UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM 10-Q



(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 20212022
or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from ______ to _____
Commission File Number: 000-56115



Woodbridge Liquidation Trust
(Exact name of registrant as specified in its charter)



Delaware
 36-7730868
(State or other jurisdiction of incorporation or organization) (I.R.S. Employment Identification No.)


14140 Ventura Boulevard201 N. Brand Blvd.,
Suite 302M
Sherman Oaks,Glendale, California
 9142391203
(Address of principal executive offices) (Zip Code)


Registrant’s telephone number, including area code: (310) 765-1550


Securities registered pursuant to Section 12(b) of the Act: NoneNaN


Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒  No ☐


Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒  No ☐


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer,’’ ‘‘smaller reporting company’’ and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☐Accelerated filer ☐
Non-accelerated filer ☐Smaller reporting company ☒
 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 pursuant to Section 13(a) of the Exchange Act. ☐


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No  ☒


APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:


Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Yes ☒  No ☐




Woodbridge Liquidation Trust
Form 10-Q
March 31, 20212022
INDEXTable of Contents


PART I. FINANCIAL INFORMATION 
  
 Item 1. 
  1
  2
  3
  4
 Item 2.2524
 Item 3.35
 Item 4.35
    
PART II. OTHER INFORMATION 
 Item 1.36
 Item 1A.4241
 Item 2.4241
 Item 3.4342
 Item 4.4342
 Item 5.4342
 Item 6.4443


PART I.FINANCIAL INFORMATION

Item 1.
Financial Statements

Woodbridge Liquidation Trust and Subsidiaries
Woodbridge Liquidation Trust and Subsidiaries
Consolidated Statements of Net Assets in Liquidation
As of March 31, 2022 and June 30, 2021
(Unaudited, $ In Thousands)
As of March 31, 2021 and June 30, 2020


  3/31/2022
  6/30/2021
 
       
Assets      
Real estate assets held for sale, net (Note 3)      
Single-family homes $92,544  $137,945 
Other real estate assets  1,998   2,910 
Subtotal  94,542   140,855 
         
Cash and cash equivalents  34,393   45,369 
         
Restricted cash (Note 4)  9,098   8,273
 
         
Other assets (Note 5)  5,731   5,473 
Total assets $143,764  $199,970 
         
Liabilities        
Accounts payable and accrued liabilities $1,366  $160 
Distributions payable  5,031   4,687 
Accrued liquidation costs (Note 6)  41,105   65,583 
Total liabilities $47,502
  $70,430
 
         
Commitments and Contingencies (Note 14)  0   0 
         
Net Assets in Liquidation        
Restricted for Qualifying Victims (Note 7) $3,203  $3,167 
All Interestholders  93,059   126,373 
Total net assets in liquidation $96,262  $129,540 
(Unaudited, $ In Thousands)

  3/31/2021  6/30/2020 
       
Assets      
Real estate assets held for sale, net (Note 3):      
Single-family homes $152,045  $281,296 
Other real estate assets  2,922   8,041 
Subtotal  154,967   289,337 
         
Cash and cash equivalents  66,700   86,073 
         
Restricted cash (Note 4)  7,914   5,358 
         
Other assets (Note 5)  4,699   4,183 
         
Total assets $234,280  $384,951 
         
Liabilities        
Accounts payable and accrued liabilities $102  $615 
Distributions payable  4,899   2,368 
Accrued liquidation costs (Note 6)  63,328   117,451 
         
Total liabilities $68,329  $120,434 
         
Commitments and Contingencies (Note 13)        
         
Net Assets in Liquidation:        
Restricted for Qualifying Victims (Note 7)  3,459   - 
All Interestholders  162,492   264,517 
         
Total net assets in liquidation $165,951  $264,517 


See accompanying notes to unaudited consolidated financial statements.


1

PART I.FINANCIAL INFORMATION (Continued)(CONTINUED)
Item 1.Financial Statements (Continued)

Woodbridge Liquidation Trust and Subsidiaries
Woodbridge Liquidation Trust and Subsidiaries
Consolidated Statements of Changes in Net Assets in Liquidation
For the Three Months Ended March 31, 2022 and 2021
(Unaudited, $ in Thousands)

  Three Months Ended March 31, 2022  
Three Months Ended March 31, 2021
 
  
Restricted
For Qualifying
Victims
  
All
Interestholders
  Total  
Restricted
For Qualifying
Victims
  
All
Interestholders
  Total 
                   
Net Assets in Liquidation as of beginning of period $3,203  $124,302  $127,505  $0  $210,476  $210,476 
                         
Change in assets and liabilities (Note 8):                        
Restricted for Qualifying Victims -
                        
Change in carrying value of assets and liabilities, net  0   0   0
   3,459   0   3,459 
                         
All Interestholders:
                        
Change in carrying value of assets and liabilities, net  0   8,266   8,266   0   1,974   1,974 
Distributions (declared) reversed, net  0   (39,509)  (39,509)  0   (49,958)  (49,958)
Net change in assets and liabilities  0   (31,243)  (31,243)  0   (47,984)  (47,984)
                         
Net Assets in Liquidation as of end of period $3,203  $93,059   $96,262  $3,459  $162,492  $165,951 
For the Three Months Ended March 31, 2021 and 2020
(Unaudited, $ in Thousands)

  Three Months Ended March 31, 2021  
Three Months Ended March 31, 2020
 
                   
  
Restricted
For Qualifying
Victims
  
All
Interestholders
  Total  
Restricted
For Qualifying
Victims
  
All
Interestholders
  Total 
                   
Net Assets in Liquidation as of beginning of period $-  $210,476  $210,476  $-  $334,583  $334,583 
                         
Change in assets and liabilities (Note 8):                        
Restricted for Qualifying Victims -
                        
Change in carrying value of assets and liabilities, net  3,459   -   3,459   -   -   - 
                         
All Interestholders -                        
Change in carrying value of assets and liabilities, net  -   1,974   1,974   -   12,905   12,905 
Distributions (declared) reversed, net  -   (49,958)  (49,958)  -   (77,678)  (77,678)
Net change in assets and liabilities  -   (47,984)  (47,984)  -   (64,773)  (64,773)
Net Assets in Liquidation as of end of period $3,459  $162,492   165,951  $-  $269,810  $269,810 


See accompanying notes to unaudited consolidated financial statements.
 
PART I.FINANCIAL INFORMATION (Continued)(CONTINUED)
Item 1.Financial Statements (Continued)


Woodbridge Liquidation Trust and Subsidiaries
Woodbridge Liquidation Trust and Subsidiaries
Consolidated Statements of Changes in Net Assets in Liquidation
For the Nine Months Ended March 31, 2022 and 2021
(Unaudited, $ in Thousands)
For the Nine Months Ended March 31, 2021 and 2020

  Nine Months Ended March 31, 2022  Nine Months Ended March 31, 2021 
                   
  
Restricted
For Qualifying
Victims
  
All
Interestholders
  Total  
Restricted
For Qualifying
Victims
  
All
Interestholders
  Total 
                   
Net Assets in Liquidation as of beginning of period
 $3,167  $126,373  $129,540  $0  $264,517  $264,517 
                         
Change in assets and liabilities (Note 8):                        
Restricted for Qualifying Victims -
                        
Change in carrying value of assets and liabilities, net
  36   0   36   3,459   0   3,459 
                         
All Interestholders :
                        
Change in carrying value of assets and liabilities, net
  0   45,922   45,922   0   7,529   7,529 
Distributions (declared) reversed, net  0   (79,236)  (79,236)  0   (109,554)  (109,554)
Net change in assets and liabilities
  0   (33,314)  (33,314)  0   (102,025)  (102,025)
                         
Net Assets in Liquidation as of end of period $3,203  $93,059   $96,262  $3,459  $162,492   $165,951
 
(Unaudited, $ in Thousands)

  Nine Months Ended March 31, 2021  Nine Months Ended March 31, 2020 
                   
  
Restricted
For Qualifying
Victims
  
All
Interestholders
  Total  
Restricted
For Qualifying
Victims
  
All
Interestholders
  Total 
                   
Net Assets in Liquidation as of beginning of period
 $-  $264,517  $264,517  $-  $329,971  $329,971 
                         
Change in assets and liabilities (Note 8):                        
Restricted for Qualifying Victims -
                        
Change in carrying value of assets and liabilities, net
  3,459   -   3,459   -   -   - 
                         
All Interestholders -                        
Change in carrying value of assets and liabilities, net
  -   7,529   7,529   -   17,440   17,440 
Distributions (declared) reversed, net  -   (109,554)  (109,554)  -   (77,601)  (77,601)
Net change in assets and liabilities
  -   (102,025)  (102,025)  -   (60,161)  (60,161)
                         
Net Assets in Liquidation as of end of period $3,459  $162,492   165,951  $-  $269,810   269,810 


See accompanying notes to unaudited consolidated financial statements.


Table of Contents
PART I.FINANCIAL INFORMATION (Continued)(CONTINUED)
Item  1.Financial Statements (Continued)

Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2022 and 2021
(Unaudited)
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2021 and 2020
(Unaudited)

1)
Formation and Description of Business


Formation


Woodbridge Liquidation Trust (Trust)(the Trust”) was established (i) for the purpose of collecting, administering, distributing and liquidating the Trust assets for the benefit of the Trust beneficiaries in accordance with the Liquidation Trust Agreement of the Trust (the “Trust Agreement”) and the First Amended Joint Chapter 11 Plan of Liquidation of Woodbridge Group of Companies, LLC and its Affiliated Debtors dated August 22, 2018 as(as amended, modified, supplemented or restated from time to time, (Plan)the “Plan”); (ii) to resolve disputed claims asserted against the Debtors, as defined in the Plan; (iii) to litigate and/or settle causes of action (Causes(“Causes of Action)Action”); and (iv) to pay certain allowed claims and statutory fees, as required by the Plan. Woodbridge Group of Companies, LLC and its affiliated debtors are individually referred to herein as a Debtor and collectively as the Debtors. The Trust was formed on February 15, 2019 (Plan(the “Plan Effective Date)Date”) as a statutory trust under Delaware law.


On the Plan Effective Date, in accordance with the Plan, (a) the following assets automatically vested in the Trust: (i) an aggregate $5,000,000 in cash from the Debtors for the purpose of funding the Trust’s initial expenses of operation; (ii) certain claims and Causes of Action; (iii) all of the outstanding equity interests of the Wind-Down Entity (as defined below); and (iv) certain other non-real estate related assets, (b) the equity interests of Woodbridge Group of Companies, LLC and Woodbridge Mortgage Investment Fund 1, LLC (together, Remaining Debtors)the “Remaining Debtors”) were cancelled and new equity interests representing all of the newly issued and outstanding equity interests in the Remaining Debtors were issued to the Trust, (c) all of the other Debtors other than the Remaining Debtors were dissolved and (d) the real estate-related assets of the Debtors were automatically vested in the Trust’s wholly-owned subsidiary, Woodbridge Wind-Down Entity LLC (Wind-Down Entity)(the “Wind-Down Entity”) or one of the Wind-Down Entity’s43 wholly-owned single member LLCs (Wind-Down Subsidiaries)(the “Wind-Down Subsidiaries”) formed to own the respective real estate assets. The Trust, the Remaining Debtors, the Wind-Down Entity and the Wind-Down Subsidiaries are collectively referred to herein as the Company.“the Company”.


The
As further discussed in Note 10, the Trust has two classes of liquidation trust interests,“Liquidation Trust Interests”: Class A Liquidation Trust Interests (Class(the “Class A Interests)Interests”) and Class B Liquidation Trust Interests (Class(the “Class B Interests)Interests”).  The holders of Class A Interests and Class B Interests are sometimes collectively referred to herein as All Interestholders.“Interestholders” or “All Interestholders”.


On December 24, 2019, the Trust’s Registration Statement on Form 10 became effective under the Securities Exchange Act of 1934 (Exchange Act)(the “Exchange Act”). The trading symbol for the Trust’s Class A Interests is WBQNL. TheBid and ask prices for the Trust’s Class A Interests are quoted on the OTC Link ATS, the SEC-registered alternative trading system, andsystem. The Class A Interests are eligible for the Depository Trust Company’s Direct Registration System (DRS)(“DRS”) services.The Class B Interests are not registered with the SEC.


Description of Business

The
The Trust is prosecuting various Causes of Action acquired by the Trust pursuant to the Plan and is resolving claims asserted against the Debtors. As of March 31, 2021,2022, the Company is the plaintiff in several pending lawsuits.lawsuits (see Note 13 for additional information). The CompanyTrust is unable to estimate the amount of recovery, if any, related to these lawsuits. During the three and nine months ended March 31, 2021 and 2020, the Company recorded approximately $1,278,000 and $1,179,000 and $8,443,000 and $4,845,000, respectively, from the settlement of certain Causes of Action. The Company has accrued an estimate of the amount of legal costs to be incurred to pursue these litigations, excluding contingent fees. As more fully discussed inalso liquidating its Forfeited Assets (see Note 2, the Company’s consolidated financial statements do not include any estimate of future net recoveries from litigation and settlement, since the Company cannot reasonably estimate them.7 for additional information).


4

Index
PART I.FINANCIAL INFORMATION (Continued)
Item 1.Financial Statements (Continued)

Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2021 and 2020
(Unaudited)

As of March 31, 2021,2022, the Wind-Down Subsidiaries own eightEntity owns 3 luxury single-family homes all except one are located in the Los Angeles, California. One single-family home is listed for sale.  AllCalifornia area. The majority of the gross carrying value of the Wind-Down Entity’s real estate assets held for sale is concentrated in these 3 single-family homes. In addition, construction is being completed on 2 other single-family homes are under construction.that have been sold.  The Wind-Down SubsidiariesEntity is also own secured loans (performing and non-performing) andliquidating its remaining 4 other properties located in other states.real estate assets. See Note 3 for additional information.


4

PART I.   FINANCIAL INFORMATION (CONTINUED)
Item  1.  Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2022 and 2021
(Unaudited)
The Company is required to liquidate its assets and distribute available cash to the Trust beneficiaries. The liquidation activities are carried out by the Trust, the Wind-Down Entity and the Wind-Down Subsidiaries. As of March 31, 2022, the Company estimates that the liquidation activities will be completed by February 15, 2024.

As discussed and defined in Note 2, the Company uses the Liquidation Basis of Accounting. The Trust currently operates as one1 reportable segment comprised primarily of real estate assets held for sale.


Net assets in liquidation represent the remaining estimated aggregate value available to Trust beneficiaries upon liquidation, with no discount for the timing of proceeds (undiscounted).  Due to the unpredictability of real estate selling prices, the impact of the COVID-19 virus (see below), as well as the uncertainty in the timing of liquidation of the real estate and other assets, net liquidation proceeds, other recoveries and actual liquidation costs may differ materially from the estimated amounts.


The Trust’s expectations about the amount of any additional distributions and when they will be paid are subject to risks and uncertainties and are based on certain estimates and assumptions, one or more of which may prove to be incorrect.  Therefore,As a result, the actual amount of any additional distributions may differ materially, perhaps in negativeadverse ways, from the Trust estimates. Furthermore, it is not possible to predict the timing of any otheradditional distributions and any such distributions may not be made within the timing referenced in the consolidated financial statements.


No assurance can be given that total distributions will equal or exceed the estimate of net assets in liquidation presented in the consolidated statements of net assets in liquidation.


As a result of the COVID-19 outbreak, three3 of the Wind-Down Subsidiaries’ home construction sites were closed for about three months during the summer of 2020. OneNaN construction site was closed for about two weeks in late December 2020.  The continued spread of COVID-19 presents challenges for the Company and its vendors, mainly due to labor and product supply shortages. The Company continues to observe health and safety guidelines, including allowing its employees to work remotely. The Company will continue to evaluate the impact of the COVID-19 outbreak on its activities, including the cost of construction, the timing of completion of the single-family homes that are under construction, the time needed to market and sell the single-family homes, and the price at which these single-family homes will be sold.sold.


The ultimate impact of the COVID-19 outbreak will depend on many factors, some of which cannot be foreseen, including the duration, severity, and geographic concentrations of the pandemic and any resurgence of the disease; the impact of COVID-19 on the nation’s economy and debt and equity markets and the local economies in the markets in which our real estate assets are located; the development and availability of COVID-19 infection and antibody testing, therapeutic agents and vaccines and the prioritization of such resources among businesses and demographic groups; government financial and regulatory relief efforts that may become available to companies and individuals; and changes in unemployment rates, consumer confidence and equity markets caused by COVID-19.disease.

5

PART I.FINANCIAL INFORMATION (Continued)
Item 1.Financial Statements (Continued)

Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2021 and 2020
(Unaudited)

2)Summary of Significant Accounting Policies


Basis of Presentation and Consolidation


The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP)(“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC)(the “SEC”), including the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, the consolidated financial statements for the unaudited interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair and consistent presentation of the results for such periods. These consolidated financial statements have been presented in accordance with Accounting Standards Codification (ASC) Subtopic 205-30, “Liquidation Basis of Accounting,” as amended by Accounting Standards Update (ASU) No. 2013-07, “Presentation of Financial Statements (Topic 205), Liquidation Basis of Accounting.” The June 30, 20202021 consolidated statement of net assets in liquidation included herein was derived from the audited consolidated financial statements but does not include all disclosures or notes required by U.S. GAAP for complete financial statements.


All material intercompany accounts and transactions have been eliminated.


5

PART I.   FINANCIAL INFORMATION (CONTINUED)
Item  1.  Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2022 and 2021
(Unaudited)
Use of Estimates


U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and for the period then ended. Actual results could differ from these estimates. Estimates and assumptions are reviewed periodically, and the carrying amounts of assets and liabilities are revised in the period that available information supports a change in the carrying amount.


Liquidation Basis of Accounting


Under the liquidation basis of accounting, all assets are recorded at their estimated net realizable value or liquidation value, which represents the estimated amount of net cash that will be received upon the disposition of the assets (on an undiscounted basis). The measurement of real estate assets held for sale is based on the terms of current contracts (if any), estimates and other indications of sales value, net of estimated selling costs. To estimatedetermine the selling pricesvalue of real estate assets held for sale, the Company considersconsidered the three traditional approaches to value (cost, income and sales comparison) commonly used by the real estate appraisal community. The applicability and relevancy of each valuation approach as applied may differ by asset. In most cases, the sales comparison approach was accorded the greatest weight. This approach compares a property to other properties with similar characteristics that have recently sold. To validate management’s estimate, the Company also considers opinions from qualified real estate professionals and local real estate brokers and, in some cases, obtained third-partythird party appraisals. The estimated selling costs range from 5.0% to 6.0% of the property sales price.


Liabilities, including estimated costs associated with implementing and completing the Plan, are measured in accordance with U.S. GAAP that otherwise applies to those liabilities. The Company has also recorded the estimated development costs to be incurred to prepare the assets for sale as well as the estimated holding costs to be incurred until the projected sale date and the estimated general and administrative costs to be incurred until the completion of the liquidation of the Company. When estimating development costs, the Company considered third-third party construction contracts and estimates of costs to complete based on construction status, progress and projected completion timing. Estimated development costs also include the costs of design and furnishings necessary to prepare and stage the homes for marketing. Holding cost estimates consider property taxes, insurance, utilities, maintenance and other costs to be incurred until the sale of the property is closed. Projected general and administrative cost estimates take into account operating costs marketing and advertising through the completion of the liquidation of the Company.


These estimated amounts are presented in the accompanying consolidated statements of net assets in liquidation.  All changes in the estimated liquidation value of the Company’s real estate held for sale, or other assets and liabilities are reflected as a change to the Company’s net assets in liquidation.


6

Index
PART I.FINANCIAL INFORMATION (Continued)
Item 1.Financial Statements (Continued)

Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2021 and 2020
(Unaudited)

The Company hasdoes not recordedrecord any amount forfrom the future recoveries from unsettledsettlement of unresolved Causes of Action or recoveries from Fair FundsFund or Forfeited Assets (including those that may be settled, but subject to court or other regulatory agency approval) in the accompanying consolidated financial statements since they cannot be reasonably estimated. The amount recovered may be material to the Company’s net assets in liquidation.


