The following provides details of the change in the carrying value of assets and liabilities, net during the three months ended March 31, 20222023 ($ in thousands) (unaudited):
The following provides details of the distributions (declared) reversed, net during the three months ended March 31, 20222023 ($ in thousands) (unaudited):
One of the Trust’s liquidation activities is to litigate and/or settle Causes of Action. The main areas of litigation have involved actions against Comerica Bank, law firms and individual attorneys and avoidance actions. The Company recognizes recoveries from settlements when an agreement is executed and collectability is reasonably assured.
In December 2021, the Trust received court approval of its agreement to settle its litigation against Comerica Bank. The Trust has also pursued litigation against nine law firms and ten individual attorneys. The cases against two law firms and two individual attorneys have been settled. As of March 31, 2023, litigation against the other seven law firms and eight individual attorneys are in various stages. See Note 15.
DuringThe Trust has also filed numerous avoidance actions, most of which have been resolved, resulting in recoveries by or judgments in favor of the Trust. As of April 30, 2023, 46 legal actions remain pending. Additionally, since February 15, 2019 and as of March 31, 2023, the Trust has obtained default and stipulated judgments related to certain avoidance actions. It is unknown at this time how much, if any, will ultimately be collected on the judgments. Therefore, the Company has not recognized any recoveries from these judgments.
During the three and nine months ended March 31, 20222023 and 2021,2022, 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 $54,500,000 from the settlement during the three months ended March 31, 2022. The allocation of the proceeds is as follows ($ 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 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. | | For the Three Months Ended March 31, | | | For the Nine Months Ended March 31, | |
| | 2023
| | | 2022
| | | 2023
| | | 2022
| |
| | | | | | | | | | | | |
Other settlement recoveries | | $ | - | | | $ | 468 | | | $ | 231 | | | $ | 1,868 | |
Comerica Bank | | | - | | | | - | | | | - | | | | 24,815 | |
Total | | $ | - | | | $ | 468 | | | $ | 231 | | | $ | 26,683 | |
21The Company also recorded liabilities of 5% of the settlement as amounts payable to the Liquidation Trustee and an allowance for uncollectible settlement installment receivables. See Note 5 for information about the settlement receivables, net as of March 31, 2023.
14) | Commitments and Contingencies |
As of March 31, 2022,2023, the Company had construction contracts under which an aggregate of approximately $5,200,000$220,000 was unpaid.
The Company had a lease for its office space that expired on August 31, 2021. The Company had 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 new lease, is for the period fromwhich commenced on August 1, 2021 throughand expired on July 31, 2022. 2022, included two six-month extension options. On May 18, 2022, the Company exercised its first option to extend the lease for six months. On November 16, 2022, the Company exercised its second option to extend its lease for an additional six months through January 31, 2024. In addition, the Company amended its lease to include a third six-month option to extend.As of March 31, 2023, the Company had not exercised its third six-month option to extend.
The annualcurrent monthly base rent is approximately $43,000$4,000 plus common area maintenance charges. The Company has 2 six-month options to extend the lease. The Companyamount of rent paid, approximately $55,000 for the lease year ending July 31, 2022 relating to prepaid rent,including common area maintenance charges and a security deposit for the new leaseparking charges, during the year ended June 30, 2021. During the three months ended March 31, 20222023 and 2021,2022, was approximately $0$13,000 and $76,000,$0, respectively, and during the nine months ended March 31, 2023 and 2022, was approximately $38,000 and 2021, approximately $50,000, and $221,000, respectively were paid as rent, including common area maintenance and parking charges.
respectively.
The Wind-Down Entity has part-time employment agreements with its two executive officers through December 31, 2023.
The Company is not presently the defendant in any materialmaterial litigation nor, to the Company’s knowledge, is any material litigation threatened against the Company.
The Company is not aware20
The Company evaluates subsequent events up until the date the unaudited consolidated financial statements are issued.
DistributionsSale of Real Estate Asset
During the period from April 1, 20222023 through May 13, 2022,12, 2023, the Company sold one property located in the state of New York and received net proceeds of approximately $1,557,000.
