obligations of the Reorganized Debtor, enforceable in accordance with their terms. The financial accommodations to be extended pursuant to the New Notes Documents are being extended, and shall be deemed to have been extended, in good faith, for legitimate business purposes, are reasonable, shall not be subject to avoidance, recharacterization, or subordination (including equitable subordination) for any purposes whatsoever, and shall not constitute preferential transfers, fraudulent conveyances, or other voidable transfers under the Bankruptcy Code or any other applicable non-bankruptcy law. On the Effective Date, all of the liens and security interests to be granted in accordance with the New Notes Documents (a) shall be legal, binding, and enforceable liens on, and security interests in, the collateral granted thereunder in accordance with the terms of the New Notes Documents, (b) shall be deemed automatically attached and perfected on the Effective Date, subject only to such liens and security interests as may be permitted under the New Notes Documents, and (c) shall not be subject to avoidance, recharacterization, or subordination (including equitable subordination) for any purposes whatsoever and shall not constitute preferential transfers, fraudulent conveyances, or other voidable transfers under the Bankruptcy Code or any applicable non-bankruptcy law. The Reorganized Debtor and the Entities granted such liens and security interests are authorized to make all filings and recordings, and to obtain all governmental approvals and consents necessary to establish, attach, and perfect such liens and security interests under the provisions of the applicable state, provincial, federal, or other law (whether domestic or foreign) that would be applicable in the absence of the Plan and the Confirmation Order (it being understood that perfection shall occur automatically by virtue of the entry of the Confirmation Order, and any such filings, recordings, approvals, and consents shall not be required), and will thereafter cooperate to make all other filings and recordings that otherwise would be necessary under applicable law to give notice of such liens and security interests to third parties. To the extent that any Holder of a Secured Claim that has been satisfied or discharged in full pursuant to the Plan, or any agent for such Holder, has filed or recorded publicly any liens and/or security interests to secure such Holder’s Secured Claim, then as soon as practicable on or after the Effective Date, such Holder (or the agent for such Holder) shall take any and all steps requested by the Debtor, the Reorganized Debtor, or the Indenture Trustee that are necessary to cancel and/or extinguish such liens and/or security interests.

 

(d) Corporate Action.

 

Subject to any restructuring transaction as permitted under Article IV.B, the Debtor shall continue to exist after the Effective Date as a separate corporation with all the powers of a corporation pursuant to laws of the state of Delaware and pursuant to the certificates of incorporation and bylaws in effect prior to the Effective Date, except to the extent such certificate of incorporation or bylaws are amended by or in connection with the Plan or otherwise, and, to the extent such documents are amended, such documents are deemed to be amended pursuant to the Plan and require no further action or approval (other than any requisite filings required under applicable state, provincial, or federal law).

 

The Organizational Documents of the Debtor in effect prior to the Effective Date shall remain in effect on the Effective Date. The certificate of incorporation of the Reorganized Debtor shall, inter alia , prohibit the issuance of nonvoting stock to the extent required by section 1123(a)(6) of the Bankruptcy Code. On or immediately prior to the Effective Date, the Debtor or Reorganized Debtor, as applicable, in its capacity as the sole managing member of Holdings, shall cause Holdings to execute the Holdings LLC Agreement to, among other things, effectuate the Noteholder Protections.

 

The adoption of any new or amended and restated certificate of incorporation and by-laws of the Reorganized Debtor and the other matters provided for under the Plan involving the corporate or entity structure of the Debtor or the Reorganized Debtor, or corporate action to be taken by or required of the Debtor or the Reorganized Debtor, shall be deemed to have occurred and be effective as provided herein and shall be authorized and approved in all respects, without any requirement of further action by members, stockholders or directors of the Debtor or the Reorganized Debtor, as the case may be. Without limiting the foregoing, the Reorganized Debtor shall be authorized, without any further act or action required, to issue all New Notes and any instruments required to be issued hereunder, to undertake, consummate and execute and deliver any documents relating to the Restructuring Transaction and to undertake any action or execute and deliver any document contemplated under the Plan. The Confirmation Order shall provide that it establishes conclusive corporate or other authority, and evidence of such corporate or other authority, required for the Debtor and the Reorganized Debtor to undertake any and all acts and actions required to implement or contemplated by the Plan, including without limitation, the specific acts or actions or documents or instruments identified in Section 7.2 of the Plan, and no board, member or shareholder vote shall be required with respect thereto.

 

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(e) Effectuating Documents and Further Transactions.

 

The Debtor or the Reorganized Debtor, as applicable, may take all actions to execute, deliver, file, or record such contracts, instruments, releases, and other agreements or documents and take such actions as may be necessary or appropriate to effectuate and implement the provisions of the Plan, including the distribution of the securities to be issued pursuant hereto in the name of and on behalf of the Reorganized Debtor, without the need for any approvals, authorizations, actions, or consents except for those expressly required pursuant hereto. The secretary and any assistant secretary of the Debtor shall be authorized to certify or attest to any of the foregoing actions. Prior to, on or after the Effective Date (as appropriate), all matters provided for pursuant to the Plan that would otherwise require approval of the shareholders, directors, or members of the Debtor shall be deemed to have been so approved and shall be in effect prior to, on or after the Effective Date (as appropriate) pursuant to applicable law and without any requirement of further action by the shareholders, directors, managers, or partners of the Debtor, or the need for any approvals, authorizations, actions or consents.

 

(f) Non-Reporting Company.

 

Following the Effective Date and in accordance with the Securities Act and any other applicable securities laws, GLBR shall be a non-SEC reporting company; provided that the Reorganized Debtor will provide quarterly reports and other specified information to holders of the New Notes pursuant to the New Notes Indenture.

 

(g) Intercompany Claims and Interests.

 

On the Effective Date, all Intercompany Claims shall be paid, adjusted, continued, settled, reinstated, discharged, or eliminated, in each case to the extent determined to be appropriate by the Debtor or the Reorganized Debtor, as applicable, with the reasonable consent of the Required Consenting Noteholders and Leucadia.

 

(h) Managers and Officers of the Reorganized Debtor.

 

As of the Effective Date, the employee of the Debtor will remain employed by the Reorganized Debtor on the same terms and conditions as existed as of the Effective Date, to assist the Reorganized Debtor with the administration of the Estate and business of the Reorganized Debtor. Notwithstanding the foregoing, and for the avoidance of doubt, any employment agreements governing the employment of such Person with the Debtor shall be deemed assumed as of the Effective Date in accordance with Section 9.1 of the Plan.

 

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(i) Directors of the Reorganized Debtor.

 

The directors and officer(s) of the Reorganized Debtor shall be identified in the Plan Supplement.

 

To the extent any director or officer of the Reorganized Debtor is an “insider” of the Debtor as defined in section 101(31) of the Bankruptcy Code, the nature of any compensation to be paid to such director or officer will be disclosed in the Plan Supplement.

 

Following the occurrence of the Effective Date, the board of directors of the Reorganized Debtor may be replaced by such individuals as are selected in accordance with the Organizational Documents of the Reorganized Debtor.

 

The Reorganized Debtor shall continue to be the managing member of Holdings after the Effective Date.

 

(j) Reinstatement of Tax Receivable Agreement

 

As provided for in the Plan, the Confirmation Order shall contain a finding that the TRA shall be reinstated and/or assumed in its entirety, that there has been no Change of Control (as defined in the TRA) and the obligations of GLBR thereunder shall be obligations of Reorganized GLBR following the Effective Date.

 

(k) Preservation of Causes of Action

 

In accordance with section 1123(b) of the Bankruptcy Code, but subject to Article IX of the Plan and as otherwise set forth in the Plan, the Reorganized Debtor shall retain and may enforce all rights to commence and pursue, as appropriate, any and all Causes of Action, whether arising before or after the Petition Date, and the Reorganized Debtor’s rights to commence, prosecute, or settle such Causes of Action shall be preserved notwithstanding the occurrence of the Effective Date, other than the Causes of Action released by the Debtor pursuant to the releases and exculpations contained in the Plan, including Article IX or as otherwise set forth in the Plan. The Reorganized Debtor may pursue such Causes of Action, as appropriate, in accordance with the best interests of the Reorganized Debtor. For the avoidance of doubt, no Cause of Action against Leucadia may be preserved by the Reorganized Debtor. No Entity may rely on the absence of a specific reference in the Plan, the Plan Supplement, or the Disclosure Statement to any Cause of Action against it as any indication that the Debtor or the Reorganized Debtor, as applicable, will not pursue any and all available Causes of Action against it. The Debtor or the Reorganized Debtor, as applicable, expressly reserve all rights to prosecute any and all Causes of Action against any Entity, except as otherwise expressly provided in the Plan, including Article IX of the Plan. Unless any Causes of Action against an Entity are expressly waived, relinquished, exculpated, released, compromised, or settled in the Plan or a Bankruptcy Court order, the Reorganized Debtor expressly reserve all Causes of Action, for later adjudication, and, therefore no preclusion doctrine, including the doctrines of res judicata , collateral estoppel, issue preclusion, claim preclusion, estoppel (judicial, equitable, or otherwise) or laches, shall apply to such Causes of Action upon, after, or as a consequence of the Confirmation or the Effective Date.