On a quarterly basis, the Company reviews the estimated net realizable values, and liquidation costs and the estimated date of the completion of the liquidation of the Company and records any significant changes. The Company will also revalue an asset when it is under contract for sale and the buyer’s contingencies have been removed. During the period when this occurs, the carrying value of the asset and the estimated closing and other costs will be adjusted, if necessary. If the Company has a change in its plan for the disposition of an asset, the carrying value will be adjusted to reflect this change in the period that the change is approved. The change in value may include the accrued liquidation costs related to the asset.


6

PART I.   FINANCIAL INFORMATION (CONTINUED)
Item  1.  Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2022 and 2021
(Unaudited)
Other Assets


The Company recognizes recoveries from the settlement of unresolved Causes of Action when an agreement ishas been executed and collectability is reasonably assured. An allowance for uncollectible settlement installment receivables is recorded when there is doubt about the collectability of the receivable.  Insurance claims are recognized when the insurance company accepts the claim or if a claim is pending and the recoverable amount can be estimated. The Company records escrow receivables at the amount that is expected to be received when the escrow receivable is released. The Forfeited Assets (Note 7) received from the United States Department of Justice (DOJ)(the “DOJ”), other than cash, have been recorded at their estimated net realizable value. In addition, the Company recognizes other amounts to be received based on contractual terms or when the amounts to be received are certain.


Accrued Liquidation Costs


The Company accrues for estimated liquidation costs to the extent they are reasonably determinable. These costs consist of (a) estimated development costs of the single-family homes under development, other project-relatedproject related costs, architectural and engineering, project management, city fees, bond payments (net of refunds), furnishings, marketing and other costs; (b) estimated holding costs, including property taxes, insurance, maintenance, utilities and other; and (c) estimated general and administrative costs including payroll, legal and other professional fees, trustee and board fees, marketing and advertising, rent and other office related expenses, interest on financing and other general and administrative costs to operate the Company.


Cash Equivalents


The Company considers short-term investments that have a maturity date of ninety days or less at the time of investment to be a cash equivalent. The Company’s cash equivalents include money market savings deposits and money market funds.


Restricted Cash


Restricted cash includes cash that can only be used for certain specified purposes.


7

Index
PART I.FINANCIAL INFORMATION (Continued)
Item 1.Financial Statements (Continued)

Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2021 and 2020
(Unaudited)

Concentrations of Credit Risk


Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents and restricted cash. At times, balances in any one financial institution may exceed the Federal Deposit Insurance Corporation (FDIC) insurance limits. The Company mitigates this risk by depositing its cash, cash equivalents and restricted cash in high-credit quality financial institutions. In addition, the Company uses strategies to reduce deposit balances at any one financial institution consistent with FDIC insurance limits.


Income Taxes


The Trust is intended to be treated as a grantor trust for income tax purposes and, accordingly, is not subject to federal or state income tax on any income earned or gain recognized by the Trust. The Trust’s beneficiaries will be treated as the owner of a pro-ratapro rata portion of each asset, including cash and each liability received by and held by the Trust,Trust. Each beneficiary will be required to report on his or her federal and state income tax return his or her pro-ratapro rata share of taxable income, including gains and losses recognized by the Trust. Accordingly, there is no provision for federal or state income taxes recorded in the accompanying consolidated financial statements.


The Company regularly analyzes its various federal and state filing positions and only recognizes the income tax effect in the consolidated financial statements when certain criteria regarding uncertain income tax positions have been met. The Company believes that its income tax positions would be more likely than not be sustained upon examination by all relevant taxing authorities. Therefore, no provision for uncertain income tax positions has been recorded in the consolidated financial statements.


Net Assets in Liquidation - Restricted for Qualifying Victims
7


The Company separately presents the portion of net assets in liquidation that are restricted for Qualifying Victims (Note 7) from the net assets in liquidation that are available to All Interestholders.
PART I.   FINANCIAL INFORMATION (CONTINUED)
Item  1.  Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2022 and 2021
(Unaudited)

Reclassifications

Certain amounts in the June 30, 2020 consolidated statement of net assets in liquidation have been reclassified to conform with the March 31, 2021 presentation.

3)Real Estate Assets Held for Sale Net


The Company’s real estate assets held for sale as of March 31, 2021,2022, with comparative information as of June 30, 2020,2021, are as follows ($ in thousands):


 March 31, 2021 June 30, 2020  March 31, 2022  June 30, 2021 
                                         
 
Number
of Assets
  Gross Value  Closing and Other Costs  Net Value  
Number
of Assets
  Gross Value  Closing and Other Costs  Net Value  
Number
of Assets
  Gross Value  
Closing and
Other Costs
  Net Value  
Number
of Assets
  Gross Value  
Closing and
Other Costs
  Net Value 
                                         
Single-family homes  8 $161,750 $(9,705) $152,045  13 $298,368 $(17,072) $281,296   3  $98,451  $(5,907) $92,544   7  $146,750  $(8,805) $137,945 
                                                 
Other real estate assets:Other real estate assets:               Other real estate assets:                             
Lots - - - - 2 3,500 (193) 3,307 
Secured loans 4 1,956 (86) 1,870 4 1,984 (86) 1,898   2   986   (40)  946   4   1,945   (87)  1,858 
Other properties  2  1,107  (55)  1,052  13  3,018  (182)  2,836   2   1,107   (55)  1,052   2   1,107   (55)  1,052 
Subtotal  6  3,063  (141)  2,922  19  8,502  (461)  8,041   4   2,093   (95)  1,998   6   3,052   (142)  2,910 
                                                 
Total  14 $164,813 $(9,846) $154,967  32 $306,870 $(17,533) $289,337   7  $100,544  $(6,002) $94,542   13  $149,802  $(8,947) $140,855 


8

Index
PART I.FINANCIAL INFORMATION (Continued)
Item 1.Financial Statements (Continued)

Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months EndedAs of March 31, 2021 and 2020
(Unaudited)

The2022, all of the single-family homes except one, are located in the Los Angeles, California area. Onearea and 2 of the single-family homes is listed for sale. All of the other single-family homes are under construction. The Company is also completing the construction of 1 single-family home that was sold in December 2021 and located in New York City and 1 that was sold in May 2021 and located in Los Angeles, California. The loans are secured by properties that are located primarily in the easternMidwest and Eastern United States. The other properties are located in the statesstate of Hawaii and the state of New York.




During the three months ended March 31, 2022, the Company settled 1 secured loan for net proceeds of approximately $725,000. As of March 31, 2022, the Company had 2 single-family homes under contract. Although the contingencies relating to these pending sales have been removed, no assurance can be given that the sales will close. During the three months ended March 31, 2021, the Company did not0t sell any real estate assets. During the threenine months ended March 31, 2020,2022, the Company sold two4 single-family homes two lots and settled one2 secured loanloans for net proceeds of approximately $74,269,000.$64,405,000. During the nine months ended March 31, 2021, the Company sold five5 single-family homes, two2 lots and eleven11 other properties for net proceeds of approximately $121,208,000. OneNaN of the single-family homes sold during the nine months ended March 31, 2021 was under construction and the buyer assumed the remaining obligations to complete construction of approximately $11,253,000. During the nine months ended March 31, 2020, the Company sold ten single-family homes, eighteen lots, and two other properties and settled three secured loans for net proceeds of approximately $177,974,000.


8

PART I.   FINANCIAL INFORMATION (CONTINUED)
Item  1.  Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2022 and 2021
(Unaudited)
4)Restricted Cash


The Company’s restricted cash as of March 31, 2021,2022, with comparative information as of June 30, 2020,2021, is as follows ($ in thousands):


 March 31, 2021 June 30, 2020  March 31, 2022
 June 30, 2021
 

          
Distributions restricted by the Company related to unresolved claims,
distributions for recently allowed claims, uncashed distribution checks,
distributions withheld due to pending avoidance actions and distributions
that the Trust is waiting for further beneficiary information
 $4,900 2,372  $5,031 $
4,687 
     
Forfeited Assets (Note 7) 2,317
 1,836
 
Interest reserve (Note 9) 1,750 1,750   1,750  1,750 
     
Fair Funds, legally restricted for distribution 1,236 1,236 
     
Forfeited Assets (Note 7)  28  - 
     
Total restricted cash $7,914  5,358  $9,098
 $
8,273 


Table of Contents
PART I.FINANCIAL INFORMATION (Continued)(CONTINUED)
Item  1.Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2022 and 2021
(Unaudited)

Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2021 and 2020
(Unaudited)

5)Other Assets


The Company’s other assets as of March 31, 2021,2022, with comparative information as of June 30, 2020,2021, are as follows ($ in thousands):


 March 31, 2021 June 30, 2020  March 31, 2022
 June 30, 2021
 
          
Escrow receivables (a) $
3,560
  $
2,500
 
Forfeited Assets (Note 7) $3,442  $-  
1,059  
1,549 
        
Settlement installment receivables, net (a)(b)
  838   575   712   1,014
 
        
Other  419   208   400   410 
        
Insurance claim receivable (b)  -   1,900 
        
Escrow receivables (c)  -   1,500 
        
Total other assets $4,699  $4,183  $5,731  $5,473
 


(a) Escrow receivables as of March 31, 2022 relate to 2 single-family homes that were sold during the nine months ended March 31, 2022. and 1 single-family home sold prior to June 30, 2021. Escrow receivables as of June 30, 2021 relate to 1 single-family home sold prior to June 30, 2021. Amounts are to be released upon completion of construction and/or obtaining a certificate of occupancy.

(b) The allowance for uncollectible settlement installment receivables was approximately $6 and $9 ($ in thousands) at March 31, 2022 and June 30, 2021, respectively.

10

(a)The allowance for uncollectible settlement installment receivables was approximately $9,000 and $40,000 at March 31, 2021 and June 30, 2020, respectively.

(b)During the three months ended March 31, 2021, the insurance claim receivable was adjusted as a result of a negative court ruling on March 25, 2021.

(c)Escrow holdbacks relating to two single-family homes sold prior to June 30, 2020, respectively; amounts were released upon completion of repairs and construction.

PART I.FINANCIAL INFORMATION (Continued)(CONTINUED)
Item  1.Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2022 and 2021
(Unaudited)

Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2021 and 2020
(Unaudited)

6)Accrued Liquidation Costs


The following is a summary of the items included in accrued liquidation costs as of March 31, 2021,2022, with comparative information as of June 30, 20202021 ($ in thousands):


 March 31, 2021  June 30, 2020  March 31, 2022
  June 30, 2021
 
Development costs:           
Construction costs $31,515 $67,204  $11,564  $23,480 
Construction warranty 2,870 2,870   2,870   2,870 
Indirect costs 774 1,407   498   712 
Bond refunds  (1,355)  (1,562)  (699)  (1,134)
Total development costs  33,804  69,919   14,233   25,928 
             
Holding costs:             
Property tax 1,842 5,918   836   1,901 
Insurance 1,523 2,125   462   1,291 
Maintenance, utilities and other  817  1,518   479   1,000 
Total holding costs  4,182  9,561   1,777   4,192 
             
General and administrative costs:             
Legal and other professional fees 10,786 17,588   10,475   17,697 
Payroll and payroll-related 9,364 13,425   8,546   10,432 
State, local and other taxes 2,014 1,725   2,188
   2,217
 
Directors and officers insurance
  2,024   2,576 
Board fees and expenses 1,138 2,118   698   1,558 
Marketing 666 765 
Other  1,374  2,350   1,164   983 
Total general and administrative costs  25,342  37,971   25,095   35,463 
             
Total accrued liquidation costs $63,328 $117,451  $41,105  $65,583 


7)
Forfeited Assets - Restricted for Qualifying Victims



The Trust entered into a resolution agreement with the United States Department of Justice (DOJ)DOJ which provided that the Trust would receive the assets forfeited (Forfeited Assets) by Robert and Jeri Shapiro.Shapiro (the “Forfeited Assets”). In March 2021, the Trust received certain Forfeited Assets from the DOJ, including cash, wine, jewelry, handbags, clothing, shoes, art, gold and other assets. The Bankruptcy Court approved the settlement on September 17, 2020wine and the District Court approvedgold were sold during the settlement on October 1, 2020.

PART I.FINANCIAL INFORMATION (Continued)
Item 1.Financial Statements (Continued)

Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Endednine months ended March 31, 2021 and 20202022.
(Unaudited)




The agreement provides for the release of specified forfeited assets by the DOJ to the Trust andalso provided for the Trust to liquidate those assetsthe Forfeited Assets and to distribute the net sale proceeds to Qualifying Victims.  Qualifying Victims include the vast majority of Trust beneficiaries (specifically, all former holders of allowed Class 3 and 5 claims and their permitted assigns), but do not include former holders of Class 4 claims. Distributions to Qualifying Victims are to be allocated pro-rata based on their net allowed claims without considering the (i) 5% enhancement for contributing their causes of action andor (ii) 72.5% Class 5 coefficient.

In March 2021, the Trust received certain Forfeited Assets from the DOJ, including cash, wine, jewelry, handbags, clothing, shoes, art, gold and other assets. The Company recorded the total estimated net realizable value of the Forfeited Assets of approximately $3,459,000, which includes a receivable for approximately $1,892,000 of additional cash that the Trust expects to receive from the DOJ (Note 14).
11

PART I.   FINANCIAL INFORMATION (CONTINUED)
Item  1.  Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2022 and 2021
(Unaudited)
The Forfeited Assets included in the Company’s March 31, 20212022 and June 30, 20202021 consolidated financial statements are as follows:follows ($ in thousands):


 March 31, 2021 June 30, 2020  March 31, 2022
  June 30, 2021
 
           
Restricted cash (Note 4) $28 $-  $2,317  $1,836 
Other assets (Note 5) 3,442 -   1,059   1,549 
Accounts payable and accrued liabilities
  (11)  - 
     
Accrued liquidation costs
  (173)  (218)
Net assets in liquidation - restricted for Qualifying Victims
 $3,459 $-  $3,203  $3,167 


8)Net Change In Assets and Liabilities


Restricted for Qualifying Victims:


The following is a summary of the change in the carrying value of assets and liabilities, net during the three and nine months ended March 31, 20212022 ($ in thousands):


  Cash  Remeasure-    
  Activities  ment  Total 
          
Real estate assets held for sale, net $0  $0  $0 
Cash and cash equivalents  0   0   0 
Restricted cash  111   0   111 
Other assets  (120)  0   (120)
Total assets $(9) $0  $(9)
             
Accounts payable and accrued liabilities
 $0  $0  $0 
Accrued liquidation costs  (9)  0   (9)
Total liabilities $(9) $0  $(9)
             
Change in carrying value of assets and liabilities, net
 $0  $0  $0 

Table of Contents
PART I.FINANCIAL INFORMATION (Continued)(CONTINUED)
Item  1.Financial Statements (Continued)

Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2022 and 2021 and 2020
(Unaudited)

  
Cash
Activities
  
Remeasure-
ment
  Total 
          
Real estate assets held for sale, net $-  $-  $- 
             
Cash and cash equivalents  -   -   - 
             
Restricted cash  28   -   28 
             
Other assets  -   3,442   3,442 
             
Total assets $28  $3,442  $3,470 
             
Accounts payable and accrued liabilities
 $-  $11  $11 
             
Accrued liquidation costs  -   -   - 
             
Total liabilities $-  $11  $11 
             
Change in carrying value of assets and liabilities, net
 $28  $3,431  $3,459 

There was no activity relating to net assets restricted for Qualifying Victims during the three and nine months ended March 31, 2020.

PART I.FINANCIAL INFORMATION (Continued)
Item 1.Financial Statements (Continued)

Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2021 and 2020
(Unaudited)

All Interestholders

The following is a summary of the change in the carrying value of assets and liabilities, net during the three months ended March 31, 2021 ($ in thousands):

  
Cash
Activities
  
Remeasure-
ment
  Total 
          
Real estate assets held for sale, net $(9) $-  $(9)
             
Cash and cash equivalents  (11,199)  -   (11,199)
             
Restricted cash  1,262   -   1,262 
             
Other assets  (287)  (1,091)  (1,378)
             
Total assets $(10,233) $(1,091) $(11,324)
             
Accounts payable and accrued liabilities
 $42  $30  $72 
             
Accrued liquidation costs  (11,238)  (2,132)  (13,370)
             
Total liabilities $(11,196) $(2,102) $(13,298)
             
Change in carrying value of assets and liabilities, net
 $963  $1,011  $1,974 


The following is a summary of the distributions (declared) reversed, net during the three months ended March 31, 2021 ($ in thousands):

Distributions (declared) $(50,005)
Distributions reversed  47 
Distributions (declared) reversed, net $(49,958)

  Cash  Remeasure-    
  Activities  ment  Total 
          
Real estate assets held for sale, net $0  $0  $0 
Cash and cash equivalents  0   0   0 
Restricted cash  28   0   28 
Other assets  0   3,442   3,442 
Total assets $28  $3,442  $3,470 
             
Accounts payable and accrued liabilities
 $0  $11  $11 
Accrued liquidation costs  0   0   0 
Total liabilities $0  $11  $11 
             
Change in carrying value of assets and liabilities, net
 $28  $3,431  $3,459 
PART I.FINANCIAL INFORMATION (Continued)
Item 1.Financial Statements (Continued)

Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2021 and 2020
(Unaudited)


The following is a summary of the change in the carrying value of assets and liabilities, net during the threenine months ended March 31, 20202022 ($ in thousands):


 
Cash
Activities
 
Remeasure-
ment
  Total  Cash  Remeasure-    
  Activities  ment  Total 
                
Real estate assets held for sale, net $(74,279) $14,009 $(60,270) $0  $0  $0 
       
Cash and cash equivalents 55,324 - 55,324   0   0   0 
       
Restricted cash 1,035 - 1,035   481   0   481 
       
Other assets (717) 1,484 767   (526)  36   (490)
          
Total assets $(18,637) $15,493 $(3,144) $(45) $36  $(9)
                   
Accounts payable and accrued liabilities
 $- $820 $820  $0  $0  $0 
       
Accrued liquidation costs (20,367) 3,498 (16,869)  (45)  0   (45)
          
Total liabilities $(20,367) $4,318 $(16,049) $(45) $0  $(45)
                   
Change in carrying value of assets and liabilities, net
 $1,730 $11,175 $12,905  $0  $36  $36 
The following is a summary of the distributions (declared) reversed, net during the three months ended March 31, 2020 ($ in thousands):

Distributions (declared) $(78,427)
Distributions reversed  749 
Distributions (declared) reversed, net $(77,678)


1513

Table of Contents
PART I.FINANCIAL INFORMATION (Continued)(CONTINUED)
Item  1.Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2022 and 2021
(Unaudited)

Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2021 and 2020
(Unaudited)

The following is a summary of the change in the carrying value of assets and liabilities, net during the nine months ended March 31, 2021 ($ in thousands):


  Cash  Remeasure-    
  Activities  ment  Total 
          
Real estate assets held for sale, net $(121,186) $(13,184) $(134,370)
             
Cash and cash equivalents  87,650   -   87,650 
             
Restricted cash  2,528   -   2,528 
             
Other assets  (2,164)  (762)  (2,926)
             
Total assets $(33,172) $(13,946) $(47,118)
             
Accounts payable and accrued liabilities
 $(947) $423  $(524)
             
Accrued liquidation costs  (41,236)  (12,887)  (54,123)
             
Total liabilities $(42,183) $(12,464) $(54,647)
             
Change in carrying value of assets and liabilities, net
 $9,011  $(1,482) $7,529 


  Cash  Remeasure-    
  Activities  ment  Total 
          
Real estate assets held for sale, net $0  $0  $0 
Cash and cash equivalents  0   0   0 
Restricted cash  28   0   28 
Other assets  0   3,442   3,442 
Total assets $28  $3,442  $3,470 
             
Accounts payable and accrued liabilities $0  $11  $11 
Accrued liquidation costs  0   0   0 
Total liabilities $0  $11  $11 
             
Change in carrying value of assets and liabilities, net $28  $3,431  $3,459 

All Interestholders

The following provides details of the change in the carrying value of assets and liabilities, net during the three months ended March 31, 2022 ($ in thousands):

  Cash  Remeasure-    
  Activities  ment  Total 
          
Real estate assets held for sale, net $(736) $9,870  $9,134 
Cash and cash equivalents  19,910
   0
   19,910
 
Restricted cash  0
   0
   0
 
Other assets  (24,991)  20
   (24,971)
Total assets $(5,817) $9,890  $4,073 
             
Accounts payable and accrued liabilities
 $0  $79  $79 
Accrued liquidation costs  (6,500)  2,228   (4,272)
Total liabilities $(6,500) $2,307  $(4,193)
             
Change in carrying value of assets and liabilities, net
 $683  $7,583  $8,266 

14

PART I.   FINANCIAL INFORMATION (CONTINUED)
Item  1.  Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2022 and 2021
(Unaudited)
The following provides details of the distributions (declared) reversed, net during the three months ended March 31, 2022 ($ in thousands):

Distributions declared $(39,981)
Distributions reversed  472
 
Distributions (declared) reversed, net $(39,509)

Distributions payable decreased by approximately $(137,000) during the three months ended March 31, 2022.