Distributions
On May 10, 2023, a distribution in the amount of approximately $25,000,000 was declared which represented approximately $2.18 per Class A Interest. The distribution included (i) a cash distribution on account of then-allowed claims in the amount of approximately $24,880,000 which is payable on or about June 12, 2023 to holders of Class A Interests as of the close of business on May 31, 2023, and (ii) a deposit of approximately $120,000 into a restricted cash account, payable as (a) claims wereare resolved, (b) claims that were recently allowed, (c) addresses for holders of uncashed distribution checks wereare obtained, (d) pending avoidance actions wereare resolved and (e) further beneficiary information wasis 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.
Causes of claims being disallowed or Class A Interests being cancelled, approximately $52,000 was released from the restricted cash account and distributions payable were reduced by the same amount.Action
Sales of Real Estate Assets
During the period from April 1, 2022 through May 13, 2022, approximately $1,800,000 relating to a pending sale was released from escrow.
During the period from April 1, 2022 through May 13, 2022, the Company increased construction contracts by approximately $106,000.
During the period from April 1, 2022 through May 13, 2022, the Trust recorded approximately $23,000 from the settlement of Causes of Action. The Company recorded approximately $1,000 as the amount due to the Liquidation Trustee on account of such settlements.
Related Party TransactionsForfeited Assets
During the period from April 1, 20222023 through May 13, 2022,12, 2023, the Company realized net proceeds of approximately $21,000 from the sale of Forfeited Assets.
Other Refunds
During the period from April 1, 2023 through May 12, 2023, the Company received approximately $20,000 of escrow receivables relating to a sold single-family home.
Trust Accounts
During the period from April 1, 2023 through May 12, 2023, the Company transferred the balances in the Trust paid approximately $1,241,000Accounts to one of the Liquidation Trustee.banking institutions with which it has a depositor relationship.
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
and analysis 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, performance, and performancetermination and dissolution of the Trust. Such forward-looking statements also include statements that are preceded by, followed by, or that include the words "anticipates", "if", “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 andliquidation activities, amount of funds needed to completefor potential construction warranty claims, punch list items and holding costs of single-family homes, amount of general and administrative costs, the number and amount of successful litigationlitigations and/or settlements and the ability to recover thereon, the amount of funding required to continue litigation,litigations, the continuing impact of the COVID-19 pandemic and other global health issues, interest rates, adverse weather conditions in the regions in which properties to be sold are located, inflation, domestic and global economic and political conditions, failure of financial institutions, 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 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 astransferred, on the effective date of February 15, 2019, owned bythe Plan to one of the Wind-Down Subsidiaries. The purpose of the Wind-Down Entity and the Wind-Down SubsidiariesGroup 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 toon the Plan Effective Date of 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 administrative 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 Interestholders in accordance with the Plan.
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.Managers. 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, 2022,2023, the number of Liquidation Trust Interests outstanding in each class is as follows:
Class of Interest | | Number Outstanding | |
| | | |
Class A Liquidation Trust InterestsInterets | | | 11,516,439 | 11,514,190 |
| | | | |
Class B Liquidation Trust Interests | | Interets | 675,617 | |
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.
Since the Plan Effective Date through March 31, 2022,2023, the Wind-Down Subsidiaries have disposed of approximately 143147 properties for aggregate net sales proceeds of approximately $481.73$574.44 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, 2022,2023, the Company owned seventhree real estate assets (including two single-family homesone other real estate asset under construction)contract) with a gross carrying value of approximately $100.54$2.45 million. Therefore, it is unlikely thatGiven the significantly smaller inventory of remaining real estate assets when compared to the inventory as of the Plan Effective Date, the amount of net proceeds forfrom the three or nine months endedsale of real estate assets in the future will be negligible as compared to the amount realized from the Plan Effective Date through March 31, 2022 will be indicative of future net proceeds, which are likely to be significantly lower. In addition, it may take longer to sell the properties than the Company has estimated.2023. The Company expects to complete theits liquidation of its assets duringactivities no later than the fiscal year ending June 30, 2024.2026.