 

The Reorganized Debtor reserves and shall retain the Causes of Action notwithstanding the rejection or repudiation of any Executory Contract or Unexpired Lease during the Chapter 11 Case or pursuant to the Plan. In accordance with section 1123(b)(3) of the Bankruptcy Code, any Causes of Action that the Debtor may hold against any Entity shall vest in the Reorganized Debtor, except as otherwise expressly provided in the Plan, including Article IX of the Plan. The Reorganized Debtor, through its authorized agents or representatives, shall retain and may exclusively enforce any and all such Causes of Action. The Reorganized Debtor shall have the exclusive right, authority, and discretion to determine and to initiate, file, prosecute, enforce, abandon, settle, compromise, release, withdraw, or litigate to judgment any such Causes of Action and to decline to do any of the foregoing without the consent or approval of any third party or further notice to or action, order or approval of the Bankruptcy Court.

 

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(l) General Distribution Mechanics.

 

A.        Distributions for Claims Allowed as of the Effective Date

 

Except as otherwise provided in the Plan, a Final Order, or as agreed to by the relevant parties, the Reorganized Debtor shall make distributions under the Plan on account of Claims in Class 3 on the Effective Date and on account of all other Claims Allowed before the Effective Date on the Effective Date, as soon as practicable thereafter, or as otherwise provided herein.

 

B.        Disputed Unsecured Claims Reserves

 

From and after the Effective Date, and until such time as all Disputed General Unsecured Claims have been compromised and settled or determined by order of the Bankruptcy Court, for the benefit of each Holder of such claims, Cash shall be reserved in an amount equal to lesser of (a) the amount of the timely filed Proofs of Claim asserting General Unsecured Claims not otherwise resolved prior to the Effective Date; (b) the amount in which the General Unsecured Claims shall be estimated by the Bankruptcy Court pursuant to section 502 of the Bankruptcy Code for purposes of allowance, which amount, unless otherwise ordered by the Bankruptcy Court, shall constitute and represent the maximum amount in which such Claim may ultimately become an Allowed Claim; and (c) such other amount as may be agreed upon by the Holder of such General Unsecured Claims and the Reorganized Debtor. Any amount of Cash reserved and held for the benefit of a Holder of a Disputed General Unsecured Claim shall be treated as a payment and reduction on account of such General Unsecured Claim for purposes of computing any additional amounts to be paid to such Holder if the General Unsecured Claim ultimately becomes an Allowed Claim. Such amount of Cash shall be reserved for the benefit of Holders of Claims who timely filed and served Proofs of Claim pending determination of their entitlement thereto under the terms of the Plan. No payments or distributions shall be made with respect to all or any portion of any Disputed General Unsecured Claim pending the entire resolution thereof by Final Order.

 

Any amount remaining in the reserve being held for the benefit of Disputed Other General Unsecured Claims after reconciliation of all General Unsecured Claims asserted against the Debtor shall be retained by the Reorganized Debtor.

 

C.        Distributions on Account of Claims Allowed After the Effective Date

 

1. Payments and Distributions on Disputed Claims

 

Except as otherwise provided in the Plan, a Final Order, or as agreed to by the relevant parties, distributions under the Plan on account of a Disputed Claim that becomes an Allowed Claim after the Effective Date shall be made promptly after the Disputed Claim becomes an Allowed Claim. Except as otherwise provided in the Plan, Holders of Claims shall not be entitled to interest, dividends, or accruals on the distributions provided for in the Plan, regardless of whether such distributions are delivered on or at any time after the Effective Date.

 

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2. Special Rules for Distributions to Holders of Disputed Claims

 

Notwithstanding any provision otherwise in the Plan and except as otherwise agreed to by the relevant parties, no partial payments and no partial distributions shall be made with respect to a Disputed Claim until all such disputes in connection with such Disputed Claim have been resolved by settlement or Final Order. In the event that there are Disputed Claims requiring adjudication and resolution, the Reorganized Debtor shall establish appropriate reserves for potential payment of such Claims, as described above.

 

D.        Delivery and Distributions and Undeliverable or Unclaimed Distributions

 

1. Delivery of Distributions in General

 

Except as otherwise provided in the Plan, the Debtor or the Reorganized Debtor, as applicable shall make distributions to Holders of Allowed Claims at the address for each such Holder as indicated on the Debtor’s records as of the date of any such distribution; provided, however, that the manner of such distributions shall be determined at the discretion of the Debtor or the Reorganized Debtor, as applicable; and provided further, that the address for each Holder of an Allowed Claim shall be the address set forth in any Proof of Claim filed by that Holder.

 

2. Issuance of New Notes to Holders of Allowed Existing Notes Claims

 

The Existing Notes Indenture Trustee shall be deemed to be the Holder of all Existing Notes Claims, as applicable, for purposes of the issuance of the New Notes to be made hereunder, and all distributions of the New Notes on account of such Existing Notes Claims shall be made to or on behalf of the Existing Notes Indenture Trustee. The Existing Notes Indenture Trustee shall hold or direct such distributions for the benefit of the Holders of Allowed Existing Notes Claims, as applicable. The Existing Notes Indenture Trustee shall arrange to deliver or direct the delivery of such distributions of the New Notes to or on behalf of such Holders of Allowed Existing Notes Claims on the Effective Date. Notwithstanding anything in the Plan to the contrary, and without limiting the release provisions of the Plan, the Existing Notes Indenture Trustee shall not have any liability to any person with respect to distributions made or directed to be made by the Existing Notes Indenture Trustee.

 

3. Fractional Distributions.

 

Notwithstanding anything contained herein to the contrary, no distributions of fractional New Notes or fractions of dollars shall be made hereunder on account of Claims or Interests, and for purposes of distribution hereunder on account of such Claims or Interests, fractional shares and fractions of dollars (whether in the form of New Notes or Cash) shall be rounded to the nearest whole unit (with any amount equal to or less than one-half dollar to be rounded down).

 

4. No Distribution in Excess of Amount of Allowed Claim.

 

Notwithstanding anything to the contrary in the Plan, no Holder of an Allowed Claim shall receive, on account of such Allowed Claim, distributions under the Plan in excess of the Allowed amount of such Claim.

 

(m) Withholding Taxes.

 

Any federal or state withholding taxes or other amounts required to be withheld under any applicable law shall be deducted and withheld from any Distributions hereunder. All Persons holding Claims shall be required to provide any information necessary to effect the withholding of such taxes. Notwithstanding any other provision of the Plan, each Holder of an Allowed Claim that is to receive a Distribution of Cash or New Notes pursuant to the Plan shall have the sole and exclusive responsibility for the satisfaction and payment of any tax obligations imposed by any governmental unit, including income, withholding, and other tax obligations, on account of such Distribution.

 

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(n) Exemption from Certain Transfer Taxes and Recording Fees.

 

Pursuant to section 1146(a) of the Bankruptcy Code, any transfer from the Debtor to the Reorganized Debtor or to any Entity pursuant to, in contemplation of, or in connection with the Plan or pursuant to: (1) the issuance, distribution, transfer, or exchange of any debt, securities, or other interest in the Debtor or the Reorganized Debtor; (2) the creation, modification, consolidation, or recording of any mortgage, deed of trust, or other security interest, or the securing of additional indebtedness by such or other means; (3) the making, assignment, or recording of any lease or sublease; or (4) the making, delivery, or recording of any deed or other instrument of transfer under, in furtherance of, or in connection with, the Plan, including any deeds, bills of sale, assignments, or other instrument of transfer executed in connection with any transaction arising out of, contemplated by, or in any way related to the Plan, shall not be subject to any document recording tax, stamp tax, conveyance fee, intangibles or similar tax, mortgage tax, real estate transfer tax, mortgage recording tax, sales or use tax, Uniform Commercial Code filing or recording fee, regulatory filing or recording fee, or other similar tax or governmental assessment, and the appropriate state or local governmental officials or agents shall forego the collection of any such tax or governmental assessment and to accept for filing and recordation any of the foregoing instruments or other documents without the payment of any such tax or governmental assessment. All filing or recording officers (or any other Person with authority over any of the foregoing), wherever located and by whomever appointed, shall comply with the requirements of section 1146(c) of the Bankruptcy Code, shall forgo the collection of any such tax or governmental assessment, and shall accept for filing and recordation any of the foregoing instruments or other documents without the payment of any such tax or governmental assessment.

 

(o) Exemptions from Securities Laws.

 

The issuance of and the distribution under the Plan, of the New Notes and the Guarantee thereof by Holdings shall be exempt from registration under the Securities Act and any other applicable securities laws to the fullest extent permitted by section 1145 of the Bankruptcy Code. Pursuant to section 1145 of the Bankruptcy Code, the New Notes will be freely transferable by the recipients thereof any may be resold without registration under the Securities Act or other federal securities laws pursuant to the exemptions provided by section 4(a)(1) of the Securities Act, unless the Holder is an “underwriter” with respect to New Notes, as that term is defined in section 1145(b) of the Bankruptcy Code. In addition, such section 1145 exempt securities generally may be resold without registration under state securities laws pursuant to various exemptions provided by the respective laws of the several states.

 

(p) Setoffs and Recoupments.