The following is a summary of the change in the carrying value of assets and liabilities, net during the three months ended March 31, 2021 ($ in thousands):

  Cash  Remeasure-    

 Activities  ment  Total 
          
Real estate assets held for sale, net $(9) $0  $(9)
Cash and cash equivalents  (11,199)  0
   (11,199)
Restricted cash  1,262
   0
   1,262
 
Other assets  (287)  (1,091)  (1,378)
Total assets $(10,233) $(1,091) $(11,324)
             
Accounts payable and accrued liabilities
 $42  $30  $72 
Accrued liquidation costs  (11,238)  (2,132)  (13,370)
Total liabilities $(11,196) $(2,102) $(13,298)
             
Change in carrying value of assets and liabilities, net
 $963  $1,011  $1,974 

The following provides details of the distributions (declared) reversed, net during the three months ended March 31, 2021 ($ in thousands):

Distributions declared $(50,005)
Distributions reversed  47
 
Distributions (declared) reversed, net $(49,958)

Distributions payable increased by approximately $1,261,000 during the three months ended March 31, 2021.
15

PART I.   FINANCIAL INFORMATION (CONTINUED)
Item  1.  Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2022 and 2021
(Unaudited)

The following provides details of the change in the carrying value of assets and liabilities, net during the nine months ended March 31, 2022 ($ in thousands):

  Cash  Remeasure-    
  Activities  ment  Total 
          
Real estate assets held for sale, net $(64,437) $18,124  $(46,313)
Cash and cash equivalents  68,260
   0
   68,260
 
Restricted cash  0
   0
   0
 
Other assets  (25,998)  26,745
   747
 
Total assets $(22,175) $44,869  $22,694 
             
Accounts payable and accrued liabilities
 $(184) $1,390  $1,206 
Accrued liquidation costs  (23,712)  (722)  (24,434)
Total liabilities $(23,896) $668  $(23,228)
             
Change in carrying value of assets and liabilities, net
 $1,721  $44,201  $45,922 

The following provides details of the distributions (declared) reversed, net during the nine months ended March 31, 20212022 ($ in thousands):


Distributions (declared) $(109,932)
Distributions declared $(79,997)
Distributions reversed  378   761
 
Distributions (declared) reversed, net $(109,554) $(79,236)


Distributions payable increased by approximately $344,000 during the nine months ended March 31, 2022.
Table of Contents
PART I.FINANCIAL INFORMATION (Continued)(CONTINUED)
Item  1.Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2022 and 2021
(Unaudited)

Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2021 and 2020
(Unaudited)


The following is a summary of the change in the carrying value of assets and liabilities, net during the nine months ended March 31, 20202021 ($ in thousands):


 Cash  Remeasure-    
 
Cash
Activities
 
Remeasure-
ment
 Total  Activities  ment  Total 
                
Real estate assets held for sale, net $(178,207) $8,757  $(169,450) $(121,186) $(13,184) $(134,370)
     ��      
Cash and cash equivalents  119,155   -   119,155   87,650
   0
   87,650
 
            
Restricted cash  642   -   642   2,528
   0
   2,528
 
            
Other assets  (2,113)  4,040   1,927   (2,164)  (762)  (2,926)
            
Total assets $(60,523) $12,797  $(47,726) $(33,172) $(13,946) $(47,118)
                        
Accounts payable and accrued liabilities
 $(371) $1,047  $676  $(947) $423  $(524)
            
Accrued liquidation costs  (72,082)  6,240   (65,842)  (41,236)  (12,887)  (54,123)
            
Total liabilities $(72,453) $7,287  $(65,166) $(42,183) $(12,464) $(54,647)
                        
Change in carrying value of assets and liabilities, net $11,930  $5,510  $17,440  $9,011  $(1,482) $7,529 


The following is a summaryprovides details of the distributions (declared) reversed, net during the nine months ended March 31, 20202021 ($ in thousands):


Distributions (declared) $(78,427)
Distributions declared $(109,932)
Distributions reversed  826   378
 
Distributions (declared) reversed, net $(77,601) $(109,554)
PART I.FINANCIAL INFORMATION (Continued)
Item 1.Financial Statements (Continued)

Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
ForDistributions payable increased by approximately $2,531,000 during the Three and Nine Months Ended nine months ended March 31, 2021 and 2020.
(Unaudited)


9)Credit AgreementsAgreement

Revolving Line of Credit


On June 19, 2020, two2 wholly-owned subsidiaries of the Wind-Down Entity entered into a $25,000,000 revolving line of credit (LOC)(the “LOC”) with a financial institution. The LOC matures onhad an original maturity of June 19, 2022 but may be extended for one additional year thereafter.2022. The LOC requiredrequires the borrowers to establish an interest reserve of $1,750,000 (Note 4), which is to be used to pay the potential monthly interest payments. Outstanding borrowings bear interest at a fixed rate of 3.50% per annum. Indebtedness under the LOC was secured by a deed of trust on one property, the personal property associated therewith and the interest reserve. The Wind-Down Entity is the guarantor of the LOC. The Company is required to keep a cash balance of $20,000,000 on deposit with the lender in order to avoid a non-compliance fee of 2% of the shortfall in the required deposit and is required to comply with various covenants.


The property that was collateral for the LOC was sold in December 2020. The LOC agreement provides that the borrower hashad 60 days after the sale of the collateral to add borrower(s) and additional property(ies) as collateral. During the 60-day period, the available borrowings under the LOC were reduced to $100,000. On February 11, 2021, the LOC was amended.  TwoNaN additional wholly owned subsidiaries of the Wind-Down Entity were joined to the LOC as co-borrowers and two2 properties were added as replacement collateral as allowed for in the original agreement.  As a result of this amendment, the available borrowing commitment was adjusted back up to $25,000,000. The maturity date of the LOC was changed to January 31, 2023 with an option to extend for one additional year.year, subject to the availability of collateral. There were no other significant changes to the LOC.


As of March 31, 2021,2022, the Company was in compliance with the financial covenants of the LOC. NoNaN amounts were outstanding under the LOC as of March 31, 20212022 or June 30, 2020.2021.


PPP Loan
17


On April 20, 2020, the Wind-Down Entity obtained unsecured credit in the form of a loan under the federal government’s Paycheck Protection Program (PPP) in the amount of $324,700. The loan bears interest at a rate of 1.00% per annum. The Company expected to have 100% of the loan balance forgiven and therefore no amounts were accrued under the liquidation basis of accounting as of June 30, 2020. On February 16, 2021, the PPP loan and the related interest were forgiven in full.
PART I.   FINANCIAL INFORMATION (CONTINUED)
Item  1.  Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2022 and 2021
(Unaudited)

10)BeneficialLiquidation Trust Interests


The following table summarizes the Liquidation Trust Interests (rounded) for the nine months ended March 31, 20212022 and 2020:2021:


  For the Nine Months Ended March 31, 
  2022
  2021
 
Liquidation Trust Interests Class A  Class B  Class A  Class B 
             
Outstanding at beginning of period
  11,512,855
   675,784
   11,518,232
   675,558
 
Allowed claims  4,976
   0
   10,367
   1,133
 
5% enhancement for certain allowed claims
  0
   0
   182
   56
 
Settlement of claims by cancelling Liquidation
                
Trust Interests  (1,392)  (167)  (15,121)  (435)
Outstanding at end of period
  11,516,439
   675,617
   11,513,660
   676,312
 
PART I.FINANCIAL INFORMATION (Continued)
Item 1.Financial Statements (Continued)

Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2021 and 2020
(Unaudited)

  For the Nine Months Ended March 31, 
  2021
  2020
 
Liquidation Trust Interests Class A  Class B  Class A  Class B 
             
Outstanding at beginning of period
  11,518,232   675,558   11,433,623   655,261 
                 
Allowed claims  10,367   1,133   85,743   21,334 
                 
5% enhancement for certain allowed claims
  182   56   459   5 
                 
Settlement of claims by cancelling Liquidation
  

  

  

  

Trust Interests  (15,121)  (435)  (3,640)  (891)
                 
Duplicate claim allowed in error
  -   -   (84)  - 
                 
Outstanding at end of period
  11,513,660   676,312   11,516,101   675,709 


Of the 11,513,66011,516,439 Class A Interests outstanding at March 31, 2021, 11,439,782 are2022, 11,436,675 were held by Qualifying Victims (Note 7).


PART I.FINANCIAL INFORMATION (Continued)
Item 1.Financial Statements (Continued)

Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2021 and 2020
(Unaudited)

As ofAt the Plan Effective Date, certain claims were disputed. As those disputed claims are resolved, additional Class A Interests and (if applicable) Class B Interests are issued on account of allowed claims.claims or Class A and (if applicable) Class B Interests are cancelled. No Class A Interests or Class B Interests are issued on account of disallowed claims. The following table summarizes the unresolved claims against the Debtors as they relate to Liquidation Trust Interests (rounded) for the nine months ended March 31, 20212022 and 2020:2021:


 For the Nine Months Ended March 31,  For the Nine Months Ended March 31, 
 2021
 2020
  2022  2021 
Liquidation Trust Interests Class A  Class B  Class A  Class B  Class A  Class B  Class A  Class B 
                        
Outstanding at beginning of period
  193,559   7,118   482,734   34,697 
                
Reserved for unresolved claims at beginning of period
  124,609
   5,011
   193,559
   7,118
 
Allowed claims  (10,367)  (1,133)  (85,743)  (21,334)  (4,976)  0   (10,367)  (1,133)
                
5% enhancement for certain allowed claims
  (32)  -   -   - 
                
5% enhancement for certain allowed claims
  0   0
   (32)  0
 
Disallowed claims  (44,372)  (974)  (122,433)  (5,406)  (28,840)  (4,678)   (44,372)  (974)
                
Outstanding at end of period
  138,788   5,011   274,558   7,957 
Reserved for unresolved claims at end of period
  90,793
   333
   138,788
   5,011
 


Of the 138,78890,793 Class A Interests relating to unresolved claims at March 31, 2021, 24,7602022, 3,449 would be held by Qualifying Victims (Note 7).


11)Distributions


The Plan provides for a distribution waterfall that specifies the priority and manner of distribution of available cash, to All Interestholders, excluding distributions of the net sales proceeds from Forfeited Assets. Distributions are to be made (a) to the Class A Interests until they have received distributions of $75.00 per Class A Interest; thereafter (b) to the Class B Interests until they have received distributions of $75.00 per Class B Interest; thereafter (c) to each Liquidation Trust Interest (whether a Class A Interest or Class B Interest) until the aggregate of all distributions made pursuant to this clause equals an amount equivalent to interest, at a per annum fixed rate of 10%, compounded annually, accrued on the aggregate principal amount of all Net Note Claims, Allowed General Unsecured Claims and Net Unit Claims, all as defined in the Plan, treating each distribution pursuant to (a) and (b) above as reductions of such principal amount; and thereafter (d) to the holders of Allowed Subordinated Claims, as defined in the Plan, until such claims are paid in full, including interest, at a per annum fixed rate of 10% or such higher rate as may be agreed to, as provided for in the Plan, compounded annually, accrued on the principal amount of each Allowed Subordinated Claim, as defined.Claim.


On January
18

PART I.   FINANCIAL INFORMATION (CONTINUED)
Item  1.  Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2022 and 2021
(Unaudited)
During the three months ended March 31, 2022, 1 distribution was declared. During the nine months ended March 31, 2022, 2 2020, adistributions were declared. A distribution in the amount of approximately $53,426,000$39,981,000 was declared on February 4, 2022 which represented $4.50$3.44 per Class A Interest. The distribution included (i) a cash distribution on account of then-allowed claims in the amount of approximately $51,188,000,$39,151,000, which was paid on January 10, 2020March 3, 2022 and (ii) a deposit of approximately $2,238,000$830,000 into a restricted cash account, which was made on March 15, 2022, for amounts, (a) payable for Class A Interests that may be issued in the future upon the allowance of unresolved claims; (b) in respect of Class A Interests issued on account of recently allowed claims; (c) for holders of Class A Interests who failed to cash distribution checks mailed in respect of prior distributions; (d) for distributions that were withheld due to pending avoidance actions; and (e) for holders of Class A Interests for which the Trust is waiting for further beneficiary information. A distribution in the amount of approximately $40,017,000 was declared on October 8, 2021 which represented $3.44 per Class A Interest. The distribution included (i) a cash distribution on account of then-allowed claims in the amount of approximately $39,134,000, which was paid on October 29, 2021 and (ii) a deposit of approximately $883,000 into a restricted cash account, which was made on October 28, 2021, for amounts, (a) payable for Class A Interests that may be issued in the future upon the allowance of unresolved claims; (b) in respect of Class A Interests issued on account of recently allowed claims; (c) for holders of Class A Interests who failed to cash distribution checks mailed in respect of prior distributions; (d) for distributions that were withheld due to pending avoidance actions; and (e) for holders of Class A Interests for which the Trust is waiting for further beneficiary information.

During the three months ended March 31, 2021, 1 distribution was declared. During the nine months ended March 31, 2021, 3 distributions were declared. A distribution in the amount of approximately $50,005,000 was declared on January 7, 2021 which represented $4.28 per Class A Interest. The distribution included (i) a cash distribution on account of then-allowed claims in the amount of approximately $48,665,000, which was paid on January 27, 2021 and (ii) a deposit of approximately $1,340,000 into a restricted cash account, which was made on January 10,28, 2021, for amounts (a) payable for Class A Interests that may be issued in the future upon the allowance of unresolved claims; (b) in respect of Class A Interests issued on account of recently allowed claims; (c) for holders of Class A Interests who failed to cash distribution checks mailed in respect of prior distributions; (d) for distributions that were withheld due to pending avoidance actions; and (e) for holders of Class A Interests for which the Trust is waiting for further beneficiary information. A distribution in the amount of approximately $29,957,000 was declared on October 19, 2020 which represented $2.56 per Class A Interest. The distribution included (i) a cash distribution on account of then-allowed claims in the amount of approximately $29,204,000, which was paid on November 6, 2020 and (ii) a deposit of approximately $753,000 into a restricted cash account, which was made on November 3, 2020, for amounts (a) payable for Class A Interests that may be issued in the future upon the allowance of unresolved claims; (b) in respect of Class A Interests issued on account of recently allowed claims; (c) tofor holders of Class A Interests who failed to cash distribution checks mailed in respect of prior distributions; (d) for distributions that were withheld due to pending avoidance actions; and (e) in respectfor holders of Class A Interests for which the Trust is waiting for further beneficiary information.

PART I.FINANCIAL INFORMATION (Continued)
Item 1.Financial Statements (Continued)

Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2021 and 2020
(Unaudited)

On March 31, 2020, a A distribution of approximately $25,000,000 was declared which represented $2.12 per Class A Interest. The distribution included (i) a cash distribution on account of then-allowed claims of approximately $24,193,000, which was paid on April 10, 2020 and (ii) a deposit of approximately $807,000 into a restricted cash account, which was made on April 10, 2020, for amounts (a) payable for Class A Interests that may be issued in the future upon the allowance of unresolved claims; (b) in respect of Class A Interests issued on account of recently allowed claims; (c) to holders of Class A Interests who failed to cash distribution checks mailed in respect of prior distributions; (d) that were withheld due to pending avoidance actions; and (e) in respect of which the Trust is waiting for further beneficiary information.

On July 13, 2020, a distributionamount of approximately $29,934,000 was declared on July 13, 2020 which represented $2.56 per Class A Interest. The distribution included (i) a cash distribution on account of then-allowed claims in the amount of approximately $29,201,000, which was paid on July 16, 2020 and (ii) a deposit of approximately $733,000 into a restricted cash account, which was made on August 25, 2020, for amounts (a) payable for Class A Interests that may be issued in the future upon the allowance of unresolved claims; (b) in respect of Class A Interests issued on account of recently allowed claims; (c) tofor holders of Class A Interests who failed to cash distribution checks mailed in respect of prior distributions; (d) for distributions that were withheld due to pending avoidance actions; and (e) in respect for holders of Class A Interests for which the Trust is waiting for further beneficiary information.


On October
19 2020, a distribution

PART I.   FINANCIAL INFORMATION (CONTINUED)
Item  1.  Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2022 and 2021
(Unaudited)
During the three months ended March 31, 2022 and 2021, approximately $495,000 and $229,000, respectively, and during the nine months ended March 31, 2022 and 2021, approximately $608,000 and $351,000, respectively, of approximately $29,957,000 was declared which represented $2.56 per Class A Interest. The distribution included (i) a cash distribution on account of then-allowed claims of approximately $29,204,000, which wasdistributions were paid on November 6, 2020 and (ii) a deposit of approximately $753,000 into a restricted cash account, which was made on November 3, 2020, for amounts (a) payable for Class A Interests that may be issued in the future upon the allowance of unresolved claims; (b) in respect of Class A Interests issued on account of recently allowed claims; (c) to holders of Class A Interests who failed to cash distribution checks mailed in respect of prior distributions; (d) that were withheld due to pending avoidance actions; and (e) in respect of which the Trust is waiting for further beneficiary information.

On January 7, 2021, a distribution of approximately $50,005,000 was declared which represented $4.28 per Class A Interest. The distribution included (i) a cash distribution on account of then-allowed claims of approximately $48,665,000, which was paid on January 27, 2021 and (ii) a deposit of approximately $1,340,000 into a restricted cash account, which was made on January 28, 2021, for amounts (a) payable for Class A Interests that may be issued in the future upon the allowance of unresolved claims; (b) in respect of Class A Interests issued on account of recently allowed claims; (c) to holders of Class A Interests who failed to cash distribution checks mailed in respect of prior distributions; (d) that were withheld due to pending avoidance actions; and (e) in respect of which the Trust is waiting for further beneficiary information.

During the three and nine months ended March 31, 2021 and 2020, distributions of approximately $229,000 and $495,000, and $351,000 and $606,000, respectively, were paid from the restricted cash account to holders of Class A Interestsand distributions payable were reduced by the same amount as (a) claims were resolved, (b) claims were recently allowed, (c) addresses for holders of uncashed distribution checks were obtained, (d) pending avoidance actions were resolved and (e) further beneficiary information was received.


During the three months ended March 31, 2022 and 2021, approximately $472,000 and $47,000, respectively, and during the nine months ended March 31, 2022 and 2021, and 2020, as a result of claims being disallowed or Class A Interests being cancelled, approximately $47,000 and $749,000,$761,000 and $379,000, and $826,000, respectively, were released from the restricted cash account and distributions payable were reduced by the same amount.amount as a result of claims being disallowed or Class A Interests being cancelled.

PART I.FINANCIAL INFORMATION (Continued)
Item 1.Financial Statements (Continued)

Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2021 and 2020
(Unaudited)


During the three months ended March 31, 2022 and 2021, approximately $0 and $197,000, respectively, and during the nine months ended March 31, 2022 and 2021, and 2020, approximately $197,000 and $37,000,$0, and $431,000, and $149,000, respectively, were received from the Company’s transfer agent and others relating to distribution checks that were returned or not cashed. These amounts were deposited into the restricted cash account and distributions payable were increased by the same amount.