Discussion of the Company’s Operations
Three months ended March 31, 2023
The following is a summary of the Consolidated Statement of Changes in Net Assets in Liquidation for the three months ended March 31, 2023 ($ in thousands):
| | Restricted for Qualifying Victims | | | All Interestholders | | | Total | |
| | | | | | | | | |
Net assets in liquidation as of December 31, 2022 | | $ | 3,483 | | | $ | 35,669 | | | $ | 39,152 | |
| | | | | | | | | | | | |
Change in assets and liabilities: | | | | | | | | | | | | |
Restricted for Qualifying Victims - change in carrying value of assets and liabilities, net | | | (25 | ) | | | - | | | | (25 | ) |
| | | | | | | | | | | | |
All Interestholders- | | | | | | | | | | | | |
Change in carrying value of assets and liabilities, net | | | - | | | | (9,187 | ) | | �� | (9,187 | ) |
Distributions (declared) reversed, net | | | - | | | | 6 | | | | 6 | |
Net change in assets and liabilities | | | - | | | | (9,181 | ) | | | (9,181 | ) |
| | | | | | | | | | | | |
Net assets in liquidation, as of March 31, 2023 | | $ | 3,458 | | | $ | 26,488 | | | | 29,946 | |
Net assets in liquidation – Restricted for Qualifying Victims decreased by approximately $0.02 million during the three months ended March 31, 2023.
Net assets in liquidation – All Interestholders decreased by approximately $9.18 million during the three months ended March 31, 2023. This decrease was due to a decrease in the net carrying value of assets and liabilities of approximately $9.19 million, and an increase from net distributions (declared) reversed of approximately $0.006 million.
The components of the changes in the carrying value of assets and liabilities, net are as follows ($ in thousands):
| | Restricted for Qualifying Victims | | | All Interestholders | | | Total | |
| | | | | | | | | |
Remeasurement of assets and liabilities, net | | $ | (25 | ) | | $ | (7,685 | ) | | $ | (7,710 | ) |
Carrying value in excess of sales proceeds | | | - | | | | (1,555 | ) | | | (1,555 | ) |
Settlement recoveries, net (1) | | | - | | | | (50 | ) | | | (50 | ) |
Other | | | - | | | | 103 | | | | 103 | |
| | | | | | | | | | | | |
Change in carrying value of assets and liabilities, net | | $ | (25 | ) | | $ | (9,187 | ) | | $ | (9,212 | ) |
(1) | Net of 5% payable to the Liquidation Trustee of approximately $20 and increase in the allowance for uncollectible settlement installment receivables of approximately $30 during the three months ended March 31, 2023. |
During the three months ended March 31, 2023, the Company:
• | Reversed distributions of approximately $0.02 million that were received from Interestholders that had been overpaid on prior distributions offset by $0.01 million of distributions of Interestholders that were previously deemed to have forfeited their rights to receive Class A Interest distributions but had subsequently responded and therefore their distributions were recorded. |
Received net proceeds from the sale of Forfeited Assets of approximately $0.08 million.
Sold one single-family home and settled one secured loan of approximately $25.40 million.
As a result of the expected additional time required for the Company to complete its liquidation activities from February 15, 2024 to March 31, 2026, the Company accrued additional accrued liquidation costs of approximately $7.7 million. The additional costs are primarily legal and other professional fees and payroll and payroll-related costs. A portion of the accrued liquidation costs relate to estimated reserves for potential construction warranty claims and the administration of such claims after its liquidation activities are completed.
Paid construction costs of approximately $0.04 million relating to single-family homes under development.
Paid holding costs of approximately $0.20 million.
Paid general and administrative costs of approximately $2.24 million, including approximately $0.15 million of board member fees and expenses, approximately $1.07 million of payroll and other general and administrative costs and approximately $1.02 million of professional fees.
For the three months ended March 31, 2022
The following is a summary of the Consolidated Statement of Changes in Net Assets in Liquidation for the three months ended March 31, 2022 ($ in thousands):
| | Restricted for Qualifying Victims | | | All Interestholders | | | Total | | |
| | | Restricted for Qualifying Victims | | All Interestholders | | Total | |
| | | | | | | | | | | | | | | | |
Net assets in liquidation as of December 31, 2021 | | $ | 3,203 | | | $ | 124,302 | | | $ | 127,505 | | | $ | 3,203 | | $ | 124,302 | | $ | 127,505 | |
| | | | | | | | | | | | | | | | |
Change in assets and liabilities: | | | | | | | | | | | | | | | | |
Restricted for Qualifying Victims - change in carrying | | | | | | | | | | |
value of assets and liabilities, net | | | - | | | | - | | | | - | | |
Restricted for Qualifying Victims - change in carrying value of assets and liabilities, net | | | | - | | | - | | | - | |
| | | | | | | | | | | | | | | | |
All Interestholders: | | | | | | | | | | |
All Interestholders- | | | | | | | | |
Change in carrying value of assets and liabilities, net | | - | | | 8,266 | | | 8,266 | | | - | | 8,266 | | 8,266 | |
Distributions (declared) reversed, net | | | - | | | | (39,509 | ) | | | (39,509 | ) | | | - | | | (39,509 | ) | | | (39,509 | ) |
Net change in assets and liabilities | | | - | | | | (31,243 | ) | | | (31,243 | ) | | | - | | | (31,243 | ) | | | (31,243 | ) |
| | | | | | | | | | | | | | | | |
Net assets in liquidation, as of March 31, 2022 | | $ | 3,203 | | | $ | 93,059 | | | $ | 96,262 | | | $ | 3,203 | | $ | 93,059 | | $ | 96,262 | |
There was no change to Netnet 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 net carrying value of assets and liabilities net of approximately $8.27 million and a decrease from net distributions (declared) reversed net of approximately $39.51 million.