 

The Debtor and the Reorganized Debtor may withhold (but not setoff except as set forth below) from the distributions called for hereunder on account of any Allowed Claim an amount equal to any Claims, Interests, rights, and Causes of Action of any nature that the Debtor or the Reorganized Debtor may hold against the Holder of any such Allowed Claim. In the event that any such Claims, Interests, rights, and Causes of Action of any nature that the Debtor or the Reorganized Debtor may hold against the Holder of any such Allowed Claim are adjudicated by Final Order or otherwise resolved, the Debtor may, pursuant to section 553 of the Bankruptcy Code or applicable non-bankruptcy law, set off against any Allowed Claim and the distributions to be made pursuant hereto on account of such Allowed Claim (before any distribution is made on account of such Allowed Claim), the amount of any adjudicated or resolved Claims, Interests, rights, and Causes of Action of any nature that the Debtor or the Reorganized Debtor may hold against the Holder of any such Allowed Claim, but only to the extent of such adjudicated or resolved amount. Neither the failure to effect such a setoff nor the allowance of any Claim hereunder shall constitute a waiver or release by the Debtor or the Reorganized Debtor of any such Claims, Interests, rights, and Causes of Action that the Debtor or the Reorganized Debtor may possess against any such Holder, except as specifically provided herein.

 

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(q) Insurance Preservation and Proceeds.

 

Nothing contained in the Plan shall constitute or be deemed a waiver of any Cause of Action that the Debtor or any Entity may hold against any other Entity, including insurers under any policies of insurance, nor shall anything contained herein constitute or be deemed a waiver by such insurers of any defenses, including coverage defenses, held by such insurers.

 

(r) No Change of Control.

 

Except as otherwise expressly provided by order of the Bankruptcy Court, none of (i) the facts or circumstances giving rise to the commencement of, or occurring in connection with, the Chapter 11 Case, (ii) the distribution of the New Notes pursuant to the Plan or (iii) consummation of the Restructuring Transaction or any other transaction pursuant to the Plan shall constitute a “change in ownership” or “change of control” (or a change in working control) of, or in connection with, the Debtor.

 

6.6 Discharge.

 

(a) Scope.

 

Except as otherwise provided in the Plan or Confirmation Order, in accordance with section 1141(d)(1) of the Bankruptcy Code, entry of the Confirmation Order acts as a discharge, effective as of the Effective Date, of all debts of, Claims against, liens on, and Interests in the Debtor, its assets or properties, which debts, Claims, liens, and Interests arose at any time before the entry of the Confirmation Order. The discharge of the Debtor shall be effective as to each Claim, regardless of whether a proof of claim therefor was filed, whether the Claim is an Allowed Claim or whether the Holder thereof votes to accept the Plan. On the Effective Date, as to every discharged Claim and Interest, any Holder of such Claim or Interest shall be precluded from asserting against the Debtor, the Reorganized Debtor or the assets or properties of any of them, any other or further Claim or Interest based upon any document, instrument, act, omission, transaction or other activity of any kind or nature that occurred before the Confirmation Date.

 

(b) Injunction.

 

In accordance with section 524 of the Bankruptcy Code, the discharge provided by Article IX.I of the Plan and section 1141 of the Bankruptcy Code, inter alia, acts as an injunction against the commencement or continuation of any action, employment of process or act to collect, offset or recover the Claims, liens and Interests discharged hereby.

 

(c) Releases of Liens.

 

Except as otherwise provided in the Plan or in any contract, instrument, release, or other agreement or document entered into or delivered in connection with the Plan, on the Effective Date and concurrently with the applicable distributions made pursuant to Article III of the Plan and, in the case of a Secured Claim, satisfaction in full of the portion of the Secured Claim that is Allowed as of the Effective Date, all mortgages, deeds of trust, liens, pledges, or other security interests against any property of the Estate shall be fully released and discharged, and all of the right, title, and interest of any Holder of such mortgages, deeds of trust, liens, pledges, or other security interests shall revert to the Reorganized Debtor and its successors and assigns.

 

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(d) Replacement of Existing Notes Indenture.

 

The Existing Notes (including any related indenture, security and guarantee agreements, or other agreements) shall be replaced by the New Notes (including any related indenture, security and guarantee agreements, or other agreements) on the Effective Date, provided , however , the Existing Notes Indenture shall continue in effect solely for purposes of allowing the Existing Notes Trustee to make the Distributions to be made on account of the Existing Notes.

 

6.7 Vesting of Assets in the Reorganized Debtor.

 

Except as otherwise provided in the Plan or in any agreement, instrument, or other document incorporated in the Plan, on the Effective Date, all property in the Estate, all Causes of Action, and any property acquired by the Debtor pursuant to the Plan shall vest in the Reorganized Debtor, free and clear of all liens, Claims, charges, or other encumbrances. On and after the Effective Date, except as otherwise provided in the Plan, the Reorganized Debtor may operate its business and may use, acquire, or dispose of property and compromise or settle any Claims, Interests, or Causes of Action without supervision or approval by the Bankruptcy Court and free of any restrictions of the Bankruptcy Code or Bankruptcy Rules.

 

6.8 Survival of Certain Indemnification Obligations.

 

The obligations of the Debtor to indemnify individuals who serve or served on or after the Petition Date as its directors, officers, agents, employees, representatives, and the Debtor’s Retained Professionals pursuant to the Debtor’s operating agreements, certificates of incorporation, by-laws, applicable statutes and preconfirmation agreements in respect of all present and future actions, suits and proceedings against any of such officers, directors, agents, employees, representatives, and the Debtor’s Retained Professionals, based upon any act or omission related to service with, for, or on behalf of the Debtor on or before the Effective Date, as such obligations were in effect at the time of any such act or omission, shall not be expanded, discharged or impaired by confirmation or consummation of the Plan but shall survive unaffected by the reorganization contemplated by the Plan and shall be performed and honored by the Reorganized Debtor regardless of such confirmation, consummation and reorganization, and regardless of whether the underlying claims for which indemnification is sought are released pursuant to the Plan.

 

6.9 Release, Injunction and Related Provisions.

 

Under the Plan, the Debtor and the other Releasing Parties will provide releases to certain third parties. The releases of these third parties is a fundamental and necessary part of the bargained-for exchange by the Plan Support Parties to obtain, among other things, the concessions made by Leucadia, FXCM, Holdings and the Consenting Noteholders in the Transaction Documents, including the Plan and the New Notes.

 

A “ D&O Releasee ” means the current and former directors, officers and employees of the Debtor. Notwithstanding anything to the contrary in the Plan, no Claim held by the D&O Releasees shall be released to the extent that such Claim must be preserved in order to prosecute and maintain coverage under all applicable D&O Liability Insurance Policies maintained by or for the benefit of the D&O Releasees; provided , however , that any such Claim shall only be used to obtain the benefits of such insurance.

 

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A “ Released Party ” means, collectively, (a) the Debtor and Reorganized Debtor; (b) Holdings, (c) the D&O Releasees; (d) Leucadia; (e) the Consenting Noteholders; (f) the Indenture Trustee; (g) FXCM; and (h) with respect to each of the foregoing entities in clauses (a) through (g), such entities’ predecessors, successors and assigns, subsidiaries, affiliates, managed accounts or funds, current or former officers, directors, principals, shareholders, members, partners, employees, agents, advisory board members, financial advisors, attorneys, accountants, investment bankers, consultants, representatives, management companies, fund advisors and other professionals (including the Retained Professionals), and such entities’ respective heirs, executors, estates, servants and nominees, in each case, solely in their capacity as such; provided, however, that any Person or Entity that votes to reject the Plan shall not be a Released Party.

 

A “ Releasing Party ” means, collectively, in each case, solely in their capacity as such, (a) the Debtor and Reorganized Debtor; (b) Holdings; (c) the D&O Releasees; (d) Leucadia; (e) the Consenting Noteholders; (f) the Indenture Trustee; (g) FXCM; and (h) all Holders of Claims who vote to accept the Plan.

 

(a) Satisfaction of Claims and Interests.

 

The treatment to be provided for respective Allowed Claims or Interests pursuant to the Plan shall be in full and final satisfaction, settlement, release and discharge of such respective Claims or Interests.

 

(b) Debtor Releases.

 

Notwithstanding anything to the contrary herein, the “Debtor Release” shall not operate to waive or release any Causes of Action of the Debtor that the Board of Directors of the Debtor determines, after investigation, should be excluded from this “Debtor Release” and all rights of the Debtor and the Board of Directors to make changes to the terms of the Debtor Release hereby are reserved as of the date of the filing of the Plan; provided , however , that the foregoing shall not apply to any release of Claims or Causes of Action granted in favor of (a) Leucadia, (b) the Consenting Noteholders, (c) Holdings or (d) FXCM, and with respect to each of the foregoing entities in clauses (a) through (d), such entities’ predecessors, successors and assigns, subsidiaries, affiliates, managed accounts or funds, current or former officers, directors, principals, shareholders, members, partners, employees, agents, advisory board members, financial advisors, attorneys, accountants, investment bankers, consultants, representatives, management companies, fund advisors and other professionals, and such entities’ respective heirs, executors, estates, servants and nominees, in each case, solely in their capacity as such .