12)Related Party Transactions


Terry Goebel, a member of the Trust Supervisory Board, is president and a principal owner of G3 Group LA (G3), a construction firm specializing in the development of high-end luxury residences. G3 Group LA is owned by Terry Goebel and his son Kelly Goebel. As of March 31, 2021,2022, the Company was under contract with G3 Group LA for the development of one 1 single-family home in Los Angeles, California. One additional construction contract was assumed by the buyer of a single-family home in November 2019. As of March 31, 20212022 and June 30, 2020,2021 the remaining amounts payable under this contract were approximately $5,845,000 $3,045,000 and $8,133,000, $4,391,000, respectively. During the three months ended March 31, 2022 and 2021, approximately $267,000 and $1,496,000, respectively, and during the nine months ended March 31, 2022 and 2021, and 2020, approximately $1,496,000 and $2,877,000,$3,443,000 and $5,887,000, and $8,801,000, respectively, were paid by the Company to G3 Group LA.related to this contract.


The Liquidation Trustee of the Trust is entitled to receive 5% of the total gross amount recovered by the Trust from the pursuit of Trust claims andthe Causes of Action. During the three months ended March 31, 2022 and 2021, approximately $23,000 and $72,000, respectively, and during the nine months ended March 31, 2022 and 2021, and 2020, approximately $72,000 and $59,000,$1,334,000 and $462,000, and $238,000, respectively, were accrued as amounts due to the Liquidation Trustee. As of March 31 2021, 2022 and June 30, 2020,2021, approximately $90,000 $1,310,000 and $119,000, $160,000, respectively, were payable to the Liquidation Trustee. These amounts are included in accounts payable and accrued liabilities in the accompanying consolidated statements of net assets in liquidation. During the three and nine months ended March 31, 20212022 and 2020,2021, approximately $0 and $0, respectively,  and during the nine months ended March 31, 2022 and 2021, approximately $184,000 and $491,000, and $0, respectively, were paid to the Liquidation Trustee. See Note 15 for additional information.


In November 2019, the Trust entered into an arrangement with Akerman LLP, a law firm based in Miami, Florida of which the Liquidation Trustee is a partner, for the provision, at the option of the Trust on an as-needed basis, of e-discovery and related litigation support services in connection with the Trust’s prosecution of the Causes of Action. Under the arrangement, the Trust is charged for the services at scheduled rates per task which, depending on specific task, include flat rates, rates based on the volume of data processed, rates based on the number of data users, the hourly rates of Akerman LLP personnel, or other rates. During the three and nine months ended March 31, 2022 and 2021, approximately $137,000 and 2020,$109,000, respectively, and during the nine months ended March 31, 2022 and 2021, approximately $109,000 and $426,000,$351,000 and $314,000, and $426,000, respectively, were paid related to these services and there are no0 outstanding payables as of March 31, 2021 or2022 and June 30, 2020.2021.


20

PART I.   FINANCIAL INFORMATION (CONTINUED)
Item  1.  Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2022 and 2021
(Unaudited)
The executive officers of the Wind-Down Entity are entitled to a bonus based on the Wind-Down Entity achieving certain specified cumulative amounts of distributions to the Trust. Based on the carrying amounts of the net assets in liquidation included in the accompanying consolidated statements of net assets in liquidation, approximately $3,040,000 and $3,840,000, were accrued as of March 31, 20212022 and June 30, 2020, 2021, approximately $2,348,000 and $3,040,000, respectively, were accrued as the estimated amount of the bonus (including associated payroll taxes). These amounts are included in the payroll and payroll- relatedpayroll-related costs portion of accrued liquidation costs in the accompanying consolidated statement of net assets in liquidation. During the three months ended March 31, 2022 and 2021, approximately $692,000 and $1,025,000, respectively, and during the nine months ended March 31, 2022 and 2021, approximately $692,000 and $1,025,000, respectively, were paid related to the bonuses.

13)Causes of Action

During the three and nine months ended March 31, 2022 and 2021, and 2020,the Company recorded the following amounts from the settlement of Causes of Action ($ in thousands):

  
For the Three Months Ended
March 31,
  
For the Nine Months Ended
March 31,
 
  2022
  2021
  2022
  2021
 
             
Comerica Bank 
$
0
  
$
0
  
$
24,815
  $0 
Other settlement recoveries  468   1,278   1,868   8,443 
Total $468  $1,278  $26,683  $8,443 

On August 6, 2021, the Trust agreed to settle 2 pending actions against Comerica Bank. As a result, the Company received proceeds of approximately $1,025,000 and $831,000 and $1,025,000 and $831,000, respectively, were paid related$54,500,000 from the settlement during the three months ended March 31, 2022. The allocation of the proceeds is as follows ($ in thousands):

Trust's net portion
 $24,815 
Payable  to non-contributing claimants  15,600 
Payable for approved legal fees and litigation costs  13,960 
Payable for incentive awards  100 
Payable for administrative costs relating to non-contributing claimants  25 
Total $54,500 

All of the proceeds have been distributed according to the bonuses.settlement except for approximately $13,000 payable to non-contributing claimants and approximately $25,000 payable for court approved notice and administrative costs as the Company has not received all of the necessary documentation.


21

PART I.   FINANCIAL INFORMATION (CONTINUED)
Item  1.  Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2022 and 2021
(Unaudited)
13)14)Commitments and Contingencies


As of March 31, 2021,2022, the Company had construction contracts under which an aggregate of which approximately $15,200,000$5,200,000 was unpaid.


The Company hashad a lease for its office space that expiresexpired on August 31, 2021. The Company has onehad 1 three-month option to extend the lease. On June 4, 2021, the Company opted not to extend its existing lease and entered into a new office lease at a different location. The amount ofnew lease is for the period from August 1, 2021 through July 31, 2022. The annual rent is approximately $43,000 plus common area maintenance charges. The Company has 2 six-month options to extend the lease. The Company paid approximately $55,000 for the lease year ending July 31, 2022 relating to prepaid rent, common area maintenance charges and a security deposit for the new lease during the year ended June 30, 2021. During the three months ended March 31, 2022 and 2021, approximately $0 and $76,000, respectively, and during the nine months ended March 31, 2022 and 2021, approximately $50,000 and $221,000, respectively were paid as rent, including common area maintenance and parking charges, during the three and nine months ended March 31, 2021 and 2020 were approximately $76,000 and $74,000, and $221,000 and $208,000, respectively.charges.

PART I.FINANCIAL INFORMATION (Continued)
Item 1.Financial Statements (Continued)

Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2021 and 2020
(Unaudited)

The Company is not presently the defendant in any material litigation nor, to the Company’s knowledge, is any material litigation threatened against the Company.


The Company is not aware of any environmental liabilities that it believes would have a material adverse effect on its net assets in liquidation.


14)15)Subsequent Events


The Company evaluates subsequent events up until the date the unaudited consolidated financial statements are issued.

The following table summarizes the Liquidation Trust Interests during
Distributions

During the period from April 1, 20212022 through May 13, 2021:2022, as (a) claims were resolved, (b) claims were recently allowed, (c) addresses for holders of uncashed distribution checks were obtained, (d) pending avoidance actions were resolved and (e) further beneficiary information was received, distributions of approximately $92,000 were paid to holders of Class A Interests from the restricted cash account and distributions payable were reduced by the same amount.

Liquidation Trust Interests Class A  Class B 
       
Outstanding at April 1, 2021
  11,513,660   676,312 
         
Allowed claims  1,600   - 
         
5% enhancement for certain allowed claims
  -   - 
         
Settlement of claims by cancelling Liquidation Trust Interests
  (1,011)  (416
)
         
Outstanding at May 13, 2021
  11,514,249   675,896 

PART I.FINANCIAL INFORMATION (Continued)
Item 1.Financial Statements (Continued)

Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2021 and 2020
(Unaudited)

The following table summarizes unresolved claims against the Debtors as they relate to Liquidation Trust Interests (rounded) during the period from April 1, 2021 through May 13, 2021:

Liquidation Trust Interests Class A  Class B 
       
Outstanding at April 1, 2021
  138,788   5,011 
         
Allowed claims  (1,600)  - 
         
Disallowed claims  (12,579)
  - 
         
Outstanding at May 13, 2021
  124,609   5,011 

During the period from April 1, 20212022 through May 13, 2021, distributions of approximately $230,000 were paid from the restricted cash account.

During the period from April 1, 2021 through May 13, 2021,2022, as a result of claims being disallowed or Class A Interests being cancelled, approximately $789,000$52,000 was released from the restricted cash account and distributions payable were reduced by the same amount.


22

PART I.   FINANCIAL INFORMATION (CONTINUED)
Item  1.  Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended March 31, 2022 and 2021
(Unaudited)
Sales of Real Estate Assets

During the period from April 1, 20212022 through May 13, 2021,2022, approximately $1,800,000 relating to a pending sale was released from escrow.

Construction Contracts

During the period from April 1, 2022 through May 13, 2022, the Company increased construction contracts by approximately $106,000.

Causes of Action

During the period from April 1, 2022 through May 13, 2022, the Trust recorded approximately $769,000$23,000 from the settlement of certain Causes of Action. The Company recorded approximately $38,000$1,000 as the amount due to the Liquidation Trustee on account of such settlement.settlements.


On April 29, 2021, the Company received approximately $1,883,000 of cash from the DOJ relating to Forfeited Assets (Note 7).Related Party Transactions


During the period from April 1, 20212022 through May 13, 2021, the Company sold one single-family home and realized net proceeds of approximately $12,950,000. The Company also has an escrow receivable of approximately $2,500,000 related to this sale, which is to be released upon the Company's completion of construction and obtaining a certificate of occupancy.

As of May 13, 2021, the Company has one single-family home under contract.  Although the contingencies relating to this pending sale have been removed, no assurance can be given that the sale will close.

On May 13, 2021, a distribution in the amount of approximately $30,000,000 was approved which represented $2.58 per Class A Interest. The distribution is payable on or about June 15, 2021. The distribution included (i) a cash distribution on account of then-allowed claims in the amount of approximately $29,400,000, and (ii) a deposit of approximately $600,000 into a restricted cash account, for amounts (a) payable for Class A Interests that may be issued in the future upon the allowance of unresolved claims; (b) in respect of Class A Interests issued on account of recently allowed claims; (c) to holders of Class A Interests who failed to cash distribution checks mailed in respect of prior distributions; (d) that were withheld due to pending avoidance actions; and (e) in respect of which2022, the Trust is waiting for further beneficiary information.
paid approximately $1,241,000 to the Liquidation Trustee.

24
23

PART I.FINANCIAL INFORMATION (CONTINUED)

PART I.  FINANCIAL INFORMATION (CONTINUED)
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations



The following discussion and analysis of changes in net assets and net assets in liquidation should be read in conjunction with the accompanying unaudited consolidated financial statements of Woodbridge Liquidation Trust and the related notes thereto. The Trust, the Remaining Debtors, the Wind-Down Entity and the Wind-Down Subsidiaries, as used herein, are defined in Note 1 to the consolidated financial statements and are collectively referred to herein as the Company.“the Company”.


Forward-Looking Statements


Certain statements included in this Quarterly Report on Form 10-Q are forward-looking statements. Those statements include, without limitation, financial guidance, and projections and statements with respect to expectation of future financial condition, changes in net assets in liquidation, cash flows, plans, targets, goals, objectives and performance of the Trust. Such forward-looking statements also include statements that are preceded by, followed by, or that include the words “believes”, “estimates”, “plans”, “expects”, “intends”, “is anticipated”, “will continue”, “project”, “outlook”,  “evaluate”,  “may”, “could”, “would”, “should” and similar expressions, and all other statements that are not historical facts. All such forward-looking statements are based on the Trust’s current expectations and involve risks and uncertainties which may cause actual results to differ materially from those set forth in such statements. Such risks and uncertainties include the amount of sales proceeds, timing of sales of real estate assets, timing and amount of funds needed to complete construction of single-family homes, amount of general and administrative costs, the number and amount of successful litigationslitigation and/or settlements and the ability to recover thereon, the amount of funding required to continue litigations,litigation, the continuing impact of the COVID-19 pandemic, interest rates, adverse weather conditions in the regions in which properties to be sold are located, economic and political conditions, changes in tax and other governmental rules and regulations applicable to the Trust and its subsidiaries and other risks and uncertainties identified in Part I. Financial Information, Item 1A. Risk Factors of the Company’s Annual Report on Form 10-K, or contained in any of the Trust’s subsequent filings with the SEC.SEC including in Part II. Other Information, Item 1A. Risk Factors of this Form 10-Q. These risks and uncertainties are beyond the ability of the Trust to control, and in many cases, the Trust cannot predict the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements.


In connection with the “safe harbor” provisions of the Securities Act of 1933 and the Exchange Act, the Trust has identified and is disclosing important factors, risks and uncertainties that could cause its actual results to differ materially from those projected in forward-looking statements made by the Trust, or on the Trust’s behalf. (See “Part II. Other Information, Item 1A. Risk Factors” of this Form 10-Q.) These cautionary statements are to be used as a reference in connection with any forward-looking statements. The factors, risks and uncertainties identified in these cautionary statements are in addition to those contained in any other cautionary statements, written or oral, which may be made or otherwise addressed in connection with a forward-looking statement or contained in any of the Trust’s subsequent filings with the SEC. Because of these factors, risks and uncertainties, the Trust cautions against placing undue reliance on forward-looking statements. Although the Trust believes that the assumptions underlying forward-looking statements are currently reasonable, any of the assumptions could be incorrect or incomplete, and there can be no assurance that forward-looking statements will prove to be accurate. Forward-looking statements speak only as of the date on which they are made. Except as may be required by law, the Trust does not undertake any obligations to modify, update or revise any forward-looking statement to take into account or otherwise reflect subsequent events, corrections in or revisions of underlying assumptions, or changes in circumstances arising after the date that the forward-looking statement was made.


Overview


Pursuant to the Plan, the Trust was formed on February 15, 2019 to hold, either directly or indirectly through the Wind-Down Entity and the Wind-Down Subsidiaries, the assets and equity interests formerly owned by the Debtors. Each of the real properties formerly owned by the Debtors was, as of February 15, 2019, owned by one of the Wind-Down Subsidiaries. The purpose of the Wind-Down Entity and the Wind-Down Subsidiaries is to develop (as applicable), market and sell those properties to generate cash. Assets formerly owned by the Debtors other than real estate assets and certain cash were transferred to the Trust. The purpose of the Trust is to receive remittances of cash from the Wind-Down Entity, to resolve disputed claims, to prosecute the Causes of Action, to pay allowed unimpairedadministrative and priority claims, as defined in the Plan, and, subject to the payment of Trust expenses and the retention of various reserves, to make distributions of cash to All Interestholders in accordance with the Plan.


2524


PART I.  FINANCIAL INFORMATION (CONTINUED)
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
PART I.FINANCIAL INFORMATION (CONTINUED)
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)


The Trust operates pursuant to the Plan and the Trust Agreement. The Trust was formed as a Delaware statutory trust and is administered by the Liquidation Trustee under the supervision of its Supervisory Board. The Wind-Down Entity, a wholly-owned subsidiary of the Trust, operates pursuant to the Plan and the Wind-Down Entity LLC Agreement. The Wind-Down Entity was formed as a Delaware limited liability company and is administered by its Board of Managers, one of which is the chief executive officer. One member of the Board of Managers is also a member of the Supervisory Board of the Trust.


The Bankruptcy Court has retained certain jurisdictions regarding the Trust, the Liquidation Trustee, the Supervisory Board, the Wind-Down Entity, the Board of Managers, and assets of the Trust and the Wind-Down Entity, including the determination of all disputes arising out of or related to administration of the Trust and the Wind-Down Entity and its subsidiaries.


As of March 31, 2021,2022, the number of Liquidation Trust Interests outstanding in each class is as follows:


Class of Interest
 Number Outstanding 
    
Class A Liquidation Trust Interests  11,513,66011,516,439 
     
Class B Liquidation Trust Interests  676,312675,617 


For each of the classes of Liquidation Trust Interests, the number of Liquidation Trust Interests outstanding will increase to the extent that the disputed claims become allowed claims. In addition, the number of Liquidation Trust Interests outstanding will decrease to the extent that disputed claims are settled by cancelling previously issued Liquidation Trust Interests.


On December 24, 2019, the Trust’s Registration Statement on Form 10 became effective under the Exchange Act.The trading symbol for the Trust’s Class A Interests is WBQNL. The Trust’s Class A Interests are quoted on OTC Link ATS, the SEC-registered alternative trading system, and are eligible for the Depository Trust Company’s DRS services.

PART I.FINANCIAL INFORMATION (CONTINUED)
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Since the Plan Effective Date through March 31, 2021,2022, the Wind-Down Subsidiaries have disposed of approximately 131143 properties for aggregate net sales proceeds of approximately $403.73$481.73 million. During the period from April 1, 2022 through May 13, 2022, the Company did not sell any real estate assets. As of March 31, 2021,2022, the Company owned fourteenseven real estate assets (including two single-family homes under construction) with a gross carrying value of approximately $164.81$100.54 million. Therefore, it is unlikely that the amount of net sales proceeds that the Company will receive in the future will be consistent with the amount received from the Plan Effective Date through March 31, 2021. Duringfor the three months ended March 31, 2021 and 2020, the Company completed the construction of zero and one single-family home, respectively. During theor nine months ended March 31, 2021,2022 will be indicative of future net proceeds, which are likely to be significantly lower. In addition, it may take longer to sell the properties than the Company sold one single-family home that was under construction. The buyer assumed the remaining obligations to complete the construction of the property.has estimated. The Company expects to complete the liquidation of its assets during the fiscal year ending June 30, 2023.2024.

25


PART I.  FINANCIAL INFORMATION (CONTINUED)
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Discussion of the Company’s Operations


Three months ended March 31, 20212022


The following is a summary of the Consolidated Statement of Changes in Net Assets in Liquidation for the three months ended March 31, 2022 ($ in thousands):

 
 
  
Restricted for
Qualifying Victims
    
All
Interestholders
   Total  
  
          
Net assets in liquidation as of December 31, 2021 $3,203  $124,302  $127,505 
             
Change in assets and liabilities:            
Restricted for Qualifying Victims - change in carrying            
value of assets and liabilities, net  -   -   - 
             
All Interestholders:            
Change in carrying value of assets and liabilities, net  -   8,266   8,266 
Distributions (declared) reversed, net  -   (39,509)  (39,509)
Net change in assets and liabilities  -   (31,243)  (31,243)
             
Net assets in liquidation, as of March 31, 2022 $3,203  $93,059  $96,262 

There was no change to Net assets in liquidation – Restricted for Qualifying Victims during the three months ended March 31, 2022.

Net assets in liquidation – All Interestholders decreased by approximately $31.24 million during the three months ended March 31, 2022. This decrease was due to an increase in the carrying value of assets and liabilities, net of approximately $8.27 million and distributions (declared) reversed, net of approximately $39.51 million.

The components of the approximately $8.27 million net change in the carrying value of assets and liabilities are as follows ($ in thousands):

  
Restricted for
Qualifying Victims
  
All
Interestholders
  Total 
          
Other settlement recoveries recognized, net (1)
 $
-  $
445  $
445 
Remeasurement of assets and liabilities, net 
-   7,627   7,627 
Other  -   194   194 
Change in carrying value of assets and liabilities, net $-  $8,266  $8,266 

(1)Net of the 5% payable to the Liquidation Trustee of approximately $22 ($ in thousands).

During the three months ended March 31, 2022, the Company:


oDeclared a distribution of $3.44 per Class A Interest, which totaled approximately $39.98 million.


oSold the rest of the gold Forfeited Assets for net proceeds of approximately $0.12 million.


oCompleted construction of one single-family home (642 St. Cloud).


oSettled one secured loan for net proceeds of approximately $0.72 million.


oSigned agreements to settle other Causes of Action for payment to the Trust of approximately $0.47 million.


oPaid construction costs of approximately $1.80 million relating to single-family homes under development.


oPaid holding costs of approximately $0.66 million.

26


PART I.  FINANCIAL INFORMATION (CONTINUED)
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

oPaid general and administrative costs of approximately $4.04 million, including approximately $0.17 million of board member fees and expenses, approximately $1.84 million of payroll and other general and administrative costs and approximately $2.03 million of professional fees.