The components of the approximately $8.27 million net change in the carrying value of assets and liabilities, net are as follows ($ in thousands):
| | Restricted for Qualifying Victims | | All Interestholders | | Total | | | Restricted for Qualifying Victims | | | All Interestholders | | | Total | |
| | | | | | | | | | | | | | | | |
Other settlement recoveries recognized, net (1)
| | $
| - | | $
| 445 | | $
| 445 | | |
Other settlement recoveries recognized, net | | | $ | - | | | $ | 445 | | | $ | 445 | |
Remeasurement of assets and liabilities, net | |
| - | | 7,627 | | 7,627 | | | - | | | 7,627 | | | 7,627 | |
Other | | | - | | | 194 | | | 194 | | | | - | | | | 194 | | | | 194 | |
| | | | | | | | | | |
Change in carrying value of assets and liabilities, net | | $ | - | | $ | 8,266 | | $ | 8,266 | | | $ | - | | | $ | 8,266 | | | $ | 8,266 | |
(1) | Net of the 5% payable to the Liquidation Trustee of approximately $22 ($ in thousands). for other settlement agreements during the three months ended March 31, 2022. |
26
During the three months ended March 31, 2022, the Company:
| o | Declared a distribution of $3.44 per Class A Interest, which totaled approximately $39.98 million. |
Declared a distribution of $3.44 per Class A Interest totaling approximately $39.98 million.
| o | Sold the rest of the gold Forfeited Assets for net proceeds of approximately $0.12 million. |
| o | Completed construction of one single-family home (642 St. Cloud). |
| o | Settled one secured loan for net proceeds of approximately $0.72 million. |
| o | Signed agreements to settle other Causes of Action for payment to the Trust of approximately $0.47 million. |
| o | Paid construction costs of approximately $1.80 million relating to single-family homes under development. |
| o | Paid holding costs of approximately $0.66 million. |
| o | Paid 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. |
ForCompleted construction of one single-family home (642 St. Cloud).
Settled one secured loan for net proceeds of approximately $0.72 million.
Recorded approximately $0.47 million from the threesettlement of other Causes of Action, net of 5% payable to the Liquidation Trustee.
Paid construction costs of approximately $1.80 million relating to single-family homes under development.
Paid holding costs of approximately $0.66 million.
Paid 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 $2.03 million of professional fees.
Nine months ended March 31, 20212023
The following is a summary of the Consolidated Statement of Changes in Net Assets in Liquidation for the threenine months ended March 31, 20212023 ($ in thousands):
| | Restricted for Qualifying Victims | | All Interestholders | | Total | | | Restricted for Qualifying Victims | | | All Interestholders | | | Total | |
| | | | | | | | | | | | | | | | |
Net assets in liquidation as of December 31, 2021 | | $ | - | | | $ | 210,476 | | | $ | 210,476 | | |
Net assets in liquidation as of June 30, 2022 | | | $ | 3,485 | | | $ | 30,910 | | | $ | 34,395 | |
| | | | | | | | | | | | | | | | | | | | | |
Change in assets and liabilities: | | | | | | | | | | | | | | | | | | | | | |
Restricted for Qualifying Victims - change in carrying value of assets and liabilities, net | | | 3,459 | | | | - | | | | 3,459 | | | | (27 | ) | | | - | | | | (27 | ) |
| | | | | | | | | | | | | | | | | | | | | |
All Interestholders: | | | | | | | | | | | | | |
All Interestholders- | | | | | | | | | | |
Change in carrying value of assets and liabilities, net | | | - | | | | 1,974 | | | | 1,974 | | | - | | | (7,066 | ) | | (7,066 | ) |
Distributions (declared) reversed, net | | | - | | | | (49,958 | ) | | | (49,958 | ) | | | - | | | | 2,644 | | | | 2,644 | |
Net change in assets and liabilities | | | - | | | | (47,984 | ) | | | (47,984 | ) | | | - | | | | (4,422 | ) | | | (4,422 | ) |
| | | | | | | | | | | | | | | | | | | | | |
Net assets in liquidation, as of March 31, 2021 | | $ | 3,459 | | | $ | 162,492 | | | $ | 165,951 | | |
Net assets in liquidation, as of March 31, 2023 | | | $ | 3,458 | | | $ | 26,488 | | | | 29,946 | |
Net assets in liquidation – Restricted for Qualifying Victims increaseddecreased by approximately $3.46$0.03 million during the threenine months ended March 31, 2021.2023.