 

Pursuant to section 1123(b) of the Bankruptcy Code, and except as otherwise specifically provided in the Plan, for good and valuable consideration, including the concessions made as set forth in the Definitive Documents, the service of the Released Parties in facilitating the expeditious reorganization of the Debtor and the implementation of the restructuring contemplated by the Plan, effective as of the Effective Date, the Debtor, the Reorganized Debtor, and any Person seeking to exercise the rights of the Estate, including, any successor to the Debtor or any estate representative appointed or selected pursuant to section 1123(b)(3) of the Bankruptcy Code shall be deemed to forever release, waive, and discharge the Released Parties of any and all claims, obligations, rights, suits, damages, Causes of Action, remedies, and liabilities whatsoever, including any derivative claims asserted or assertable on behalf of the Debtor, whether known or unknown, foreseen or unforeseen, liquidated or unliquidated, contingent or fixed, existing or hereafter arising, in law, at equity or otherwise, whether for tort, contract, violations of federal or state securities laws or otherwise, including those that any of the Debtor, the Reorganized Debtor, the Estate, or their Affiliates would have been legally entitled to assert in their own right (whether individually or collectively) or on behalf of the Holder of any Claim or Interest, based on or relating to, or in any manner arising from, in whole or in part: (i) the Debtor; (ii) the Estate; (iii) the conduct of the Debtor’s business; (iv) the Chapter 11 Case; (v) the purchase, sale, or rescission or the purchase or sale of any security of the Debtor or the Reorganized Debtor; (vi) the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in the Plan; (vii) the Leucadia Credit Agreement, the FXCM Agreement, and any of the agreements, documents, or transactions that in any way relate to such agreements; (viii) the business or contractual arrangements between the Debtor and any Released Party; (ix) the restructuring of Claims and Interests prior to or in the Chapter 11 Case; or (x) the negotiation, formulation, or preparation of the Support Agreement, the Definitive Documents, or related agreements, instruments, or other documents; and resulting from any act or omission, transaction, or occurrence taking place on or before the Effective Date of the Plan; provided , that, nothing in the Plan shall limit the liability of professionals to their clients pursuant to N.Y. Comp. Codes R. & Regs. tit. 22 § 1200.8 Rule 1.8(h)(1) (2009).

 

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Notwithstanding anything to the contrary herein, the “Debtor Release” shall not operate to waive or release: (1) any Causes of Action, rights or remedies of the Debtor arising under any contract, instrument, agreement, release, or document delivered pursuant to the Plan, including, the New Notes or documents, agreements, or instruments executed in connection therewith, (2) any Causes of Action of the Debtor expressly set forth in and preserved by the Plan Documents; provided, however , that pursuant to the Plan Documents, the Debtor shall not retain any Cause of Action against Leucadia, or (3) any Claim or Cause of Action of the Debtor or Reorganized Debtor against any D&O Releasee brought or asserted prior to the Petition Date in the Securities Class Action, but only to the extent such Claim or Cause of Action is covered by one or more of the D&O Liability Insurance Policies; provided, that with respect to this clause (3), the D&O Releasees shall have no personal liability related to any such Claim or Cause of Action in excess of any liability that falls within the coverage and policy limits of the D&O Liability Insurance Policies and is payable by such policies.

 

Entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval, pursuant to Bankruptcy Rule 9019, of the Debtor Release, which includes by reference each of the related provisions and definitions contained herein, and further , shall constitute the Bankruptcy Court’s finding that the Debtor Release is: (1) in exchange for the good and valuable consideration provided by the Released Parties; (2) a good faith settlement and compromise of the Claims released by the Debtor Release; (3) in the best interests of the Debtor and all Holders of Claims and Interests; (4) fair, equitable and reasonable; (5) given and made after reasonable investigation by the Debtor and after notice and opportunity for hearing; and (6) a bar to the Debtor or the Reorganized Debtor asserting any Claim released by the Debtor Release against any of the Released Parties.

 

(c) Third-Party Release.

 

Except as otherwise specifically provided in the Plan, for good and valuable consideration, including the concessions made as set forth in the Definitive Documents, the service of the Released Parties in facilitating the expeditious reorganization of the Debtor and the implementation of the restructuring contemplated by the Plan, effective as of the Effective Date, the Releasing Parties (regardless of whether a Releasing Party is a Released Party) shall be deemed to forever release, waive, and discharge the Released Parties of any and all claims, obligations, rights, suits, damages, Causes of Action, remedies, and liabilities whatsoever, including any derivative claims asserted or assertable on behalf of a Debtor, whether known or unknown, foreseen or unforeseen, liquidated or unliquidated, contingent or fixed, existing or hereafter arising, in law, at equity, or otherwise, whether for tort, contract, violations of federal or state securities laws or otherwise, including, those that any of the Debtor, the Reorganized Debtor, the Estate, or their Affiliates would have been legally entitled to assert in their own right (whether individually or collectively) or on behalf of the Holder of any Claim or Interest, based on or relating to, or in any manner arising from, in whole or in part: (i) the Debtor; (ii) the Estate; (iii) the conduct of the Debtor’s business; (iv) the Chapter 11 Case; (v) the purchase, sale, or rescission or the purchase or sale of any security of the Debtor or the Reorganized Debtor; (vi) the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in the Plan; (vii) the Leucadia Credit Agreement, the FXCM LLC Agreement, and any of the agreements, documents, or transactions that in any way relate to such agreements; (viii) the business or contractual arrangements between any of the Debtor and any Released Party; (ix) the restructuring of Claims and Interests prior to or in the Chapter 11 Case; or (x) the negotiation, formulation, or preparation of the Support Agreement, the Definitive Documents, or related agreements, instruments or other documents; and resulting from any act or omission, transaction, or occurrence taking place on or before the Effective Date of the Plan; provided, that, nothing in the Plan shall limit the liability of professionals to their clients pursuant to N.Y. Comp. Codes R. & Regs. tit. 22 § 1200.8 Rule 1.8(h)(1) (2009).

 

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Notwithstanding anything in the Plan to the contrary and except as specifically set forth in the Definitive Documents, (a) nothing shall affect or otherwise release, waive, or alter any rights and remedies of Leucadia under (i) the Leucadia Loan Documents, (ii) the Other Contractual Agreements, and (iii) the FXCM Agreement, and (b) nothing shall bar any Claim or Cause of Action of an Accepting Noteholder against any D&O Releasee alleged prior to the Petition Date in the Securities Class Action but only to the extent such Claims or Causes of Action are covered by one or more of the D&O Liability Insurance Policies (such Claim or Cause of Action, the “Preserved Accepting Noteholder Claims”), it being understood that the Preserved Accepting Noteholder Claims shall not be released by any Noteholder, and the right of any Accepting Noteholder to participate in the Securities Class Action or receive a recovery from the proceeds of the D&O Liability Insurance Policies based on the Preserved Accepting Noteholder Claims shall not be affected by the release contained in this Article IX.G or any other provision of the Plan; provided, that the D&O Releasees shall have no personal liability related to the Preserved Accepting Noteholder Claims in excess of any liability that falls within the coverage and available policy limits of the D&O Liability Insurance Policies and is payable by such policies; provided further , that, it is expressly understood that (a) the Accepting Noteholders will not name the Debtor or Reorganized Debtor as a nominal party to the Securities Class Action based on the parties' understanding and this Court's determination that nothing in the Plan, including this Article IX, shall in any way affect, bar, modify, or release any of the pending claims against the D&O Releasees in the Securities Class Action (including section 20a claims based on the primary or underlying liability of the Debtor) whether or not the Debtor or Reorganized Debtor is a party to the Securities Class Action and (b) counsel for the D&O Releasees/Debtor and Reorganized Debtor has agreed to enter a stipulation to such effect in the Securities Class Action.

 

Notwithstanding anything contained herein to the contrary, the foregoing release does not release any post-Effective Date obligations of any Person or Entity under the Plan or any document, instrument, or agreement (including those set forth in the Plan Supplement) executed to implement the Plan.

 

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Entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval, pursuant to Bankruptcy Rule 9019, of the Third-Party Release, which includes by reference each of the related provisions and definitions contained herein, and further , shall constitute the Bankruptcy Court’s finding that the Third-Party Release is: (1) in exchange for the good and valuable consideration provided by the Released Parties; (2) a good faith settlement and compromise of the claims released by the Releasing Parties; (3) in the best interests of the Debtor and all Holders of Claims and Interests; (4) fair, equitable and reasonable; (5) given and made after notice and opportunity for hearing; and (6) a bar to any of the Releasing Parties asserting any Claim released by the Third-Party Release against any of the Released Parties.

 

(d) Injunction.

 

(1)         General.