For the three months ended March 31, 2021
($
The following is a summary of the Consolidated Statement of Changes in Net Assets in Liquidation for the three months ended March 31, 2021 ($ in thousands):


 
Restricted for
Qualifying Victims
 
All
Interestholders
 Total  
Restricted for
Qualifying Victims
 
All
Interestholders
 Total 
              
Net assets in liquidation as of December 31, 2020 $- $210,476 $210,476 
Net assets in liquidation as of December 31, 2021 $-  $210,476  $210,476 
                   
Change in assets and liabilities:                   
Restricted for Qualifying Victims - change in carrying value of assets and liabilities, net
  3,459  -  3,459   3,459   -   3,459 
                   
All Interestholders:                   
Change in carrying value of assets and liabilities, net
 - 1,974

 1,974

  -   1,974   1,974 
Distributions (declared) reversed, net  -  (49,958)  (49,958)  -   (49,958)  (49,958)
Net change in assets and liabilities  -  (47,984)  (47,984)  -   (47,984)  (47,984)
                   
Net assets in Liquidation, as of March 31, 2021 $3,459 $162,492  165,951 
Net assets in liquidation, as of March 31, 2021 $3,459  $162,492  $165,951 


Net assets in liquidation – Restricted for Qualifying Victims increased by approximately $3.46 million during the three months ended March 31, 2021. The increase was the result of receiving the Forfeited Assets from the DOJ during the three months ended March 31, 2021.


Net assets in liquidation – All Interestholders decreased by approximately $47.98 million during the three months ended March 31, 2021. This decrease was due to: (a) an increaseto changes in the carrying value of assets and liabilities, net of approximately $1.97 million and (b)distributions (declared) reversed, net distributions of approximately $49.95 million.


The components of the approximately $3.46 million and $1.97 million net change in the carrying value of assets and liabilities, net are as follows ($ in thousands):


 
Restricted for
Qualifying Victims
 
All
Interestholders
 Total  
Restricted for
Qualifying Victims
 
All
Interestholders
 Total 
              
Recognition of Forfeited Assets $3,459 $- $3,459  $3,459 $- $3,459 
Remeasurement of assets and liabilities, net - 2,473 2,473  - 2,473 2,473 
Settlement recoveries recognized, net - 1,326 1,326 
Adjustment to insurance claim receivable - (1,900) (1,900)
Other settlement recoveries recognized, net (1) - 1,326 1,326 
Carrying value in excess of sales proceeds - (1,900) (1,900)
Other  -  75  75   -  75  75 
       
Change in carrying value of assets and liabilities, net $3,459 $1,974 $5,433  $3,459 $1,974 $5,433 


(1)Net of the 5% payable to the Liquidation Trustee of approximately $72 ($ in thousands).

During the three months ended March 31, 2021, the Company:



oDeclared a distribution of $4.28 per Class A Interest, which totaled approximately $50.01 million.


oSigned agreements to settle other Causes of Action for payment to the Trust of approximately $1.28 million.


oRecorded Forfeited Assets with an estimated net realizable value of approximately $3.46 million.

Declared a distribution of $4.28 per Class A Liquidation Trust Interest, which totaled approximately $50.01 million.
Signed agreements to settle certain Causes of Action for payment to the Trust of approximately $1.28 million.
Recorded Forfeited Assets with an estimated net realizable value of approximately $3.46 million.
Paid construction costs of approximately $5.77 million relating to single-family homes under development.

27

PART I.FINANCIAL INFORMATION (CONTINUED)
Item 2.
PART I.  FINANCIAL INFORMATION (CONTINUED)
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

oPaid construction costs of approximately $5.77 million relating to single-family homes under development.



oPaid holding costs of approximately $0.77 million.


oPaid general and administrative costs of approximately $4.29 million, including approximately $0.21 million of board member fees and expenses, approximately $1.90 million of payroll and other general and administrative costs and approximately $2.18 million of professional fees.

Paid holding costs of approximately $0.77 million.
Paid general and administrative costs of approximately $4.29 million, including approximately $0.21 million of board member fees and expenses, approximately $1.90 million of payroll and other general and administrative costs and approximately $2.18 million of post Plan Effective Date professional fees.
ThreeNine months ended March 31, 20202022


The following is a summary of the Consolidated Statement of Changes in Net Assets in Liquidation
For for the threenine months ended March 31, 2020
($2022 ($ in thousands):


Net assets in liquidation, as of December 30, 2019 $334,583 
 
Restricted for
Qualifying Victims
 
All
Interestholders
 Total 
       
Net assets in liquidation as of June 30, 2021 $3,167 $126,373 $129,540 
       
Change in assets and liabilities:          
Restricted for Qualifying Victims - change in carrying value of assets and liabilities, net  36  -  36 
       
All Interestholders:       
Change in carrying value of assets and liabilities, net 12,905  - 45,922 45,922 
Distributions (declared) reversed, net  (77,678)  -  (79,236)  (79,236)
Net change in assets and liabilities  (64,773)  -  (33,314)  (33,314)
Net assets in liquidation, as of March 31, 2020 $269,810 
       
Net assets in liquidation, as of March 31, 2022 $3,203 $93,059 $96,262 


Net assets in liquidation decreased– Restricted for Qualifying Victims increased by approximately $64.77$0.04 million during the threenine months ended March 31, 2020.2022.

Net assets in liquidation – All Interestholders decreased by approximately $33.31 million during the nine months ended March 31, 2022. This increasedecrease was due to: (a)to an increase in the carrying value of assets and liabilities, net of approximately $12.91$45.92 million and (b)distributions (declared) reversed, net distributions of approximately $77.68$79.23 million.

The components of the approximately $12.91$0.04 million and $45.92 million of the net change in the carrying value of assets and liabilities net are as follows ($ in thousands):


Settlement recoveries recognized, net $1,120 
 
Restricted for
Qualifying Victims
 
All
Interestholders
 Total 
Causes of Action, net(1) :       
Comerica Bank $- $23,575 23,575 
Other settlement agreements - 1,777 1,777 
Sales proceeds in excess of carrying value 16,873  - 6,460 6,460 
Remeasurement of assets and liabilities, net (5,345) 36 13,428 13,464 
Other  257   -  682  682 
Change in carrying value of assets and liabilities, net $12,905  $36 $45,922 $45,958 


(1)Net of the 5% payable to the Liquidation Trustee of approximately $1,241 for Comerica Bank and $93 for other settlement agreements ($ in thousands).

28


PART I.  FINANCIAL INFORMATION (CONTINUED)
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
During the threenine months ended March 31, 2020,2022, the Company:


Declared distributions of $4.50 and $2.12 per Class A Liquidation Trust Interest, which totaled approximately $78.43 million.
Completed construction of one single-family home (1241 Loma Vista).

Sold two single-family homes, two lots and settled one secured loan for net proceeds of approximately $74.27 million.

Adopted a strategy to auction certain secured loans and other properties. As a result of this change in strategy, the net carrying value of these real estate assets was reduced by approximately $1.86 million.

Signed agreements to settle certain Causes of Action of approximately $1.18 million.

Paid construction costs of approximately $11.79 million relating to single-family homes under development.

Paid holding costs of approximately $2.11 million.

PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 2.o
Management’s Discussion and AnalysisDeclared two distributions, both of Financial Condition and Results of Operations (Continued)
$3.44 per Class A Interest, which totaled approximately $80.00 million.



oSold the wine and the gold Forfeited Assets for net proceeds of approximately $0.49 million.


oCompleted construction of one single-family home (642 St. Cloud).


oSold four single-family homes and settled two secured loans for net proceeds of approximately $64.40 million. One of the single-family homes was under construction.


oRecorded approximately $24.81 million from the settlement of the two pending actions against Comerica Bank, the California Class Action and the Delaware Adversary Action.
Paid general and administrative costs of approximately $5.52 million, including approximately $0.26 million of board member fees and expenses, approximately $2.23 million of payroll and other general and administrative costs and approximately $3.03 million of post Plan Effective Date professional fees.

oSigned agreements to settle other Causes of Action for payment to the Trust of approximately $1.87 million.


oPaid construction costs of approximately $9.47 million relating to single-family homes under development.


oPaid holding costs of approximately $1.90 million.


oPaid general and administrative costs of approximately $12.56 million, including approximately $0.56 million of board member fees and expenses, approximately $4.68 million of payroll and other general and administrative costs and approximately $7.32 million of professional fees.

Nine months ended March 31, 2021

Consolidated Statement of Changes in Net Assets in Liquidation
For the nine months ended March 31, 2021
($
The following is a summary of the Consolidated Statement of Changes in Net Assets in Liquidation for the nine months ended March 31, 2021 ($ in thousands):


 
Restricted for
Qualifying Victims
 
All
Interestholders
 Total  
Restricted for
Qualifying Victims
 
All
Interestholders
 Total 
              
Net assets in liquidation as of June 30, 2020 $- $264,517 $264,517  $- $264,517 $264,517 
              
Change in assets and liabilities:              
Restricted for Qualifying Victims - change in carrying value of assets and liabilities, net
  3,459  -  3,459   3,459  -  3,459 
              
All Interestholders:              
Change in carrying value of assets and liabilities, net - 7,529 7,529  - 7,529 7,529 
Distributions (declared) reversed, net  -  (109,554)  (109,554)  -  (109,554)  (109,554)
Net change in assets and liabilities  -  (102,025)  (102,025)  -  (102,025)  (102,025)
              
Net assets in Liquidation, as of March 31, 2021 $3,459 $162,492  165,951 
Net assets in liquidation, as of March 31, 2021 $3,459 $162,492 $165,951 


Net assets in liquidation – Restricted for Qualifying Victims increased by approximately $3.46 million during the nine months ended March 31, 2021.2022.


Net assets in liquidation – All Interestholders decreased by approximately $102.02 million during the nine months ended March 31, 2021. This decrease was due to: (a) an increase in the carrying value of assets and liabilities of approximately $7.53 million and (b) net distributions of approximately $109.55 million.

The components of the change in the carrying value of assets and liabilities, net are as follows ($ in thousands):

  Restricted for  All    
  Qualifying Victims  Interestholders  Total 
          
Recognition of Forfeited Assets $3,459  $-  $3,459 
Settlement recoveries recognized, net  -   8,013   8,013 
Carrying value in excess of sales proceeds  -   (1,540)  (1,540)
Remeasurement of assets and liabilities, net  -   2,775   2,775 
Adjustment to insurance claim receivable  -   (1,900)  (1,900)
Other      181   181 
             
Change in carrying value of assets and liabilities, net $3,459  $7,529  $10,988 


During the nine months ended March 31, 2021, the Company:

Declared three distributions, two each of $2.56 and one of $4.28 per Class A Liquidation Trust Interest, which totaled approximately $109.93 million.

PART I.FINANCIAL INFORMATION (CONTINUED)
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Sold five single-family homes, two lots and eleven other properties for net proceeds of approximately $121.16 million.

Signed agreements to settle certain Causes of Action for payment to the Trust of approximately $8.44 million.

Recorded forfeited assets with an estimated net realizable value of approximately $3.46 million.

Paid construction costs of approximately $22.04 million relating to single-family homes under development.

Paid holding costs of approximately $4.13 million.

Paid general and administrative costs of approximately $14.39 million, including approximately $0.68 million of board member fees and expenses, approximately $6.35 million of payroll and other general and administrative costs and approximately $7.36 million of post Plan Effective Date professional fees.

Nine months ended March 31, 2020

Consolidated Statement of Changes in Net Assets in Liquidation
For the nine months ended March 31, 2020
 ($ in thousands)

Net assets in liquidation, as of June 30, 2019 $329,971 
Change in assets and liabilities:    
Change in carrying value of assets and liabilities, net  17,440 
Distributions (declared) reversed, net  (77,601)
Net change in assets and liabilities  (60,161)
Net assets in liquidation, as of March 31, 2020 $269,810 

Net assets in liquidation decreased by approximately $60.16 million during the nine months ended March 31, 2020. This increase was due to: (a) changes in the carrying value of assets and liabilities, net of approximately $17.44$7.53 million and (b)distributions (declared) reversed, net distributions of approximately $77.60$109.55 million.

29


PART I.  FINANCIAL INFORMATION (CONTINUED)
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
The components of the approximately $17.44$3.46 million and $7.53 million change in the carrying value of assets and liabilities, net are as follows ($ in thousands):


Reduction of state, local and other taxes $2,890 
Settlement recoveries recognized, net 4,596 
Sales proceeds in excess of carrying value 20,164 
 
Restricted for
Qualifying Victims
 
All
Interestholders
 Total 
       
Recognition of Forfeited Assets $3,459 $- $3,459 
Settlement recoveries recognized, net (1) - 8,013 8,013 
Carrying value in excess of sales proceeds - (1,540) (1,540)
Remeasurement of assets and liabilities, net (10,660) - 2,775 2,775 
Adjustment to insurance claim receivable - (1,900) (1,900)
Other  450  $- $181 $181 
Change in carrying value of assets and liabilities, net $17,440  $3,459 $7,529 $10,988 


(1)Net of the 5% payable to the Liquidation Trustee of approximately $462 ($ in thousands).

During the nine months ended March 31, 2020,2021, the Company:


Declared distributions of $4.50 and $2.12 per Class A Liquidation Trust Interest, which totaled approximately $78.43 million.

PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 2.o
Management’s DiscussionDeclared three distributions, two each of $2.56 and Analysisone of Financial Condition and Results of Operations (Continued)
$4.28 per Class A Interest, which totaled approximately $109.93 million.



oSold five single-family home, two lots and eleven other properties for net proceeds of approximately $121.16 million. One of the single-family homes was under construction and the buyer assumed the remaining obligations to complete the construction of the property of approximately $11.25 million.


oSigned agreements to settle Causes of Action for payment to the Trust of approximately $8.44 million.


oRecorded Forfeited Assets with an estimated net realizable value of approximately $3.46 million.


oPaid construction costs of approximately $22.04 million relating to single-family homes under development.


oPaid holding costs of approximately $4.13 million.


oPaid general and administrative costs of approximately $14.39 million, including approximately $0.68 million of board member fees and expenses, approximately $6.35 million of payroll and other general and administrative costs and approximately $7.36 million of professional fees.

Completed construction of three single-family homes (25210 Jim Bridger, 1241 Loma Vista and 24055 Hidden Ridge).

Sold ten single-family homes, 18 lots, two other properties and settled three secured loans for net proceeds of approximately $177.97 million.

Adopted a strategy to auction certain secured loans and other properties. As a result of this change in strategy, the net carrying value of these real estate assets were reduced by approximately $1.86 million.

Signed agreements to settle certain Causes of Action of approximately $4.84 million.

Paid construction costs of approximately $37.33 million relating to single-family homes under development.

Paid holding costs of approximately $8.69 million.

Paid general and administrative costs of approximately $17.09 million, including approximately $0.85 million of board member fees and expenses, approximately $5.37 million of payroll and other general and administrative costs and approximately $10.87 million of post Plan Effective Date professional fees.

Paid professional fees incurred before the Plan Effective Date of approximately $0.36 million.

Liquidity and Capital Resources


Liquidity


The Company’s primary sources for meeting its capital requirements are its cash and cash equivalents, availability under the LOC, proceeds from the sale of its real estate assets and recoveries from certain Causes of Action. The Company’s primary uses of funds are and will continue to be for distributions, development costs, holding costs and general and administrative costs, all of which the Company expects to be able to adequately fund over the next twelve months from its primary sources of capital.


Capital Resources


In addition to consolidated cash and cash equivalents at March 31, 20212022 of approximately $74.61$43.49 million (of which approximately $7.91$9.10 million is restricted), the capital resources available to the Company and its uses of liquidity are as follows:

Revolving Line of Credit

On June 19, 2020, two wholly-owned subsidiaries of the Wind-Down Entity entered into a $25,000,000 revolving LOC. On February 11, 2021, the LOC was amended.  Two additional wholly owned subsidiaries of the Wind-Down Entity were joined to the LOC as co-borrowers and two properties were added as replacement collateral as allowed for in the original agreement. The maturity date of the LOC was changed to January 31, 2023 with an option to extend for one additional year. The LOC required the borrowers to establish an interest reserve of $1,750,000, which is to be used to pay the potential monthly interest payments. Outstanding borrowings bear interest at a fixed rate of 3.50% per annum. Indebtedness under the LOC is secured by a deed of trust on two properties, the personal property associated therewith and the interest reserve. The Wind-Down Entity is the guarantor of the LOC. The Company is required to keep a cash balance of $20,000,000 on deposit with the lender in order to avoid a non-compliance fee of 2% of the shortfall in the required deposit and is required to comply with various covenants.


3130

PART I.FINANCIAL INFORMATION (CONTINUED)
Item 2.

PART I.  FINANCIAL INFORMATION (CONTINUED)
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

oRevolving Line of Credit:  On June 19, 2020, two wholly-owned subsidiaries of the Wind-Down Entity entered into a $25.00 million LOC.  On February 11, 2021, the LOC was amended.  Two additional wholly owned subsidiaries of the Wind-Down Entity were joined to the LOC as co-borrowers and two properties were added as replacement collateral. The maturity date of the LOC was changed to January 31, 2023 with an option to extend for one additional year, subject to the availability of collateral. The LOC required the borrowers to establish an interest reserve of $1.75 million, which is to be used to pay the potential monthly interest payments. Outstanding borrowings bear interest at a fixed rate of 3.50% per annum. Indebtedness under  the LOC is secured by a deed of trust on two properties, the personal property associated therewith and the interest reserve. The Wind-Down Entity is the guarantor of the LOC. The Company is required to keep a cash balance of $20.00 million on deposit with the lender in order to avoid a non-compliance fee of 2% of the shortfall in the required deposit and is required to comply with various covenants.  No amounts were outstanding under the LOC as of March 31, 2022 or May 13, 2022.


No amounts were outstanding under the LOC as of March 31, 2021 or

oSales of Real Estate Assets: The Wind-Down Entity and the Wind-Down Subsidiaries are in the process of developing, marketing and selling their real estate assets, all of which are held for sale. As of March 31, 2022, the Company owned a total of seven real estate assets with a gross carrying value of approximately $100.54 million. The majority of the gross carrying value is concentrated in the three single-family homes. Four single-family homes were under construction; two that are owned as of March 31, 2022,  one that was sold in December 2021 and one that was sold in May 13, 2021. During the three months ended March 31, 2022, the Company settled one secured loan for net proceeds of approximately $725,000. During the nine months ended March 31, 2022, the Company sold four single-family homes and settled two secured loans for net proceeds of approximately $64,405,000. It is unlikely that the net proceeds for the three or nine months ended March 31, 2022 will be indicative of future net proceeds, which are likely to  be significantly lower. In addition, it may take longer to sell the properties than the Company has estimated.


oRecoveries: During the three and nine months ended March 31, 2022, the Company recognized approximately $0.47 million and $26.68 million, respectively, from the settlement of Causes of Action. The recoveries for the three and nine months ended March 31, 2022 include approximately $0 and $24.81 million from Comerica Bank. There can be no assurance that the amounts the Company recovers from settling Causes of Action in the future will be consistent with the amount recovered during the three and nine months ended March 31, 2022.

Sales of Real Estate Assets

The Wind-Down Entity and the Wind-Down Subsidiaries are in the process of developing, marketing and selling their real estate assets.  As of March 31, 2021, one of the single-family homes was listed for sale. All of the other single-family homes are under construction. There can be no assurance as to the amount of net proceeds that the Company will receive from the sale of real estate assets or when the net sales proceeds will be received. As of March 31, 2021, the Company owned fourteen real estate assets with a gross carrying value of approximately $164.81 million. Therefore, it is unlikely that the net proceeds for the nine months ended March 31, 2021 will be indicative of future net proceeds, which may be significantly lower. In addition, it may take longer to sell the properties than the Company has estimated.

Causes of Action and Fair Funds Recoveries

During the three and nine months ended March 31, 2021, the Company recognized approximately $1.33 and $8.01 million, net, respectively, from the settlement of certain Causes of Action. There can be no assurance that the amounts the Company receives from settling other Causes of Action and Fair Funds recoveries in the future will be consistent with the amount recovered during the three and nine months ended March 31, 2021.
Forfeited Assets

Forfeited Assets consist of cash and other assets (jewelry, art, wine, purses, clothing, a car and other items). During the three months ended March 31, 2021, the Trust received certain of the Forfeited Assets from the DOJ. During the three and nine months ended March 31, 2021, the Company recognized approximately $3.46 million and $3.46 million, respectively of Forfeited Assets, including a $1.89 million receivable for cash not yet received from the DOJ.

The Trust is required to distribute the net sale proceeds from liquidating the Forfeited Assets to the Qualifying Victims. Qualifying Victims are the former holders of Class 3 and Class 5 Claims and their permitted assigns. Former holders of Class 4 Claims are not Qualifying Victims. Because of the requirement to distribute the net sale proceeds of the Forfeited Assets to the Qualifying Victims only, the Forfeited Assets at March 31, 2021 are presented in the consolidated statement of net assets as restricted net assets in liquidation. At March 31, 2021, 11,439,782 of the 11,513,660 Class A Interests were held by Qualifying Victims. Of the 138,788 Class A Interests relating to unresolved claims at March 31, 2021, 24,760 would be held by Qualifying Victims.


Uses of Liquidity


The primary uses of the Company’s liquidity are to pay (a) distributions payable, (b) development costs, (c) holding costs, and (d) general and administrative costs. As of March 31, 2021,2022, the Company’s total liabilities were approximately $68.33$47.50 million. The total liabilities recorded as of March 31, 20212022 may not be indicative of the costs paid in future periods, which may be significantly higher.


Given current cash and cash equivalent balances, projected sales of real estate assets, availability under the LOC, Causes of Action recoveries, distributions declared and expected cash needs, the Company does not expect a deficiency in liquidity in the next twelve months. Due to the uncertain nature of future net sales proceeds, recoveries and costs to be incurred, it is not possible to be certain that the current liquidity will be adequate to cover all future financial needs of the Company.  Creating contingent obligation agreements and/or seeking methods to reduce professional costs, including legal fees, and administrative costs are strategies that could be undertaken to address liquidity issues should they arise. These strategies could impact the Company’s ability to maximize recoveries from the settlement of otherunresolved Causes of Action.


32Distributions

PART I.FINANCIAL INFORMATION (CONTINUED)
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Distributions


Distributions will be made at the sole discretion of the Liquidation Trustee in accordance with the provisions of the Plan and the Trust Agreement. As of May 13, 2021,2022, the Liquidation Trustee has declared sixnine distributions on account ofto the Class A Interests.Interestholders. The distributions are paid on account of the then-allowed claims and a deposit is made into a restricted cash account for amounts (a) payable for Class A Interests that may be issued in the future upon the allowance of unresolved claims, (b) in respect of Class A Interests on account of recently allowed claims, (c) tofor holders of Class A Interests who failed to cash distribution checks mailed in respect of prior distributions, (d)  for distributions that were withheld due to pending avoidance actions and (e) in respectfor holders of Class A Interests for which the Trust is waiting for further beneficiary information.


31


PART I.  FINANCIAL INFORMATION (CONTINUED)
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Sections 7.6 and 7.18 of the Plan provide that distributions that have not been cashed within 180 calendar days of their issuance shall be null and void and the holder of the associated Liquidation Trust Interests “shall be deemed to have forfeited its rights to any reserved and future Distributions under the Plan,” with such amounts to become “Available Cash” of the Trust for all purposes.  On February 1, 2022, the Trust sent letters to the holders of the Class A Interests who have failed to cash distribution checks in respect of prior distributions, which checks were issued more than 180 days prior to the date of the letter. The letter informed the holders that, unless such holders contact the Trust no later than February 28, 2022,  in accordance with the Plan, the holders’ reserved and future distributions will be deemed forfeited.  The Trust provided this final notice simply as a one-time courtesy and reserves its rights to strictly enforce the Plan’s forfeiture provisions, and any other provision of the Plan, against any person (including any recipient of the final notice) at any time in the future, without further notice.

The following tables summarize the distributions declared, distributions paid and the activity in the restricted cash account for the periods from February 15, 2019 (inception) through March 31, 20212022 and from February 15, 2019 (inception) through May 13, 2021:2022:


 
Date
Declared
  
$ per
Class A
Interest
  During the Period from
February 15, 2019 (inception) through
March 31, 2022 ($ in Millions)
  
During the Period from
February 15, 2019 (inception) through
May 13, 2022 ($ in Millions)
 
  
Total
Declared
  Paid  
Restricted
Cash
Account
  
Total
Declared
  Paid  
Restricted
Cash
Account
 
                       
Distributions Declared                     
First3/15/2019 $3.75  $44.70  $42.32  $2.38  $44.70  $42.32  $2.38 
Second1/2/2020  4.50   53.43   51.19   2.24   53.43   51.19   2.24 
Third3/31/2020  2.12   25.00   24.19   0.81   25.00   24.19   0.81 
Fourth7/13/2020  2.56   29.97   29.24   0.73   29.97   29.24   0.73 
Fifth10/19/2020  2.56   29.95   29.20   0.75   29.95   29.20   0.75 
Sixth1/7/2021  4.28   50.01   48.67   1.34   50.01   48.67   1.34 
Seventh (a)5/13/2021  2.58   30.02   29.33   0.69   30.02   29.33   0.69 
Eighth10/8/2021  3.44   40.02   39.14   0.88   40.02   39.14   0.88 
Ninth2/4/2022  3.44   39.98   39.15   0.83   39.98   39.15   0.83 
Subtotal $29.23  $343.08  $332.43   10.65  $343.08  $332.43   10.65 
                              
Distributions Reversed                            
Disallowed/cancelled (b)              (3.57)          (3.62)
Returned (c)              0.73           0.73 
Subtotal              (2.84)          (2.89)
                              
Distributions Paid from Reserve Account (d)           (2.78)          (2.87)
                              
Distributions Payable, Net         as of 3/31/2022:  $5.03      as of 5/13/2022:  $4.89 

      
$ per
Class A
Interest
  
During the Period From February 15, 2019
(inception) through March 31, 2021
($ in Millions)
  
During the Period From February 15, 2019
(inception) through May 13, 2021
($ in Millions)
 
 
Date 
Total
Declared
  Paid  Distribution Reserve
Account
  
Total
Declared
  Paid  
Distribution Reserve
Account
 
                        
 Distributions Declared                      
 First3/15/2019 $3.75  $44.70  $42.32  $2.38  $44.70  $42.32   2.38 
 Second1/2/2020  4.50   53.43   51.19   2.24   53.43   51.19   2.24 
 Third3/31/2020  2.12   25.00   24.19   0.81   25.00   24.19   0.81 
 Fourth7/13/2020  2.56   29.97   29.24   0.73   29.97   29.24   0.73 
 Fifth10/19/2020  2.56   29.95   29.20   0.75   29.95   29.20   0.75 
 Sixth1/7/2021  4.28   50.01   48.67   1.34   50.01   48.67   1.34 
 Seventh (a)
5/13/2021
  2.58
   -
   -
   -
   30.00
   -
   -
 
 Subtotal  $22.35  $233.06  $224.81  $8.25  $263.06  $224.81  $8.25 
                               
 Distributions Reversed                             

Disallowed/cancelled (b)               (2.02)          (2.81)

Returned (c)               0.58           0.58 
 Subtotal               (1.44)          (2.23)
                               

Distributions Paid from Reserve Account (d)              (1.91)          (2.14)
                               
 Distributions Payable, Net          as of 3/31/2021:  $4.90      as of 5/13/2021:  $3.88
 

(a)Approved on May 13, 2021.
The seventh distribution included the cash the Trust received from Fair Funds.
(b)As a result of claims being disallowed or Class A Interests being cancelled.
(c)Distribution checks returned or not cashed.
(d)Paid as claims are allowed or resolved.


32



PART I.  FINANCIAL INFORMATION (CONTINUED)
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
As claims are resolved, additional Class A Interests may be issued or cancelled (see the Company’s Annual Report on Form 10-K filed on September 27, 2021, “Part 1, Item 1. Business, D. Plan Provisions Regarding the Company, 2. Treatment under the Plan of holders of claims against and equity interests in the Debtors and 3. Assets and liabilities of the Company”). Therefore, the total amount of a distribution declared may change between the date declared and the date paid. The Liquidation Trustee will continue to assess the adequacy of funds held and expects to make additional cash distributions on account of Class A Interests, but does not currently know the timing or amount of any such distribution(s).


Management believes that, since its inception, the Wind-Down Entity has made substantial progress toward completion of its liquidation activities and is nearing the end of the liquidation of its real estate portfolio. Holders of Liquidation Trust Interests are advised that future distributions from the Trust will be limited. Once the Company’s remaining real property assets have been liquidated and the net proceeds resulting therefrom, net of reserves, have been distributed, further distribution(s) will be materially reliant on future recoveries from litigation, which are uncertain and the amount and timing of which are difficult to determine.

Contractual Obligations


As of March 31, 2021,2022, the Company has contractual commitments related to construction contracts totaling approximately $15.20$5.20 million. The Company expects to complete the construction of thesethe single-family homes during the fiscal year ending June 30, 2022. The Company has an office lease that expires in August 2021.July 2022. The Company has two six-month options to extend the lease. The Company expects that it will continue to lease office space until the liquidation process is completed.


Quantitative Disclosures about Market Risk

As of March 31, 2021, the Company does not have any market risk exposure as defined by Securities and Exchange Commission Regulation 229.305.

PART I.FINANCIAL INFORMATION (CONTINUED)
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Critical Accounting Policies and Practices


The Company’s consolidated financial statements are prepared in accordance with U.S. GAAP. The accounting policies and practices that the Company believes are the most critical are discussed below. These accounting policies and practices require management to make decisions on subjective and/or complex matters that may inherently be uncertain. Estimates are required to prepare the consolidated financial statements in conformity with U.S. GAAP. Significant estimates, judgments and assumptions are required in a number of areas, including, but not limited to, the sales price of real estate assets, selling costs, development costs, holding costs and general and administrative costs to be incurred until the completion of the liquidation of the Company. In many instances, changes in the accounting estimates are likely to occur from period to period. Actual results may differ from the estimates. The Company believes the current assumptions and other considerations used in preparing the consolidated financial statements are appropriate. However, if actual experience differs from the assumptions and other considerations used in estimating amounts reflected in the Company’s consolidated financial statements, the resulting changes could have a material adverse effect on the Company’s net assets in liquidation.


Liquidation Basis of Accounting


Under the liquidation basis of accounting, all assets are recorded at their estimated net realizable value or liquidation value, which represents the estimated amount of net cash that may be received upon the disposition of the assets (on an undiscounted basis). Liabilities are measured in accordance with U.S. GAAP that otherwise applies to those liabilities. The Company has not recorded any amount forfrom the future recoveries from unsettledsettlement of unresolved Causes of Action or Fair FundsFund recoveries in the accompanying consolidated financial statements because they cannot be reasonably estimated.


Valuation of Real Estate


The measurement of real estate assets held for sale is based on the terms of current contracts (if any), estimates and other indications of sales value, net of estimated selling costs. To determine the value of real estate assets held for sale, the Company considersconsidered the three traditional approaches to value (cost, income and sales comparison) commonly used by the real estate appraisal community. The applicability and relevancy of each valuation approach as applied may differ by asset. In most cases, the sales comparison approach was accorded the greatest weight. This approach compares a property to other properties with similar characteristics that have recently sold. To validate management’s estimate, the Company also considers opinions from qualified real estate professionals and local real estate brokers and, in some cases, obtained third-partythird party appraisals.


33


PART I.  FINANCIAL INFORMATION (CONTINUED)
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Accrued Liquidation Costs


The estimated costs associated with implementing and completing the Company’s plan of liquidation are recorded as accrued liquidation costs. The Company has also recorded the estimated development costs to be incurred to prepare the assets for sale as well as the estimated holding costs to be incurred until the projected sale date and the estimated general and administrative costs to be incurred until the completion of the liquidation of the Company.


Changes in Carrying Value


On a quarterly basis, the Company reviews the estimated net realizable values, and liquidation costs and the estimated date of the completion of the liquidation of the Company and records any significant changes. The Company will also evaluate an asset when it is under contract for sale and the buyer’s contingencies have been removed. During the period that this occurs, the carrying value of the asset and the estimated closing and other costs will be adjusted, if necessary. If the Company has a change in its plan for the disposition of an asset, the carrying value will be adjusted to reflect this change in the period that the change is approved. The change in value may also include a change to the accrued liquidation costs related to the asset.


All changes in the estimated liquidation value of the Company’s assets, real estate held for sale, or other assets and liabilities are reflected as a change to the Company’s net assets in liquidation.


Causes of Action

The Company does not record any amount from the future settlement of unresolved Causes of Action or recoveries from Fair Fund or Forfeited Assets (including those that may be settled, but subject to court or other regulatory agency approval) in the accompanying consolidated financial statements since they cannot be reasonably estimated. The Company recognizes recoveries from the settlement of unresolved Causes of Action when an agreement has been executed and collectability is reasonably assured.

34


PART I.  FINANCIAL INFORMATION (CONTINUED)
PART I.FINANCIAL INFORMATION (CONTINUED)

Item 3.
Quantitative and Qualitative Disclosures about Market Risk


Not applicable, as the Company is a “smaller reporting company” within the meaning of Rule 12b-2 of the Exchange Act.


Item 4.
Controls and Procedures


This quarterlyDisclosure Controls and Procedures

As of the end of the period covered by this report, does notmanagement and the Liquidation Trustee evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based upon, and as of the date of, the evaluation, management and the Liquidation Trustee concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report to ensure that information required to be disclosed in the reports we file and submit under the Exchange Act is recorded, processed, summarized and reported as and when required. Disclosure controls and procedures include, a report of management’s assessment ofwithout limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file and submit under the Exchange Act is accumulated and communicated to our management, including the Liquidation Trustee, as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal controlscontrol over financial reporting, due to a transition period establishedas such term is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934, as amended.

In connection with the preparation of our Form 10-Q, our management and the Liquidation Trustee assessed the effectiveness of our internal control over financial reporting as of March 31, 2022. In making that assessment, management used the criteria set forth by rulesthe Committee of Sponsoring Organizations of the SEC for newly public companies.Treadway Commission (COSO) in Internal Control-Integrated Framework (2013).


Based on its assessment, our management and the Liquidation Trustee believes that, as of March 31, 2022, our internal control over financial reporting was effective based on those criteria. There have been no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

35

PART II.OTHER INFORMATION
Item 1.

PART II.   OTHER INFORMATION
Item 1.  Legal Proceedings

Below is a descriptiondescription of pending litigation. As the Company is the plaintiff in these legal proceedings and does not have the ability to estimate the ultimate recovery amount until they are settled, and in accordance with the Company’s accounting policy, no recoveries have been recorded in the Company’s consolidated financial statements for these legal proceedings, other than for settlements for which the Trust has entered into a signed settlement agreement.agreement and collectability is reasonably assured.


Goldberg v. Halloran & Sage LLP, et al., Case No. 19STCV42900 (Cal. Super. Ct., L.A. Cnty., filed Dec. 2, 2019), is an action by the Trust against nine law firms (Halloran & Sage LLP; Balcomb & Green, P.C.; Rome McGuigan, P.C.; Haight Brown & Bonesteel LLP; Bailey Cavalieri LLC; Sidley Austin LLP; Davis Graham & Stubbs LLP; Robinson & Cole LLP; and Finn Dixon & Herling LLP) and ten individual attorneys (Richard Roberts, Lawrence R. Green, Jon H. Freis, Brian Courtney, Ted Handel, Thomas Geyer, Neal Sullivan, S. Lee Terry, Jr., Shant Chalian, and Reed Balmer) for conduct in connection with their representation of Robert Shapiro, the Debtors or their affiliates before the commencement of the Bankruptcy Cases, as well as against up to 100 “Doe” defendants. The conduct challenged in the complaint includes knowingly and/or negligently preparing loan documents and investment agreements with material misstatements and omissions, designing deceptive securities products, preparing incorrect legal opinion memoranda on which investors relied, and assisting in the creation of nominally third-party borrower entities that were in fact controlled by Robert Shapiro.


The first set of counts in the complaint are against law firm Halloran & Sage LLP, attorney Richard Roberts, and the “Doe” defendants for aiding and abetting securities fraud (First Count), aiding and abetting fraud (Second Count), aiding and abetting breach of fiduciary duty (Third Count), negligent misrepresentation (Fourth Count), professional negligence (Fifth Count), and aiding and abetting conversion (Sixth Count). These defendants are alleged to be jointly and severally liable for rescission of investors’ purchases of securities and for damages in an amount believed to be in excess of $500 million, as well as for punitive damages.


The second set of counts in the complaint are against law firm Balcomb & Green, P.C., attorney Lawrence R. Green, and the “Doe” defendants for aiding and abetting securities fraud (Seventh Count), aiding and abetting fraud (Eighth Count), aiding and abetting breach of fiduciary duty (Ninth Count), negligent misrepresentation (Tenth Count), professional negligence (Eleventh Count), and aiding and abetting conversion (Twelfth Count). These defendants are alleged to be jointly and severally liable for rescission of investors’ purchases of securities and for damages in an amount believed to be in excess of $500 million, as well as for punitive damages.


The third set of counts in the complaint are against attorney Jon H. Freis and the “Doe” defendants for aiding and abetting securities fraud (Thirteenth Count), aiding and abetting fraud (Fourteenth Count), aiding and abetting breach of fiduciary duty (Fifteenth Count), negligent misrepresentation (Sixteenth Count), professional negligence (Seventeenth Count), and aiding and abetting conversion (Eighteenth Count). These defendants are alleged to be jointly and severally liable for rescission of investors’ purchases of securities and for damages in an amount believed to be in excess of $500 million, as well as for punitive damages.


The fourth set of counts in the complaint are against law firm Rome McGuigan, P.C., attorney Brian Courtney, and the “Doe” defendants for aiding and abetting securities fraud (Nineteenth Count), aiding and abetting fraud (Twentieth Count), aiding and abetting breach of fiduciary duty (Twenty-First Count), negligent misrepresentation (Twenty-Second Count), professional negligence (Twenty-Third Count), and aiding and abetting conversion (Twenty-Fourth Count). These defendants are alleged to be jointly and severally liable for rescission of investors’ purchases of securities and for damages in an amount believed to be in excess of $500 million, as well as for punitive damages.


The fifth set of counts in the complaint are against law firm Haight Brown & Bonesteel LLP, attorney Ted Handel, and the “Doe” defendants for aiding and abetting securities fraud (Twenty-Fifth Count), aiding and abetting fraud (Twenty-Sixth Count), aiding and abetting breach of fiduciary duty (Twenty-Seventh Count), negligent misrepresentation (Twenty-Eighth Count), professional negligence (Twenty-Ninth Count), and aiding and abetting conversion (Thirtieth Count). These defendants are alleged to be jointly and severally liable for rescission of investors’ purchases of securities and for damages in an amount believed to be in excess of $20 million, as well as for punitive damages.


36


PART II.   OTHER INFORMATION (CONTINUED)
Item 1.  Legal Proceedings (Continued)
PART II.OTHER INFORMATION (CONTINUED)
Item 1.Legal Proceedings (Continued)

The sixth set of counts in the complaint are against law firm Bailey Cavalieri LLC, Thomas Geyer, and the “Doe” defendants for aiding and abetting securities fraud (Thirty-First Count), aiding and abetting fraud (Thirty-Second Count), aiding and abetting breach of fiduciary duty (Thirty-Third Count), negligent misrepresentation (Thirty-Fourth Count), professional negligence (Thirty-Fifth Count), and aiding and abetting conversion (Thirty-Sixth Count). These defendants are alleged to be jointly and severally liable for rescission of investors’ purchases of securities and for damages in an amount believed to be in excess of $500 million, as well as for punitive damages.