 

The satisfaction, release, and discharge pursuant to Article IX of the Plan shall also act as an injunction against any Person commencing or continuing any action, employment of process or act to collect, offset, or recover any claim or Cause of Action satisfied, released, or discharged under the Plan or the Confirmation Order to the fullest extent authorized or provided by the Bankruptcy Code, including, to the extent provided for or authorized by sections 524 and 1141 thereof; provided , however , the injunction provided for in Article IX.I of the Plan (a) shall not enjoin, discharge or bar any Preserved Accepting Noteholder Claims, (b) the Preserved Accepting Noteholder Claims shall not be released by any Accepting Noteholder, and (c) the right of any Accepting Noteholder to participate in the Securities Class Action or receive a recovery from the proceeds of the D&O Liability Insurance Policies based on the Preserved Accepting Noteholder Claims shall not be affected by the injunction contained in Article IX.I of the Plan; provided , that the D&O Releasees shall have no personal liability related to any Preserved Accepting Noteholder Claims not enjoined as a result of the proviso above. For the avoidance of doubt, no Claim that is Reinstated pursuant to the Plan shall be subject to discharge under Sections 524 or 1141 of the Bankruptcy Code.

 

(2)         Injunction Against Interference with Plan.

 

Upon Entry of the Confirmation Order, all Holders of Claims and Interests and their respective current and former employees, agents, officers, directors, principals, and affiliates shall be enjoined from taking any actions to interfere with the implementation or consummation of the Plan; provided , that the foregoing shall not enjoin any party to the Support Agreement from exercising any of its rights or remedies under the Support Agreement in accordance with the terms thereof.

 

(e) Exculpation.

 

Upon and effective as of the Effective Date, the Debtor and their directors, officers, employees, attorneys, investment bankers, financial advisors, restructuring consultants, and other professional advisors and agents will be deemed to have solicited acceptances of the Plan in good faith and in compliance with the applicable provisions of the Bankruptcy Code, including section 1125(e) of the Bankruptcy Code

 

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Except with respect to any acts or omissions expressly set forth in and preserved by the Plan, the Plan Supplement, or related documents, or as otherwise provided by the Plan, the Exculpated Parties shall neither have nor incur any liability to any Entity for any prepetition or postpetition act taken or omitted to be taken in connection with, or arising from or relating in any way to, the Chapter 11 Case, including, the operation of the Debtor’s business during the pendency of the Chapter 11 Case; formulating, negotiating, preparing, disseminating, implementing, and/or effecting the Support Agreement, the Disclosure Statement, and the Plan (including the Plan Supplement and any related contract, instrument, release, or other agreement or document created or entered into in connection therewith); the solicitation of votes for the Plan and the pursuit of Confirmation and Consummation of the Plan; the administration of the Plan and/or the property to be distributed under the Plan; the offer and issuance of any securities under the Plan; and/or any other prepetition or postpetition act taken or omitted to be taken in connection with or in contemplation of the restructuring of the Debtor to the extent provided in section 1125(e) of the Bankruptcy Code. In all respects, each Exculpated Party shall be entitled to rely upon the advice of counsel concerning his, her, or its respective duties under, pursuant to, or in connection with the Plan; provided , that, nothing in the Plan shall limit the liability of professionals to their clients pursuant to N.Y. Comp. Codes R. & Regs. tit. 22 § 1200.8 Rule 1.8(h)(1) (2009).

 

Notwithstanding anything herein to the contrary, nothing in the foregoing “Exculpation” shall exculpate any Person or Entity from any liability resulting from any act or omission constituting actual fraud, willful misconduct, gross negligence, criminal conduct, malpractice, misuse of confidential information that causes damages, or ultra vires acts as determined by a Final Order.

 

(f) Exclusive Jurisdiction.

 

The Bankruptcy Court (and the United States District Court for the Southern District of New York) shall retain exclusive jurisdiction to adjudicate any and all Claims or Causes of Action released pursuant to Article IX of the Plan (i) against any Released Party, (ii) relating to the Debtor, the Plan, the Distributions, the Chapter 11 Case, the Restructuring Transaction, or any contract, instrument, release, agreement or document executed and delivered in connection with the Plan and the Restructuring Transaction, and (iii) brought by the Debtor (or any successor thereto) or any Holder of a Claim or Interest.

 

6.10 Objections to Claims and Interests.

 

Any objections to any Proof of Claim filed in the Chapter 11 Case shall be filed on or before the later of (1) 60 days after the Effective Date and (2) such other period of limitation as may be specifically fixed by the Debtor or the Reorganized Debtor, as applicable, or by a Final Order of the Bankruptcy Court for objecting to such claims. Notwithstanding any authority to the contrary, any objections to a Claim shall be deemed properly served on the claimant if the objecting party effects service in any of the following manners: (x) in accordance with Federal Rule of Civil Procedure 4, as modified and made applicable by Bankruptcy Rule 7004; (y) by first class mail, postage prepaid, on the signatory on the proof of claim as well as all other representatives identified in the proof of claim or any attachment thereto; or (z) by first class mail, postage prepaid, on any counsel that has appeared on the claimant’s behalf in the Chapter 11 Case (so long as such appearance has not been subsequently withdrawn).

 

After the Confirmation Date, only the Reorganized Debtor shall have the authority to file, settle, compromise, withdraw, or litigate to judgment objections to Claims. All Disputed Claims not otherwise resolved as of the Effective Date for which a Proof of Claim has not been filed shall exist as if the Chapter 11 Case did not commence and shall be resolved pursuant to applicable nonbankruptcy law.

 

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6.11 Executory Contracts.

 

(a) Assumption and Rejection of Executory Contracts and Unexpired Leases

 

On the Effective Date, except as otherwise provided herein, each Executory Contract or Unexpired Lease, not previously assumed, assumed and assigned, or rejected shall be deemed automatically assumed, pursuant to sections 365 and 1123 of the Bankruptcy Code, unless such Executory Contract or Unexpired Lease: (1) is identified on the Schedule of Rejected Executory Contracts and Unexpired Leases; (2) is the subject of a motion to reject such Executory Contracts or Unexpired Leases that is pending on the Confirmation Date; or (3) is a contract, release, or other agreement or document entered into in connection with the Plan.

 

Entry of the Confirmation Order by the Bankruptcy Court shall, subject to and upon the occurrence of the Effective Date, constitute a Bankruptcy Order approving the assumptions or rejections of the Executory Contracts and Unexpired Leases assumed or rejected pursuant to the Plan. Any motions to assume Executory Contracts or Unexpired Leases pending on the Effective Date shall be subject to approval by the Bankruptcy Court on or after the Effective Date by a Final Order. Each Executory Contract and Unexpired Lease assumed pursuant to Article V.A of the Plan or by any order of the Bankruptcy Court, which has not been assigned to a third party prior to the Confirmation Date, shall revest in and be fully enforceable by the Reorganized Debtor in accordance with its terms, except as such terms are modified by the provisions of the Plan or any order of the Bankruptcy Court authorizing and providing for its assumption under applicable federal law. Notwithstanding anything to the contrary in the Plan, the Debtor or the Reorganized Debtor, as applicable, reserve the right to, with the reasonable consent of Leucadia and the Required Consenting Noteholders, alter, amend, modify, or supplement the Schedule of Rejected Executory Contracts and Unexpired Leases (i) to add or remove any Executory Contract or Unexpired Lease to the Schedule of Rejected Executory Contracts and Unexpired Leases at any time prior to the Confirmation Date, and (ii) to remove any Executory Contract or Unexpired Lease from the Schedule of Rejected Executory Contracts and Unexpired Leases at any time through and including the Confirmation Date. The Debtor or the Reorganized Debtor shall provide notice of any amendments to the Schedule of Rejected Executory Contracts and Unexpired Leases to the parties to the Executory Contracts or Unexpired Leases affected thereby.

 

(b) Indemnification Obligations

 

On the Effective Date, except as otherwise provided herein, all indemnification provisions, consistent with applicable law, in place as of the Petition Date (whether in the bylaws, certificates of incorporation or formation, limited liability company agreements, other organizational documents, board resolutions, indemnification agreements, employment contracts, or otherwise) for the current directors, officers, managers, employees, attorneys, accountants, investment bankers, and other professionals of the Debtor, as applicable, shall be assumed, which assumption shall be irrevocable, and shall survive the Effective Date.

 

(c) Directors and Officers Insurance Policies and Agreements

 

Pursuant to Article IV.N of the Plan, to the extent that the D&O Liability Insurance Policies are considered to be Executory Contracts, notwithstanding anything in the Plan to the contrary, effective as of the Effective Date, the Reorganized Debtor shall be deemed to have assumed all unexpired D&O Liability Insurance Policies.

 

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(d) Cure of Defaults for Assumed Executory Contracts and Unexpired Leases

 

Any monetary defaults under each Executory Contract and Unexpired Lease to be assumed pursuant to the Plan shall be satisfied, pursuant to section 365(b)(1) of the Bankruptcy Code, by payment of the default amount in Cash on the Effective Date, subject to the limitation described below, or on such other terms as the parties to such Executory Contracts or Unexpired Leases may otherwise agree. Following the Petition Date, the Debtor shall serve a notice on parties to Executory Contracts and Unexpired Leases to be assumed reflecting the Debtor’s intention to assume the Executory Contract or Unexpired Lease in connection with the Plan. If the counterparty believes any Cure amounts are due by the Debtor in connection with the assumption it shall assert such Cure amount against the Debtor in the ordinary course of business or by objection to the notice of proposed assumption within ten (10) days of service thereof. The Cure payments required by section 365(b)(1) of the Bankruptcy Code shall be made following (1) resolution by the parties or (2) the entry of a Final Order or orders resolving the objection and approving the assumption.