The seventh set of counts in the complaint are against law firm Sidley Austin LLP, attorney Neal Sullivan, and the “Doe” defendants for aiding and abetting securities fraud (Thirty-Seventh Count), aiding and abetting fraud (Thirty-Eighth Count), aiding and abetting breach of fiduciary duty (Thirty-Ninth Count), negligent misrepresentation (Fortieth Count), professional negligence (Forty-First Count), and aiding and abetting conversion (Forty-Second Count). These defendants are alleged to be jointly and severally liable for rescission of investors’ purchases of securities and for damages in an amount believed to be in excess of $500 million, as well as for punitive damages.


The eighth set of counts in the complaint are against law firm Davis Graham & Stubbs LLP, attorney S. Lee Terry, Jr., and the “Doe” defendants for aiding and abetting securities fraud (Forty-Third Count), aiding and abetting fraud (Forty-Fourth Count), aiding and abetting breach of fiduciary duty (Forty-Fifth Count), negligent misrepresentation (Forty-Sixth Count), professional negligence (Forty-Seventh Count), and aiding and abetting conversion (Forty-Eighth Count). These defendants are alleged to be jointly and severally liable for rescission of investors’ purchases of securities and for damages in an amount believed to be in excess of $200 million, as well as for punitive damages.


The ninth set of counts in the complaint are against law firm Robinson & Cole LLP, attorney Shant Chalian, and the “Doe” defendants for aiding and abetting securities fraud (Forty-Ninth Count), aiding and abetting fraud (Fiftieth Count), aiding and abetting breach of fiduciary duty (Fifty-First Count), negligent misrepresentation (Fifty-Second Count), professional negligence (Fifty-Third Count), and aiding and abetting conversion (Fifty-Fourth Count). These defendants are alleged to be jointly and severally liable for rescission of investors’ purchases of securities and for damages in an amount believed to be in excess of $5 million, as well as for punitive damages.


The tenth set of counts in the complaint are against law firm Finn Dixon & Herling LLP, attorney Reed Balmer, and the “Doe” defendants for aiding and abetting securities fraud (Fifty-Fifth Count), aiding and abetting fraud (Fifty-Sixth Count), aiding and abetting breach of fiduciary duty (Fifty-Seventh Count), negligent misrepresentation (Fifty-Eighth Count), professional negligence (Fifty-Ninth Count), and aiding and abetting conversion (Sixtieth Count). These defendants are alleged to be jointly and severally liable for rescission of investors’ purchases of securities and for damages in an amount believed to be in excess of $5 million, as well as for punitive damages.


The eleventh set of counts in the complaint are against law firms Halloran & Sage LLP; Balcomb & Green, P.C.; Rome McGuigan, P.C.; Haight Brown & Bonesteel LLP; Bailey Cavalieri LLC; Sidley Austin LLP; Davis Graham & Stubbs LLP; Robinson & Cole LLP; and Finn Dixon & Herling LLP; attorney Jon H. Freis, and the “Doe” defendants for actual-intent fraudulent transfer (Sixty-First Count) and constructive fraudulent transfer (Sixty-Second Count). These defendants are alleged to be liable for damages in an amount believed to be in excess of $5 million, as well as for provisional remedies, avoidance of the transfers, and punitive damages.


The case was designated as a complex matter on December 18, 2019, and was assigned to the Honorable Amy Hogue.

PART II.OTHER INFORMATION (CONTINUED)
Item 1.Legal Proceedings (Continued)

On March 20, 2020, two sets of defendants – Sidley Austin LLP and Neal Sullivan; and Davis Graham & Stubbs LLP and S. Lee Terry, Jr. – filed special motions to strike the portions of the complaint directed at them under a California statute (Civil Procedure Code section 425.16) that permits defendants to bring early challenges to causes of action against them that allegedly arise from protected litigation activity if those causes of action lack minimal merit.  The defendants that filed these special motions to strike asserted that the claims against them arise from communicative conduct in the course of quasi-judicial proceedings, such as regulatory inquiries, and that the Trust cannot establish a likelihood of prevailing on its claims against them.  The Trust opposed these motions, and the matters were heard on July 28, 2020, and taken under submission on that date.  On August 14, 2020, the Court entered orders: (i) granting the motion to strike filed by Sidley Austin LLP and Neal Sullivan, and (ii) granting in part and denying in part the motion to strike filed by Davis Graham & Stubbs LLP and S. Lee Terry, Jr.  In September 2020, the Trust filed notices of appeal of the foregoing orders, and Davis Graham & Stubbs LLP and S. Lee Terry, Jr. subsequently filed a cross-appeal.  On January 27, 2021, the Court entered an order granting, in part, a motion for attorneys’ fees filed by Sidley Austin LLP and Neal Sullivan, pursuant to which the movants were awarded $282,500.00 in fees and $5,557.87 in costs. On March 1, 2021, the Trustee filed a notice of appeal of the order granting fees and costs.


37


PART II.   OTHER INFORMATION (CONTINUED)
Item 1.  Legal Proceedings (Continued)
On April 13, 2020, four sets of defendants – Rome McGuigan, P.C. and Brian Courtney; Bailey Cavalieri LLC and Thomas Geyer; Robinson & Cole LLP and Shant Chalian; and Finn Dixon & Herling LLP and Reed Balmer – filed motions to quash the service of summonses.  The defendants that filed these motions asserted that they are not subject to suit in California because they do not have sufficient contacts with California to justify a California court���scourt’s exercise of jurisdiction over them.  The Trust opposed these motions, and the matters were heard in part on July 15, 2020 and in part on July 20, 2020, and (with exception of the motion filed by Finn Dixon & Herling LLP and Reed Balmer) were taken under submission on July 20, 2020.  The motion filed by Finn Dixon & Herling LLP and Reed Balmer was taken off calendar prior to July 20, 2020, and the parties thereafter reached a confidential settlement.  On July 21, 2020, the Court entered orders granting the motions to quash filed by Rome McGuigan, P.C. and Brian Courtney; Bailey Cavalieri LLC and Thomas Geyer; and Robinson & Cole LLP and Shant Chalian.  On September 10, 2020, the Trust filed a notice of appeal of the foregoing orders.


On June 16, 2020, the Trust reached a confidential settlement with Balcomb & Green, P.C. and Lawrence R. Green.  On July 6, 2020, these defendants filed a motion seeking the Court’s determination that the settlement was made in good faith under a California statute (Civil Procedure Code section 877.6) that permits settling defendants to seek a good faith settlement finding in order to bar any other defendant from seeking contribution or indemnity.  The motion was unopposed, and the Court entered an order granting it on August 12, 2020.


On January 21, 2021, the Trust reached a confidential settlement with Robinson & Cole LLP and Shant Chalian.  As part of that settlement, the appeal of the jurisdictional ruling as to those parties has been dismissed. The other appeals remain pending. On June 14, 2021, the Trustee filed a combined opening brief for all of the appeals other than his appeal of the order granting fees and costs to Sidley Austin LLP. Between September 22-29, 2021, the respondents filed their opening briefs.   On March 17, 2022, the Trustee filed a combined reply brief for all of the appeals other than his appeal of the order granting fees and costs to Sidley Austin LLP.


On October 28, 2020, the Trust filed a federal lawsuit against four defendants that prevailed on the motions to quash service of summons in the California state court action (Rome McGuigan, P.C.; Brian Courtney; Bailey Cavalieri LLC; and Thomas Geyer), as well as a fifth defendant (Ivan Acevedo), and certain “Doe” defendants.”  The case is styled Goldberg v. Rome McGuigan, P.C., et al., Case No. 2:20-cv-09958-JFW-SK (C.D. Cal.).  The complaint contains counts for (i) violations of section 10(b) of the Exchange Act and Rule 10b-5; (i) aiding and abetting fraud; (iii) aiding and abetting breach of fiduciary duty; (iv) negligent misrepresentation; (v) professional negligence; (vi) aiding and abetting conversion; (vii) actual fraudulent transfer; and (viii) constructive fraudulent transfer.  The conduct challenged in the complaint includes certain of the same conduct challenged in the California state court action, and a footnote in the complaint explains:  “Plaintiff filed an action in Los Angeles Superior Court against [four of these defendants] raising some of the claims asserted in this action.  Those defendants filed a motion to quash service, alleging that the court did not have personal jurisdiction.  The Court granted those motions, and Plaintiff appealed.  Plaintiff brings this action to preserve his rights and ensure that his claims against [the defendants] are adjudicated on the merits.  Should the state court appeal be successful, resulting in two cases being simultaneously litigated on the merits in two forums, [plaintiff] will consider dismissing this action and litigating the case in state court.”  On January 4, 2021, the four defendants from the California state court action filed motions to dismiss this federal lawsuit, and on March 4, 2021, the court entered an order granting those motions in part by dismissing the first count (arising under the federal securities laws), without ruling on the remaining counts (arising under state law) in light of potential personal jurisdiction issues.  On March 29, 2021, the same four defendants again moved to dismiss the remaining counts for lack of personal jurisdiction, and onjurisdiction. On April 23, 2021 the federal court grantedentered an order granting those motions. The Trust is considering its appellate options.
motions, but has not yet entered a final judgment.


PART II.OTHER INFORMATION (CONTINUED)
Item 1.Legal Proceedings (Continued)
Comerica Bank litigation. There areOn August 6, 2021, the Trust agreed to the terms of a settlement of two pending actions against Comerica Bank.  The terms of the settlement, reached following negotiations with Comerica Bank and the plaintiffs in a putative class action against Comerica Bank in the United States District Court for the Central District of California (the “District Court”), are the subject of a Settlement Agreement among the plaintiffs, Comerica Bank, and the Trust (“Comerica Settlement Agreement”).  Comerica Bank is the institution at which the Debtors maintained all of their bank accounts, alleging various causesand these actions arise out of action:the Debtors’ former banking relationships with Comerica Bank.  The Comerica Settlement Agreement is referenced hereto as Exhibit 10.16.


(1)
38


PART II.   OTHER INFORMATION (CONTINUED)
Item 1.  Legal Proceedings (Continued)
The Comerica Settlement Agreement resolves two actions.  One of the actions, captioned In re Woodbridge Investments Litigation, Case No. 2:18-cv-00103-DMG-MRW (C.D. Cal.), iswas a consolidated putative class action (Class Action) in the United States District Court for the Central District of California (California District Court) brought on behalf of former Noteholdersnoteholders and Unitholders against Comerica Bank. It isunitholders of the Debtors (the “California Class Action”).  The California Class Action was comprised of five separate lawsuits filed between January 4, 2018 and April 26, 2018. The five lawsuits were2018 and, as consolidated, Lead Class Counsel was appointed, and Lead Class Counsel filed a Consolidated Class Action Complaint on September 19, 2019. The Consolidated Class Action Complaint asserted claims for aiding and abetting fraud, (Count 1), aiding and abetting breach of fiduciary duty, (Count 2), negligence, (Count 3), and violations of California’s unfair competition law (Count 4).

On November 1, 2019, Comerica moved to dismisslaw.  The Trust believes that it is the Consolidated Class Action Complaint under Federal Rule of Civil Procedure 12(b)(6) (failure to state a claim upon which relief can be granted) and Federal Rule of Civil Procedure 12(b)(1) (lack of subject matter jurisdiction). With respect to Count 1 (aiding and abetting fraud) and Count 2 (aiding and abetting breach of fiduciary duty), Comerica argued that the Class Plaintiffs’ allegations did not demonstrate that Comerica had actual knowledge of the underlying fraud and breach of fiduciary duty that Comerica is alleged to have aided and abetted; with respect to Count 3 (negligence), Comerica argued that there is no duty of care owed to non-customers of Comerica; and with respect to Count 4 (California Unfair Competition Law), Comerica argued that a claim for unfair competition fails when there is no actual knowledge of fraud or breach of fiduciary duty and no duty owed. In addition, Comerica argued that all causes of action failed to state a claim for the additional reason that Comerica’s filing or non-filing of a Suspicious Activity Report (SAR) under federal law cannot support any of the causes of action, and that the Court lacked subject matter jurisdiction because all of the causes of action belong to the Trust such that the Class Plaintiffs lack standing to pursue them.

On August 5, 2020, the Court entered an order granting in part and denying in part Comerica’s motion to dismiss.  The Court denied Comerica’s request to dismiss Counts 1 and 2 on the ground that the allegations of the Consolidated Class Action Complaint sufficiently alleged that Comerica had the requisite knowledge of the underlying fraud and breach of fiduciary duty.  The Court granted Comerica’s request to dismiss Count 3 on the ground that the allegations of the Consolidated Class Action Complaint did not sufficiently allege a duty of care owed to non-customers of Comerica.  On Count 4, the Court granted the motion to dismiss to the extent it relied on a failure to file a SAR (which claim the Court found was preempted by federal law, which prohibits disclosure of a SAR), but denied the motion to dismiss to the extent the complaint relied on violations arising from non-SAR-related conduct, and the Court granted the class leave to amend the complaint.  The Court also denied Comerica’s request to dismiss based on Comerica’s allegations that the class lacked standing and that the Trust cannot be a member of a class, finding instead that the class has plausibly alleged standing to sue, and that the question of whether the Trust can be a class member did not need to be answered at this stage.

On August 26, 2020, the putative class filed a First Amended Consolidated Class Action Complaint, which asserted claims for aiding and abetting fraud (Count 1), aiding and abetting breach of fiduciary duty (Count 2), and violations of California’s unfair competition law (Count 3).  Comerica answered the First Amended Consolidated Class Action Complaint on September 16, 2020.  Discovery is now proceeding in the litigation, and on April 16, 2021 the plaintiffs moved to certify a class.  The class certification motion remains pending.  The Court has entered a schedule setting the following dates and deadlines: (i) August 3, 2021 as the fact discovery cut-off; (ii) August 20, 2021 as the deadline to file dispositive motions; (iii) September 7, 2021 as the deadline for initial expert disclosures and reports; (iv) October 22, 2021 as the expert discovery cut-off; (v) December 14, 2021 as the final pretrial conference; and (vi) January 11, 2022 as the start of what is estimated to be a 10-day jury trial.

The Liquidation Trustee asserts that he is alargest member of the putative class andin the California Class Action, as holder of approximately 60.9% of all claims against Comerica disputes that assertion.based on the claims contributed to the Trust by former investors of the Debtors.


PART II.OTHER INFORMATION (CONTINUED)
Item 1.Legal Proceedings (Continued)
(2) The other action resolved by the settlement, captioned Michael I. Goldberg vs.as trustee for the Woodbridge Liquidation Trust v. Comerica Bank, Adv. Pro. No. 20-ap-50452-BLS (Bankr. D. Del., originally filed Apr. 26, 2019 in California and transferred on February 5, 2020 to Delaware)), is an action byadversary proceeding  in the Bankruptcy Court, in which the Trust asserted claims against Comerica Bank allegingfor fraudulent transfer liabilitytransfers under the California Civil Code.Code the (the “Delaware Adversary Action”). The Trust’s complaintDelaware Adversary Action also incorporatesincorporated the claims asserted against Comerica Bank in the class action (referenced in paragraph (1) above)California Class Action to the extent that such claims aremay ultimately be determined to belong to the TrustDebtors’ estates rather than to individual former Noteholdersnoteholders and Unitholders.unitholders.


On June 28, 2019, Comerica filed three motions: (i) a motion to transfer venue toUnder the Bankruptcy Court; (ii) alternatively, a motion to dismiss the action for failure to state a claim; and (iii) a motion to strike the portionterms of the Complaint that incorporatesComerica Settlement Agreement, the California Class Action has been settled as a class action claims. Comerica argued that venue should be transferred to the Bankruptcy Court on the grounds that, inter alia, that court is familiar withbasis of a class defined to consist of (i) the facts underlyingTrust, as assignee of the litigation and is best positioned to adjudicate it. Inclaims of the alternative,holders of Net Claims (as defined in the event thatSettlement Agreement) in Class 3 (Standard Note Claims, as defined in the court declines to transfer venue, Comerica argued thatPlan) and Class 5 (Unit Claims, as defined in the Complaint should be dismissed onPlan) of the grounds that, among other grounds, (i)Plan who are Contributing Claimants (as defined in the Trust’s claims are barred by the doctrine of in pari delicto,Plan) and (ii) the transfers thatholders of Net Claims (as defined in the Trust seeks to recoverSettlement Agreement) in Class 3 (Standard Note Claims, as defined in the Plan) and Class 5 (Unit Claims, as defined in the Plan) of the Plan who are not avoidable as a matterContributing Claimants (as defined in the Plan).  For purposes of law becausedistributions under the paymentSettlement Agreement, the holders of a secured banking obligation cannotNet Claims who are not Contributing Claimants are deemed to be the subjectholders of a fraudulent transfer claim.such Net Claims as of February 15, 2019.

Under the Comerica Settlement Agreement, Comerica Bank agreed to pay (including through its insurers) an aggregate of $54.5 million, consisting of $54.2 million to settle the California Class Action (the “Class Payment”) and $300,000 to settle the Delaware Adversary Action (the “FT Payment”).  The Class Payment was intended to provide recoveries to members of the plaintiff class and to fund, in amounts to be determined by the District Court, the legal fees of plaintiffs’ counsel in the California Class Action, not to exceed 25% of the California Class Action settlement payment, the costs of administering the settlement, and certain incentive award for the class representatives.  Under the Comerica Settlement Agreement, Comerica Bank (and certain related parties) has been released from all claims advanced, or that could have been advanced, related to the facts alleged in the California Class Action or the Delaware Adversary Action.

The settlement amount was required to be paid within ten business days of the Settlement Effective Date (as defined in the Comerica Settlement Agreement), and was paid, in its entirety, between January 19, 2022 and January 27, 2022.

On July 22, 2019, the Trust filed its omnibus opposition to the three Comerica motions. On February 5, 2020,December 17, 2021, the court entered an order granting Comerica’s motion to transfer the casefinal approval to the Bankruptcy Court in Delaware, and denying the remaining two motions (to dismiss and to strike) as moot in lightsettlement of the transfer, without prejudice to renewalCalifornia Class Action, and the “Effective Date” of the settlement occurred on or about January 20, 2022.  Since that time, the settlement payment has been paid by Comerica in the Bankruptcy Court. On February 6, 2020, the Bankruptcy Court opened the above-referenced docket number for the transferred case.  On March 23, 2020,Bank (or its insurers) and the Trust and Comerica filed a stipulation, which was approved byhas commenced administration of that payment.  The Trust has recorded approximately $24.81 million from the Bankruptcy Court, agreeing to staysettlement, comprised of (i) the action pending dispositionTrust’s share (approximately 60.9%) of the motion to dismissNet Class Consideration (without reduction for costs of administration or incentive awards) and (ii) the class action (referenced in paragraph (1) above)$300,000 FT Payment (without reduction for any reason).  On September 3, 2020, the Trust and Comerica filed a stipulation, which was also approved by the Bankruptcy Court, agreeing to further stay the action until thirty days after the California District Court enters a scheduling order in the Class Action.  On December 18, 2020, the Bankruptcy Court approved a stipulation staying the action until one of the parties or the court determines to vacate the stay.


Avoidance actions. The Trust is currently prosecuting numerous legal actions to recover preferential payments, fraudulent transfers, and other funds subject to recovery by the bankruptcy estate.  These actions were filed in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”), are pending before the Honorable J. Kate Stickles, and generally fall into the following categories:



o
Preferential transfers. Certain of the actions include claims arising under chapter 5 of the Bankruptcy Code, and seek to avoid or recover payments made by the Debtors during the 90 days prior to the December 4, 2017 bankruptcy filing, including payments to miscellaneous vendors and former Noteholders and Unitholders.

Preferential transfers. Certain of the actions include claims arising under chapter 5 of the Bankruptcy Code, and seek to avoid or recover payments made by the Debtors during the 90 days prior to the December 4, 2017 bankruptcy filing, including payments to miscellaneous vendors and former Noteholders and Unitholders.

Fraudulent transfers (Interest to Noteholders and Unitholders). Certain of the actions include claims arising under chapter 5 of the Bankruptcy Code, and seek to avoid or recover payments made by the Debtors during the course of the Ponzi scheme (from July 2012 through the December 4, 2017 bankruptcy filing) for interest paid to former Noteholders and Unitholders.