 

Assumption of any Executory Contract or Unexpired Lease pursuant to the Plan or otherwise shall result in the full release and satisfaction of any Claims or defaults, whether monetary or nonmonetary, including defaults of provisions restricting the change in control or ownership interest composition or other bankruptcy-related defaults, arising under any assumed Executory Contract or Unexpired Lease at any time prior to the effective date of assumption.

 

Any Proofs of Claim filed with respect to an Executory Contract or Unexpired Lease that has been assumed shall be deemed disallowed and expunged, without further notice to or action, order, or approval of the Bankruptcy Court.

 

(e) Claims Based on Rejection of Executory Contracts and Unexpired Leases

 

Unless otherwise provided by a Final Order of the Bankruptcy Court, all Proofs of Claim with respect to Claims arising from the rejection of Executory Contracts or Unexpired Leases, pursuant to the Plan or the Confirmation Order, if any, must be filed with the Bankruptcy Court within 30 days after the later of (1) the date of entry of an order of the Bankruptcy Court (including the Confirmation Order) approving such rejection, (2) the effective date of such rejection, or (3) the Effective Date. Any Claims arising from the rejection of an Executory Contract or Unexpired Lease not filed with the Bankruptcy Court within such time will be automatically disallowed, forever barred from assertion, and shall not be enforceable against the Debtor or the Reorganized Debtor, the Estate, or their property without the need for any objection by the Reorganized Debtor or further notice to, or action, order, or approval of the Bankruptcy Court or any other Entity, and any Claim arising out of the rejection of the Executory Contract or Unexpired Lease shall be deemed fully satisfied, released, and discharged, notwithstanding anything in a Proof of Claim to the contrary . All Claims arising from the rejection of the Debtor’s Executory Contracts or Unexpired Leases shall be classified as General Unsecured Claims as set forth in the Plan.

 

(f) Preexisting Obligations to the Debtor Under Executory Contracts and Unexpired Leases

 

Rejection of any Executory Contract or Unexpired Lease pursuant to the Plan or otherwise shall not constitute a termination of preexisting obligations owed to the Debtor or the Reorganized Debtor, as applicable, under such Executory Contracts or Unexpired Leases. In particular, notwithstanding any non-bankruptcy law to the contrary, the Reorganized Debtor expressly reserve and do not waive any right to receive, or any continuing obligation of a counterparty to provide, warranties or continued maintenance obligations on goods previously purchased by the Debtor contracting from non-Debtor counterparties to rejected Executory Contracts or Unexpired Leases.

 

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(g) Modifications, Amendments, Supplements, Restatements, or Other Agreements

 

Unless otherwise provided in the Plan, each Executory Contract or Unexpired Lease that is assumed shall include all modifications, amendments, supplements, restatements, or other agreements that in any manner affect such Executory Contract or Unexpired Lease, and Executory Contracts and Unexpired Leases related thereto, if any, including easements, licenses, permits, rights, privileges, immunities, options, rights of first refusal, and any other interests, unless any of the foregoing agreements has been previously rejected or repudiated or is rejected or repudiated under the Plan.

 

Modifications, amendments, supplements, and restatements to prepetition Executory Contracts and Unexpired Leases that have been executed by the Debtor during the Chapter 11 Case shall not be deemed to alter the prepetition nature of the Executory Contract or Unexpired Lease, or the validity, priority, or amount of any Claims that may arise in connection therewith.

 

(h) Contracts and Leases Entered Into After the Petition Date

 

Contracts and leases entered into after the Petition Date by the Debtor, including any Executory Contracts and Unexpired Leases assumed by the Debtor, will be performed by the Debtor or the Reorganized Debtor in the ordinary course of its business. Accordingly, such contracts and leases (including any assumed Executory Contracts and Unexpired Leases) will survive and remain unaffected by the terms of the Plan and entry of the Confirmation Order.

 

(i) Reservation of Rights

 

Neither the exclusion nor inclusion of any Executory Contract or Unexpired Lease on the Schedule of Rejected Executory Contract and Unexpired Leases, nor anything contained in the Plan, shall constitute an admission by the Debtor that any such contract or lease is in fact an Executory Contract or Unexpired Lease or that any of the Reorganized Debtor has any liability thereunder. If there is a dispute regarding whether a contract or lease is or was executory or unexpired at the time of assumption or rejection, the Debtor or the Reorganized Debtor, as applicable, shall have thirty (30) days following entry of a Final Order resolving such dispute to alter their treatment of such contract or lease under the Plan.

 

(j) Nonoccurrence of Effective Date

 

In the event that the Effective Date does not occur, the Bankruptcy Court shall retain jurisdiction with respect to any request to extend the deadline for assuming or rejecting Unexpired Leases pursuant to section 365(d)(4) of the Bankruptcy Code.

 

6.12 Conditions Precedent to Confirmation and Consummation of the Plan.

 

(a) Conditions Precedent to Confirmation.

 

Confirmation of the Plan is subject to: (i) GLBR shall have received votes in favor of the Plan from the Holders of the Existing Notes sufficient to satisfy the requirements of section 1126(c) of the Bankruptcy Code; (ii) within one (1) business day following the execution of the Support Agreement, and prior to or concurrently with the commencement of the Chapter 11 Case, GLBR shall have disclosed all “Material, Non-Public Information” as provided in Section 8 of each of the Non-Disclosure Agreements; (iii) the Definitive Documents are in form and substance satisfactory to the Debtor, Holdings, FXCM, Leucadia, and the Required Consenting Noteholders; (iv) the Support Agreement shall not have been terminated and shall be in full force and effect and, to the extent not assumed by the Debtor prior to Confirmation, the Support Agreement shall not be (a) identified on the Schedule of Rejected Executory Contracts or Unexpired Leases or (b) the subject of a motion to reject, such that the Support Agreement will, pursuant to the terms of the Plan, be assumed upon the Effective Date; (v) Holdings shall have submitted to the jurisdiction of the Bankruptcy Court regarding all matters arising under the Plan and the transactions contemplated therein, and (vi) the Bankruptcy Court shall have approved the Disclosure Statement as containing adequate information with respect to the Plan within the meaning of section 1125 of the Bankruptcy Code.

 

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(b) Conditions to the Effective Date.

 

It shall be a condition to the Effective Date of the Plan that the following conditions shall have been satisfied or waived pursuant to the provisions of Article VIII of the Plan:

 

1.          The Confirmation Order shall have been entered by the Bankruptcy Court in form and substance acceptable to the Debtor, Holdings, FXCM, Leucadia, and the Required Consenting Noteholders. The Confirmation Order shall provide that, among other things, (a) the Debtor or the Reorganized Debtor, as appropriate, is authorized and directed to take all actions necessary or appropriate to consummate the Plan, including, entering into, implementing, and consummating (i) the Restructuring Transactions as described in Article IV.B of the Plan, (ii) the Definitive Documents, and (iii) any other contracts, instruments, releases, leases, indentures, and other agreements or documents created in connection with or described in the Plan, (b) the Debtor or the Reorganized Debtor, as appropriate, in its capacity as the Managing Member of Holdings, is authorized and directed to cause Holdings to take all actions necessary or appropriate to consummate the Plan, including, entering into, implementing, and consummating (i) the Restructuring Transaction as described in Article IV.B of the Plan, (ii) the Definitive Documents, and (iii) any other contracts, instruments, releases, leases, indentures, and other agreements or documents created in connection with or described in the Plan;

 

2.          All documents and agreements necessary to implement the Plan, including the Definitive Documents, shall have (a) been tendered for delivery and (b) been effected or executed. All conditions precedent to the effectiveness of such documents and agreements shall have been satisfied or waived pursuant to the terms of such documents or agreements, including all authorizations, consents, and regulatory approvals required, if any, in connection with the consummation of the Plan;

 

3.          All actions, documents, certificates, and agreements necessary to implement the Plan shall have been effected or executed and delivered to the required parties and, to the extent required, filed with the applicable Governmental Units in accordance with applicable laws;

 

4.          The Professional Fee Escrow Account shall have been established and funded;

 

5.          The New Notes Issuance shall have been (or as a result of the Effective Date occurring will be) consummated in accordance with the terms of the Restructuring Support Agreement;

 

6.          The Restructuring Support Agreement shall not have been terminated, shall be in full force and effect and the expenses required to be paid pursuant to Section 1.3(h) thereof shall have been paid in full in Cash; and

 

7.          The Debtor Release and Third Party Release set forth in the Plan shall be approved by the Bankruptcy Court.

 

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(c) Waiver of Conditions Precedent.

 

The conditions to Confirmation and to the Effective Date set forth in Article VIII of the Plan may be waived by the Debtor, with the consent of the Required Consenting Noteholders, Leucadia, Holdings, and FXCM without notice to parties in interest and without any further notice, leave, or order of the Bankruptcy Court or any formal action other than proceeding to confirm or consummate the Plan. Notwithstanding the foregoing, the condition contained in Article VIII.B.2 of the Plan may not be waived.

 

(d) Effect of Non-Occurrence of the Conditions to Consummation.

 

If the Effective Date does not occur, the Plan shall be null and void in all respects and nothing contained in the Plan or the Disclosure Statement shall: (1) constitute a waiver or release of any claims by or Claims against or Interests in the Debtor; (2) prejudice in any manner the rights of the Debtor, any Holders, or any other Entity; or (3) constitute an admission, acknowledgment, offer, or undertaking by the Debtor, any Holders, or any other Entity in any respect.

 

(e) Withdrawal of Plan.

 

Subject to the Support Agreement, the Debtor reserves the right to modify or revoke and withdraw the Plan at any time before the Confirmation Date or, if the Debtor is for any reason unable to consummate the Plan after the Confirmation Date, at any time up to the Effective Date. If the Debtor revokes and withdraws the Plan: (a) nothing contained herein shall be deemed to constitute a waiver or release of any claims by or against the Debtor or to prejudice in any manner the rights of the Debtor or any Persons in any further proceeding involving the Debtor; and (b) the result shall be the same as if the Confirmation Order were not entered, the Plan was not filed and no actions were taken to effectuate it.

 

6.13 Retention of Jurisdiction.

 

Notwithstanding the entry of the Confirmation Order and the occurrence of the Effective Date, on and after the Effective Date, the Bankruptcy Court shall retain exclusive jurisdiction over all matters arising out of, or related to, the Chapter 11 Case and the Plan pursuant to sections 105(a) and 1142 of the Bankruptcy Code, as set forth in Article X of the Plan.

 

6.14 Amendments.

 

The Debtor may modify the Plan at any time prior to the entry of the Confirmation Order provided that the Plan, as modified, and this Disclosure Statement pertaining thereto meet applicable Bankruptcy Code requirements, provided that any such modification is consistent with the terms of the Support Agreement. After the entry of the Confirmation Order, the Debtor may modify the Plan to remedy any defect or omission or to reconcile any inconsistencies in the Plan or in the Confirmation Order, as may be necessary to carry out the purposes and effects of the Plan; provided that any such modification is consistent with the terms of the Support Agreement; provided   further that the Debtor obtains approval of the Bankruptcy Court for such modification, after notice and a hearing. Any waiver under Article VIII.C of the Plan shall not be considered to be a modification of the Plan. After the Confirmation Date and before substantial consummation of the Plan, the Debtor may modify the Plan in a way that materially and adversely affects the interests, rights, treatment, or Distributions of a Class of Claims or Interests; provided that any such modification is consistent with the terms of the Support Agreement; provided   further that: (i) the Plan, as modified, meets applicable Bankruptcy Code requirements; (ii) the Debtor obtains Court approval for such modification, after notice and a hearing; (iii) such modification is accepted by the Holders of at least two-thirds in amount, and more than one-half in number, of Allowed Claims or Interests voting in each Class affected by such modification; and (iv) the Debtor complies with section 1125 of the Bankruptcy Code with respect to the Plan as modified.

 

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ARTICLE VII.  

CONFIRMATION OF THE PLAN

 

7.1 Confirmation Hearing.

 

Section 1128(a) of the Bankruptcy Code requires the Bankruptcy Court to hold a confirmation hearing, including a determination that the Plan solicitation was in compliance with any applicable nonbankruptcy law, rule or regulation governing the adequacy of disclosure or, if there is not any such law, rule or regulation, was made after disclosure of adequate information as defined in the Bankruptcy Code, upon such notice to parties-in-interest as is required by the Bankruptcy Code and the Bankruptcy Court (the “ Confirmation Hearing ”). On, or as promptly as practicable after, the Petition Date, the Debtor will request that the Bankruptcy Court schedule the Confirmation Hearing. Notice of the Confirmation Hearing will be provided to all known creditors and equity holders or their representatives. The Confirmation Hearing may be adjourned from time to time by the Bankruptcy Court without further notice except for the announcement of the continuation date made at the Confirmation Hearing, at any subsequent continued Confirmation Hearing, or pursuant to a notice on the docket for the Chapter 11 Case.

 

Section 1128(b) of the Bankruptcy Code provides that any party in interest may object to the confirmation of a plan. Any objection to confirmation of the Plan must be in writing, must conform to the Bankruptcy Rules and the Local Bankruptcy Rules, must set forth the name of the objector, the nature and amount of Claims held or asserted by the objector against the Debtor’s estates or properties, the basis for the objection and the specific grounds therefore, and must be filed with the Bankruptcy Court, with a copy to the chambers of the United States Bankruptcy Judge appointed to the Chapter 11 Case, together with proof of service thereto, and served upon the following parties, including such other parties as the Bankruptcy Court may order:

 

(a)       The Debtor at:

Global Brokerage, Inc.

55 Water Street, 50 th Floor

New York, New York 10041 

Attn: David Sassoon, General Counsel

 

(b)      Office of the U.S. Trustee at:

Office of the U.S. Trustee for Region 2 

U.S. Federal Office Building 201 Varick Street, Suite 1006 New York, New York 10014

Attn:     Linda Riffkin, Esq., Greg Zipes, Esq., and Andy Velez-Rivera, Esq.

 

(c) Counsel to the Debtor at:

King & Spalding LLP

1180 Peachtree Street, NE
Atlanta, Georgia 30309

Attn:  Sarah R. Borders, Esq.

          Thaddeus D. Wilson, Esq.

 

(d) Counsel to the Consenting Noteholders at:

Vinson & Elkins LLP

666 5th Avenue, 26 th Floor    

New York, NY 10103

Attention:  David Meyer

                  Steven Abramowitz

 

(e) Counsel to Leucadia  

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, NY 10036

Attention:  J. Eric Ivester

                  Gregory A. Fernicola

 

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UNLESS AN OBJECTION TO CONFIRMATION IS TIMELY SERVED AND FILED, IT MAY
NOT BE CONSIDERED BY THE BANKRUPTCY COURT.

  

7.2 Confirmation.

 

At the Confirmation Hearing, the Bankruptcy Court will determine whether the requirements of section 1129(a) of the Bankruptcy Code have been satisfied with respect to the Plan.

 

(a) Confirmation Requirements.

 

Confirmation of a plan under section 1129(a) of the Bankruptcy Code requires, among other things, that:

 

the plan complies with the applicable provisions of the Bankruptcy Code;

 

the proponent of the plan has complied with the applicable provisions of the Bankruptcy Code;

 

the plan has been proposed in good faith and not by any means forbidden by law;

 

any plan payment made or to be made by the proponent under the plan for services or for costs and expenses in, or in connection with, the chapter 11 case, or in connection with the plan and incident to the case, has been approved by, or is subject to the approval of, the Bankruptcy Court as reasonable;

 

the proponent has disclosed the identity and affiliations of any individual proposed to serve, after confirmation of the plan, as a director, officer, or voting trustee of the debtor, an affiliate of the debtor participating in the plan with the debtor, or a successor to the debtor under the plan. The appointment to, or continuance in, such office by such individual must be consistent with the interests of creditors and equity security holders and with public policy and the proponent must have disclosed the identity of any insider that the reorganized debtor will employ or retain, and the nature of any compensation for such insider;

 

with respect to each impaired class of claims or equity interests, either each holder of a claim or equity interest of such class has accepted the plan, or will receive or retain under the plan, on account of such claim or equity interest, property of a value, as of the effective date of the plan, that is not less than the amount that such holder would receive or retain if the debtor were liquidated on such date under chapter 7 of the Bankruptcy Code;

 

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each class of claims or equity interests has either accepted the plan or is not impaired under the plan;

 

except to the extent that the holder of a particular claim has agreed to a different treatment of such claim, the plan provides that allowed administrative expenses and priority claims will be paid in full on the effective date;

 

if a class of claims is impaired, at least one (1) impaired class of claims has accepted the plan, determined without including any acceptance of the plan by any insider holding a claim in such class; and

 

confirmation of the plan is not likely to be followed by the liquidation, or the need for further financial reorganization, of the debtor or any successor to the debtor under the plan, unless such liquidation or reorganization is proposed in the plan.

 

Set forth below is a summary of the relevant statutory confirmation requirements.

 

(1)         Acceptance.

 

Class 3 is impaired under the Plan and is entitled to vote to accept or reject the Plan. Classes 1, 2, 4, 5, 6, and 7 are unimpaired and, therefore, are conclusively presumed to accept the Plan pursuant to section 1126(f) of the Bankruptcy Code.

 

The Debtor will also seek confirmation of the Plan over the objection of any individual Holders of Claims or Interests who are members of an accepting Class. However, there can be no assurance that the Bankruptcy Court will determine that the Plan meets the requirements of section 1129(b) of the Bankruptcy Code.

 

(2)         Unfair Discrimination and Fair and Equitable Test.

 

To obtain nonconsensual confirmation of the Plan, it must be demonstrated to the Bankruptcy Court that the Plan “does not discriminate unfairly” and is “fair and equitable” with respect to each impaired, non-accepting Class. The Bankruptcy Code provides a non-exclusive definition of the phrase “fair and equitable” for, respectively, secured creditors, unsecured creditors and Holders of equity interests.

 

A plan of reorganization does not “discriminate unfairly” with respect to a non-accepting class if the value of the cash and/or securities to be distributed to the non-accepting class is equal to, or otherwise fair when compared to, the value of the distributions to other classes whose legal rights are the same as those of the non-accepting class.