Fraudulent transfers (Shapiro personal expenses). Certain of the actions include claims arising under chapter 5 of the Bankruptcy Code, and seek to avoid and recover payments made by the Debtors during the course of the Ponzi scheme (from July 2012 through the December 4, 2017 bankruptcy filing) for the personal expenses of Robert and Jeri Shapiro, including those identified in a forensic report prepared in connection with an SEC enforcement action in the United States District Court for the Southern District of Florida.

4039


PART II.   OTHER INFORMATION (CONTINUED)
Item 1.  Legal Proceedings (Continued)

o
Fraudulent transfers (Interest to Noteholders and Unitholders). Certain of the actions include claims arising under chapter 5 of the Bankruptcy Code, and seek to avoid or recover payments made by the Debtors during the course of the Ponzi scheme (from July 2012 through the December 4, 2017 bankruptcy filing) for interest paid to former Noteholders and Unitholders.


o
Fraudulent transfers (Shapiro personal expenses). Certain of the actions include claims arising under chapter 5 of the Bankruptcy Code, and seek to avoid and recover payments made by the Debtors during the course of the Ponzi scheme (from July 2012 through the December 4, 2017 bankruptcy filing) for the personal expenses of Robert and Jeri Shapiro, including those identified in a forensic report prepared in connection with an SEC enforcement action in the United States District Court for the Southern District of Florida.

PART II.
OTHER INFORMATION (CONTINUED)o
Fraudulent transfers and fraud (against former agents). These actions, which arise under chapter 5 of the Bankruptcy Code and applicable state law governing fraudulent transfers, seek to avoid and recover payments made by the Debtors during the course of the Ponzi scheme (from July 2012 through the December 4, 2017 bankruptcy filing) for commissions to former agents, as well as for fraud, aiding and abetting fraud, and the unlicensed sale of securities asserted by the Trust based on claims contributed to the Trust by defrauded investors. These actions were filed by the Trust in the United States Bankruptcy Court for the District of Delaware between November 15, 2019 and December 4, 2019. Actions of this type are also being pursued by the SEC, and it is the Trust’s understanding that any recoveries obtained by the SEC will be transmitted to the Trust pursuant to a Fair Fund established by the SEC.
Item 1.Legal Proceedings (Continued)

The Trust has filed over 400 legal actions of this nature, many of which have been resolved, resulting in recoveries by or judgments in favor of the Trust. Since inception and as of April 30, 2021,2022, the Trust has obtained  judgments of approximately $6.8$23.60 million, including default judgments of approximately $15.43 million and stipulated judgement of approximately $8.17 million and has entered into settlements in approximately 158210 legal actions and in an additional approximately 245 potential avoidance claims for which litigation was not filed, resulting in an aggregate settlements of approximately $14.6$17.17 million of cash payments made or due to the Trust and approximately $9.6$9.98 million in reductions of claims against the Trust.


o
Other legal proceedings.  In addition, other legal proceedings are being prosecuted by the Trust and United States governmental authorities, which actions may result in recoveries in favor of the Trust. Such actions currently include:
In addition, other legal proceedings are being prosecuted by the Trust and United States governmental authorities, which actions may result in recoveries in favor of the Trust. Such actions currently include:


o
Actions regarding the Shapiro’s personal assets. On December 4, 2019, the Trust filed an action in the Bankruptcy Court, Adv. Pro. No. 10-51076 (BLS), Woodbridge Liquidation Trust v. Robert Shapiro, Jeri Shapiro, 3X a Charm, LLC, Carbondale Basalt Owners, LLC, Davana Sherman Oaks Owners, LLC, In Trend Staging, LLC, Midland Loop Enterprises, LLC, Schwartz Media Buying Company, LLC and Stover Real Estate Partners LLC. In this action, the Trust asserts claims under chapter 5 of the Bankruptcy Code and applicable state law for avoidance of preferential and fraudulent transfers together with claims for fraud, aiding and abetting fraud, the unlicensed sale of securities, breach of fiduciary duty and unjust enrichment. The Trust seeks to recover damages and assets held in the names of Robert Shapiro, Jeri Shapiro and their family members and entities owned or controlled by them, which assets the Trust contends are beneficially owned by the Debtors or for which the Debtors are entitled to recover based on the Shapiros’ defalcations, including over $20 million in avoidable transfers. On February 4, 2022, the Trust entered into a Settlement Agreement with Ms. Jeri Shapiro resolving the Trust’s adversary proceeding against Ms. Shapiro.  In connection with the Settlement Agreement, Ms. Shapiro responded to interrogatories from the Trust and submitted a declaration under penalty of perjury detailing her lack of assets.  Upon execution of the Settlement Agreement, Ms. Shapiro executed and delivered a Stipulated Judgment for approximately $20.6 million that will be held by the Trust in escrow for three years that can be entered without notice if the Trust learns Ms. Shapiro’s representations in her declaration were false or materially inaccurate.  Additionally, Ms. Shapiro authorized the Trust to expunge the filed claims of certain co-defendants she was listed as an officer and turned over payments to the Trust that were received by certain co-defendants in the adversary proceeding.  A stipulation of dismissal (as to Ms. Shapiro only) was entered on April 1, 2022.


o
Criminal proceeding and forfeiture.  In connection with the United States’ criminal case against Robert Shapiro (Case No. No. 19-20178-CR-ALTONAGA (S.D. Fla. 2019)), Shapiro agreed to the forfeiture of certain assets.  The Trust filed a petition in the Florida court to claim the Forfeited Assets as property of the Debtors’ estates, and therefore as property that had vested in the Trust pursuant to the Plan.  The Trust has entered into an agreement with the United States Department of Justice to resolve its claim.  The agreement was approved by the Bankruptcy Court on September 17, 2020 and was approved by the United States District Court on October 1, 2020.  Among other things, the agreement provides for the release of specified Forfeited Assets by the United States to the Trust, and for the Trust to liquidate those assets and distribute the net sale proceeds to Qualifying Victims, which include the vast majority of Trust beneficiaries—specifically, all former holders of Class 3 and 5 claims under the Plan and their permitted assigns—but do not include former holders of Class 4 claims under the Plan. The Trust has taken possession of the Forfeited Assets and has sold the wine and gold assets.


Actions regarding the Shapiros’ personal assets. On December 4, 2019, the Trust filed an action in the United States Bankruptcy Court for the District of Delaware, Adv. Pro. No. 10-51076 (BLS), Woodbridge Liquidation Trust v. Robert Shapiro, Jeri Shapiro, 3X a Charm, LLC, Carbondale Basalt Owners, LLC, Davana Sherman Oaks Owners, LLC, In Trend Staging, LLC, Midland Loop Enterprises, LLC, Schwartz Media Buying Company, LLC and Stover Real Estate Partners LLC. In this action, the Trust asserts claims under chapter 5 of the Bankruptcy Code and applicable state law for avoidance of preferential and fraudulent transfers together with claims for fraud, aiding and abetting fraud, the unlicensed sale of securities, breach of fiduciary duty and unjust enrichment. The Trust seeks to recover damages and assets held in the names of Robert Shapiro, Jeri Shapiro and their family members and entities owned or controlled by them, which assets the Trust contends are beneficially owned by the Debtors or for which the Debtors are entitled to recover based on the Shapiros’ defalcations, including over $20 million in avoidable transfers.

Criminal Proceeding and Forfeiture.  In connection with the United States’ criminal case against Robert Shapiro (Case No. No. 19-20178-CR-ALTONAGA (S.D. Fla. 2019)), Shapiro agreed to the forfeiture of certain assets.  The Trust filed a petition in the Florida court to claim the Forfeited Assets as property of the Debtors’ estates, and therefore as property that had vested in the Trust pursuant to the Plan.  The Trust has entered into an agreement with the United States Department of Justice to resolve its claim.  The agreement was approved by the Bankruptcy Court on September 17, 2020 and was approved by the United States District Court on October 1, 2020.  Among other things, the agreement provides for the release of specified Forfeited Assets by the United States to the Trust, and for the Trust to liquidate those assets and distribute the net sale proceeds to Qualifying Victims, which include the vast majority of Trust beneficiaries—specifically, all former holders of Class 3 and 5 claims and their permitted assigns—but do not include former holders of Class 4 claims. The Trust has taken possession of most of the Forfeited Assets, and is working with the Department of Justice to obtain possession of the remainder of the Forfeited Assets.

Wind-Down Group Litigationlitigation. The Wind-Down Group owns a portfolio of real estate assets, which includes secured loans and other properties.  As part of its recovery efforts, the Wind-Down Group, through its subsidiaries, is involved in ordinary routine litigation incidental to such assets.  Among other litigation, certain Woodbridge entities (including the Trust, the Wind-Down Entity, and WB 8607 Honoapiilani, LLC) filed an action against Certain Underwriters at Lloyd’s of London in Los Angeles Superior Court, alleging that the defendant insurer breached its obligations under an insurance policy purchased to protect a property owned by WB 8607 Honoapiilani (a subsidiary of the Wind-Down Entity) in Hawaii, which property was destroyed by fire in August 2017.  The Superior Court granted the defendant’s motion for summary judgment, and on March 25, 2021 entered judgment in favor of the defendant.  The judgment provided that plaintiffs take nothing by way of the complaint.  Further, the judgment provided that defendant refund plaintiffs for the premium payments under the insurance policy at issue in the lawsuit (approximately $111,000)($110,829.43), less all amounts paid by the defendant in respect of claims under the policy (approximately $98,000)($97,770.38) and less defendant’s costs (defendant has requested costs of approximately $10,000)$9,874.71).  Plaintiffs are considering their appellate options.
have appealed the judgment. The appeal has been fully briefed and is awaiting oral argument before the Court of Appeal.


PART II.OTHER INFORMATION (CONTINUED)

Item 1A.
Risk Factors


Please see the applicable risksrisk in Item 1A1A. of our Annual Report on Form 10-K filed with the SEC on September 28, 2020.27, 2021 and Item 1A. of our Quarterly Report on Form 10-Q filed on February 11, 2022 or contained in any of the Trust’s subsequent filings with the SEC.


Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds


In accordance with the Plan, all Liquidation Trust Interests have been issued without registration under the Securities Act.  The Liquidation Trust Interests have been issued only to holders of allowed claims in Class 3, Class 4, and Class 5 under the Plan entirely in exchange for such claims.  See “Item 1.  Business - D. Plan Provisions Regarding the Company - 2. Treatment under the Plan of holders of claims against and equity interests in the Debtors” of our Annual Report on Form 10-K filed with the SEC on September 28, 2020.27, 2021.  During the period from February 15, 2019 (inception) through March 31, 2021,2022, the Trust has issued an aggregate of 11,534,09711,539,281 Class A Interests and an aggregate of 677,790677,624 Class B Interests.  As of March 31, 2021,2022, the Trust has 11,513,660had 11,516,439 Class A Interests and 676,312675,617 Class B Interests outstanding. All Liquidation Trust Interests were issued on the Plan Effective Date andor from time to time thereafter as soon as practicable as and when claims in respect of which Liquidation Trust Interests were issuableClass 3, Class 4 or Class 5 have become allowed.


41


PART II.   OTHER INFORMATION
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds (Continued)
During the three months ended March 31, 2021,2022, the Trust issued the following Liquidation Trust Interests:

Date of Sale 
Number of
Class A
Interests Sold
 
Number of
Class B
Interests Sold
 
Nature of the
Transaction
Consideration
Received
         
March 4, 2021January 31, 2022 328.304,674.25 - Allowance ofAllowance of
claimsclaims
March 31, 20212,666.67- Allowance ofAllowance of
claimsclaims
         
Total 2,994.974,674.25 -   


The issuance of Liquidation Trust Interests has occurred in reliance upon the exemption from the registration requirements of the Securities Act afforded by Section 1145(a)(1) of the Bankruptcy Code. Section 1145(a)(1) exempts the offer and sale of securities under a plan of reorganization from registration under the Securities Act and state securities laws and regulation if (i) the securities are offered and sold under a plan of reorganization and are securities of the debtor, of an affiliate of the debtor participating in a joint plan with the debtor, or of a successor to the debtor under the plan; (ii) the recipients of the securities hold a pre-petition or administrative claim against the debtor or an interest in the debtor; and (iii) the securities are issued entirely in exchange for the recipient’s claim against or interest in the debtor, or principally in such exchange and partly for cash or property. The Trust believes that the Liquidation Trust Interests are securities of a “successor” to the Debtors within the meaning of Section 1145(a)(1), and such securities were issued under the Plan entirely in exchange for allowed claims in Class 3, Class 4, and Class 5.5 under the Plan.


PART II.OTHER INFORMATION (CONTINUED)

Item 3.
Defaults upon Senior Securities


NoneNone.


Item 4.
Mine Safety Disclosures


NoneNone.


Item 5.
Other Information


NoneNone.

4342


EXHIBITS (CONTINUED)
PART II.OTHER INFORMATION (CONTINUED)
Item 6.
Exhibits

Exhibit
Description


First Amended Joint Chapter 11 Plan of Liquidation of Woodbridge Group of  Companies, LLC and its Affiliated Debtors dated August 22, 2018, incorporated herein by reference to the Registration Statement on Form 10 filed by the Trust on October 25, 2019.


Certificate of Trust of Woodbridge Liquidation Trust dated February 14 and effective February 15, 2019, incorporated herein by reference to the Registration Statement on Form 10 filed by the Trust on October 25, 2019.


Liquidation Trust Agreement of Woodbridge Liquidation Trust dated February 15, 2019, as amended by Amendment No. 1 dated August 21, 2019 and Amendment No. 2 dated September 13, 2019, incorporated herein by reference to the Registration Statement on Form 10 filed by the Trust on October 25, 2019.


Amendment No. 3 to Liquidation Trust Agreement dated as of November 1, 2019, incorporated herein by reference to Amendment No. 1 to Registration Statement on Form 10 filed by the Trust on December 13, 2019.


Amendment No. 4 to Liquidation Trust Agreement dated as of February 5, 2020, incorporated herein by reference to the Current Report on Form 8-K filed by the Trust on February 6, 2020.


Amended and Restated Bylaws of Woodbridge Liquidation Trust effective August 21, 2019, incorporated herein by reference to the Registration Statement on Form 10 filed by the Trust on October 25, 2019.


Limited Liability Company Agreement of Woodbridge Wind-Down Entity LLC dated February 15, 2019, incorporated herein by reference to the Registration Statement on Form 10 filed by the Trust on October 25, 2019.


Loan and Security Agreement dated June 19, 2020 by and among WB Propco, LLC and WB 141 S. Carolwood, LLC, as Borrowers, Woodbridge Wind-Down Entity LLC, as Guarantor, and City National Bank of Florida, as Lender, incorporated herein by reference to Amendment No. 1 to the Current Report on Form 8-K filed by the Trust on June 29, 2020.


Agreement and Amendment to Loan and Security Agreement dated December 18, 2020 by and among WB Propco, LLC and WB 141 S. Carolwood, LLC, as Borrowers, Woodbridge Wind-Down Entity, LLC, as Guarantor, and City National Bank of Florida, as Lender.Lender, incorporated by reference herein to the Form 10-Q filed by the Trust on May 17, 2021.


Assumption Agreement and Joinder dated February 11, 2021 by and among WB Propco, LLC, WB 638 Siena, LLC and WB 642 St. Cloud, LLC, as co-borrowers, Woodbridge Wind Down Entity, LLC, as guarantor, and City National Bank of Florida.Florida, incorporated by reference herein to the Form 10-Q filed by the Trust on May 17, 2021.


Amended and Restated Security Agreement dated February 11, 2021 by WB Propco, LLC, WB 638 Siena, LLC and WB 642 St. Cloud, LLC in favor of City National Bank of Florida.Florida, incorporated by reference herein to the Form 10-Q filed by the Trust on May 17, 2021.


Amended and Restated Employment Agreement dated July 31, 2019 between Woodbridge Wind-Down Entity LLC and Frederick Chin, incorporated herein by reference to the Registration Statement on Form 10 filed by the Trust on October 25, 2019.


First Amendment to Amended and Restated Employment Agreement dated September 24, 2020 between Woodbridge Wind-Down Entity LLC and Frederick Chin, incorporated herein by reference to the Form 10-K filed by the Trust on September 28, 2020.

43


EXHIBITS (CONTINUED)
Indemnification Agreement dated February 27, 2019 between Woodbridge Wind-Down Entity LLC and Frederick Chin, incorporated herein by reference to the Registration Statement on Form 10 filed by the Trust on October 25, 2019.



PART II.
OTHER INFORMATION (CONTINUED)

Employment Agreement dated November 12, 2019 between Woodbridge Wind-Down Entity LLC and Marion W. Fong, incorporated herein by reference to Amendment No. 1 to Registration Statement on Form 10 filed by the Trust on December 13, 2019.

First Amendment to Employment Agreement dated September 24, 2020 between Woodbridge Wind-Down Entity LLC and Marion W. Fong, incorporated herein by reference to the Form 10-K filed by the Trust on September 28, 2020.



Indemnification Agreement dated November 12, 2019 between Woodbridge Wind-Down Entity LLC and Marion W. Fong, incorporated herein by reference to Amendment No. 1 to Registration Statement on Form 10 filed by the Trust on December 13, 2019.


Employment Agreement dated November 12, 2019 between Woodbridge Wind-Down Entity LLC and David Mark Kemper, incorporated herein by reference to Amendment No. 1 to Registration Statement on Form 10 filed by the Trust on December 13, 2019.



First Amendment to Employment Agreement dated September 24, 2020 between Woodbridge Wind-Down Entity LLC and David Mark Kemper, incorporated herein by reference to the Form 10-K filed by the Trust on September 28, 2020.


Indemnification Agreement dated November 12, 2019 between Woodbridge Wind-Down Entity LLC and David Mark Kemper, incorporated herein by reference to Amendment No. 1 to Registration Statement on Form 10 filed by the Trust on December 13, 2019.


Stipulation and Settlement Agreement between the United States and Woodbridge Liquidation Trust, as approved by order of the United States Bankruptcy Court for the District of Delaware entered September 17, 2020, incorporated herein by reference to the Form 10-K filed by the Trust on September 28, 2020.


Settlement Agreement dated August 6, 2021 by and among Mark Baker, Jay Beynon as Trustee for the Jay Beynon Family Trust DTD 10/23/1998, Alan and Marlene Gordon, Joseph C. Hull, Lloyd and Nancy Landman, and Lilly A. Shirley on behalf of themselves and the proposed Settlement Class, Michael I. Goldberg, as Trustee for Woodbridge Liquidation Trust, and Comerica Bank, incorporated herein by reference to the Form 10-K filed by the Trust on September 27, 2021.


California Residential Purchase Agreement and Joint Escrow Instructions dated October 19, 2021 for 642 St. Cloud Rd., Los Angeles, CA, including amendments, incorporated herein by reference to the Form 10-Q filed by the Trust on February 11, 2022.


Certification of Liquidation Trustee pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.


Certification of Liquidation Trustee pursuant to 18 U.S.C. 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


Findings of Fact, Conclusions of Law, and Order Confirming the First Amended Joint Chapter 11 Plan of Liquidation of Woodbridge Group of Companies, LLC and its Affiliated Debtors, entered October 26, 2018, incorporated herein by reference to the Registration Statement on Form 10 filed by the Trust on October 25, 2019.


XBRL101The following financial statements from the Woodbridge Liquidation Trust Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, formatted in eXtensible Business Reporting Language (XBRL): (i)  Consolidated Statements of Net Assets in Liquidation as of March 31, 2022 and June 30, 2021, (ii)  Consolidated Statements of Changes in Net Assets in Liquidation for the three months ended March 31, 2022 and 2021, (iii) Consolidated Statements of Changes in Net Assets in Liquidation for the nine months ended March 31, 2022 and 2021, (iv) the Notes to the Consolidated Financial sSatements. XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.


104Cover Page Interactive Data File (Formatted as Inline XBRL and contained in Exhibit 101).


*Filed herewith

† Portions omitted in accordance with Item 601(b)(10)(iv) of Regulation S-K (17 CFR § 220.601(b)(10)(iv)).

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 thereunto duly authorized.



Woodbridge Liquidation Trust


Date: May 14, 202113, 2022By:
/s/ Michael I. Goldberg





Michael I. Goldberg,


Liquidation Trustee



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