 

(3)         Feasibility; Financial Projections; Valuation.

 

The Bankruptcy Code permits a plan to be confirmed only if confirmation is not likely to be followed by liquidation or the need for further financial reorganization. For purposes of determining whether the Plan meets this requirement, GLBR has analyzed its ability to meet its obligations under the Plan. As part of this analysis, GLBR has prepared projections of the financial performance of the Reorganized Debtor for each of the four fiscal years from 2018 through 2021 (the “ Financial Projections ”). The Financial Projections, and the assumptions on which they are based, are set forth in the Projected Financial Information contained in Exhibit 6 hereto.

 

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FXCM and the other FXCM Entities are separate entities from the Company. They are not debtors and not anticipated to be debtors. Their assets are not available to satisfy the claims of creditors of the Company. However, because all of the revenue of the Company is derived from distributions and payments made by FXCM to Holdings and Holdings to the Company, this Disclosure Statement includes disclosures related to the FXCM Entities.

 

The Financial Projections are based on the assumption that the Plan will be confirmed by the Bankruptcy Court and, for projection purposes, that the Effective Date under the Plan will occur on or before February 12, 2018.

 

THE PROJECTIONS, INCLUDING THE UNDERLYING ASSUMPTIONS, SHOULD BE CAREFULLY REVIEWED IN EVALUATING THE PLAN. THE PROJECTIONS WERE PREPARED DURING THE FOURTH QUARTER OF 2017 TO REFLECT CERTAIN OPERATIONAL ITEMS AND THE PRO FORMA BALANCE SHEET. WHILE THE DEBTOR BELIEVES THE ASSUMPTIONS UNDERLYING THE PROJECTIONS, WHEN CONSIDERED ON AN OVERALL BASIS, WERE REASONABLE WHEN PREPARED IN LIGHT OF CURRENT CIRCUMSTANCES AND EXPECTATIONS, NO ASSURANCE CAN BE GIVEN THAT THE PROJECTIONS WILL BE REALIZED. GLBR MAKES NO REPRESENTATION OR WARRANTY AS TO THE ACCURACY OF THE PROJECTIONS, AND DOES NOT UNDERTAKE ANY OBLIGATION TO UPDATE THE FINANCIAL PROJECTIONS TO REFLECT NEW INFORMATION, FUTURE EVENTS OR OTHERWISE, EXCEPT AS MAY BE REQUIRED UNDER APPLICABLE LAW.

 

GLBR prepared the Financial Projections based upon certain assumptions that it believes to be reasonable under the circumstances. Those assumptions considered to be significant are described in Exhibit 6 . The Financial Projections have not been examined or compiled by independent accountants. Many of the assumptions on which the projections are based are inherently subject to significant economic and competitive uncertainties and contingencies beyond the control of GLBR and its management, and are subject to significant incremental uncertainty as a result of the scope and potential duration of the current economic recession underway both in the United States and abroad. Inevitably, some assumptions will not materialize and unanticipated events and circumstances may affect the Reorganized Debtor’s actual financial results. Therefore, the actual results achieved throughout the five-year period of the Financial Projections may vary from the projected results and the variations may be material. All Holders of Claims or Interests that are entitled to vote to accept or reject the Plan are urged to examine carefully all of the assumptions on which the Financial Projections are based in connection with their evaluation of the Plan.

 

(b) Best Interests Test.

 

With respect to each impaired Class of Claims and Interests, confirmation of the Plan requires that each Holder of a Claim or Interest either (i) accept the Plan or (ii) receive or retain under the Plan property of a value, as of the Effective Date, that is not less than the value such Holder would receive if GLBR were liquidated under chapter 7 of the Bankruptcy Code. To determine what Holders of Claims in each impaired Class would receive if GLBR were liquidated under chapter 7, the Bankruptcy Court must determine the dollar amount that would be generated from the liquidation of GLBR’s assets and properties in the context of liquidation under chapter 7 of the Bankruptcy Code. The Cash amount that would be available for satisfaction of Claims and Interests would consist primarily of the proceeds resulting from the disposition of the assets and properties of GLBR, augmented by the Cash held by GLBR at the time of the commencement of the liquidation case. Such Cash amount would be (i) first, reduced by the amount of the Allowed Secured Claims and chapter 7 trustee related fees, and, to the extent approved by the Bankruptcy Court, reasonable necessary costs and expenses of preserving, or disposing of, such property, (ii) second, reduced by the costs and expenses of liquidation and such additional administrative claims that might result from the termination of GLBR’s business and the use of chapter 7 for the purposes of liquidation, and (iii) third, reduced by GLBR’s costs of liquidation under chapter 7, including the fees payable to a trustee in bankruptcy, as well as those fees that might be payable to attorneys and other professionals that such a trustee might engage. In addition, claims would arise by reason of the breach or rejection of leases and executory contracts (including vendor, agent and customer contracts) assumed or entered into by GLBR prior to the filing of the chapter 7 case.

 

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To determine if the Plan is in the best interests of each impaired class, the present value of the distributions from the proceeds of a liquidation of GLBR’s assets and properties, after subtracting the amounts attributable to the foregoing claims, must be compared with the value of the property offered to such Classes of Claims under the Plan.

 

After considering the effects that a chapter 7 liquidation would have on the ultimate proceeds available for distribution to creditors, GLBR has determined that confirmation of the Plan will provide each Holder of an Allowed Claim with a recovery that is not less than such Holder would receive pursuant to the liquidation of GLBR under chapter 7.

 

Moreover, GLBR believes that the value of any distributions to each Class of Allowed Claims in a chapter 7 case would be less than the value of distributions under the Plan because in a chapter 7 case the proceeds from the sale of the assets of GLBR would be insufficient to repay the Existing Notes in full or satisfy its other creditors. It is likely that distribution of the proceeds of the liquidation could be delayed for up to eighteen (18) months after the completion of such liquidation in order to resolve claims and prepare for distributions. In the likely event litigation was necessary to resolve claims asserted in the chapter 7 case, the delay could be further prolonged.

 

GLBR prepared a liquidation analysis that is annexed hereto as Exhibit 5 (the “ Liquidation Analysis ”). The information set forth in Exhibit 5 provides (i) a summary of the liquidation values of GLBR’s assets, assuming a chapter 7 liquidation in which a trustee appointed by the Bankruptcy Court would liquidate the assets of the Debtor’s estate and (ii) the expected recoveries of GLBR’s creditors and equity interest Holders under the Plan. The Liquidation Analysis indicates that Holders of Existing Notes Claims would, after payment of liquidation costs and expenses, receive approximately 0% recovery on their Claims in a liquidation scenario versus a recovery under the Plan. As reflected in Exhibit 5 , Holders of General Unsecured Claims and Interests would have a zero percent (0%) recovery on their Claims and Interests. In contrast, the Holders of Allowed General Unsecured Claims would have a 100% recovery on their Claims under the Plan if Class 3 votes to accept the Plan, and a 0% recovery on their Claims under the Plan if Class 3 votes to reject the Plan.

 

Underlying the Liquidation Analysis are a number of estimates and assumptions that, although developed and considered reasonable by GLBR’s management, are inherently subject to significant economic and competitive uncertainties and contingencies beyond the control of GLBR and its management. The Liquidation Analysis also is based on assumptions with regard to liquidation decisions that are subject to change and significant economic and competitive uncertainties and contingencies beyond the control of GLBR and its management. Inevitably, some assumptions will not materialize and unanticipated events and circumstances may affect the results of a liquidation of GLBR. Accordingly, the values reflected might not be realized if GLBR were, in fact, to be liquidated. The chapter 7 liquidation period is assumed to last six (6) months following the appointment of a chapter 7 trustee, allowing for, among other things, the sale of GLBR’s equity ownership in Holdings. All Holders of Claims that are entitled to vote to accept or reject the Plan are urged to examine carefully all of the assumptions on which the Liquidation Analysis is based in connection with their evaluation of the Plan.

 

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7.3 Classification of Claims and Interests.

 

Section 1123 of the Bankruptcy Code provides that a plan of reorganization must classify claims against, and interests in, a debtor. Under section 1122 of the Bankruptcy Code, a plan of reorganization may classify claims and equity interests only into classes containing claims and equity interests which are substantially similar to the other claims or equity interests in the same class. The Plan designates seven classes of claims and class of interests. GLBR believes that it has classified all claims and equity interests in compliance with the provisions of section 1122 of the Bankruptcy Code. However, should GLBR commence a chapter 11 case, a Holder of a Claim or Equity Interest could challenge GLBR’s classification of Claims and Interests, and the Bankruptcy Court could determine that a different classification is required for the Plan to be confirmed. In such event, it is GLBR’s intention to seek to modify the Plan to provide for whatever classification might be required by the Bankruptcy Court and to use the acceptances received, to the extent permitted by the Bankruptcy Court, the Bankruptcy Code and the Bankruptcy Rules to demonstrate the acceptance of the Class or Classes which are affected. Any such reclassification could affect a Class’s acceptance of the Plan by changing the composition of such Class and the required vote for acceptance of the Plan and could potentially require a resolicitation of votes on the Plan. GLBR believes that the Plan meets the classification requirements of the Bankruptcy Code.

 

7.4 Consummation.