Net assets in liquidation – All Interestholders decreased by approximately $47.98$4.42 million during the threenine months ended March 31, 2021.2023. This decrease was due to changesa decrease in the net carrying value of assets and liabilities net of approximately $1.97$7.06 million, and from an increase in net distributions (declared) reversed net of approximately $49.95$2.64 million.
The components of the approximately $3.46 million and $1.97 million net changechanges in the carrying value of assets and liabilities, net are as follows ($ in thousands):
| | Restricted for Qualifying Victims | | All Interestholders | | Total | | | Restricted for Qualifying Victims | | All Interestholders | | Total | |
| | | | | | | | | | | | | | |
Recognition of Forfeited Assets | | $ | 3,459 | | $ | - | | $ | 3,459 | | |
Remeasurement of assets and liabilities, net | | - | | 2,473 | | 2,473 | | | $ | (27 | ) | | $ | (6,486 | ) | | $ | (6,513 | ) |
Other settlement recoveries recognized, net (1) | | - | | 1,326 | | 1,326 | | |
Carrying value in excess of sales proceeds | | - | | (1,900 | ) | | (1,900 | ) | | - | | (1,555 | ) | | (1,555 | ) |
Settlement recoveries recognized, net (1) | | | - | | 144 | | 144 | |
Other | | | - | | | 75 | | | 75 | | | | - | | | 831 | | | 831 | |
| | | | | | | | |
Change in carrying value of assets and liabilities, net | | $ | 3,459 | | $ | 1,974 | | $ | 5,433 | | | $ | (27 | ) | | $ | (7,066 | ) | | $ | (7,093 | ) |
(1) | Net of the 5% payable to the Liquidation Trustee of approximately $72 ($$31 and an increase in thousands).the allowance for uncollectible settlement installment receivables of approximately $56 during the nine months ended March 31, 2023. |
During the threenine months ended March 31, 2021,2023, the Company:
| o | Declared a distribution of $4.28 per Class A Interest, which totaled approximately $50.01 million. |
Reversed distributions of approximately $2.64 million from claims being disallowed or Class A Interests being cancelled. Reversed distributions of approximately $0.02 million that were received from Interestholders that had been overpaid on prior distributions offset by $0.03 million of distributions of Interestholders that were previously deemed to have forfeited their rights to receive Class A Interest distributions but had subsequently responded and therefore their distributions were recorded.
| o | Signed agreements to settle other Causes of Action for payment to the Trust of approximately $1.28 million. |
Received net proceeds from the sale of Forfeited Assets of approximately $0.79 million.
| o | Recorded Forfeited Assets with an estimated net realizable value of approximately $3.46 million. |
Completed construction of one single-family home (41 King Street).
Sold one single-family home and settled one secured loan for net proceeds of approximately $25.40 million.
Recorded approximately $0.23 million from the settlement of Causes of Action, net of 5% payable to the Liquidation Trustee and an allowance for uncollectible installment receivables.
As a result of the expected additional time required for the Company to complete its liquidation activities from February 15, 2024 to March 31, 2026, the Company accrued additional accrued liquidation costs of approximately $7.7 million. The additional costs are primarily legal and other professional fees and payroll and payroll-related costs. A portion of the accrued liquidation costs relate to estimated reserves for potential construction warranty claims and the administration of such claims after its liquidation activities are completed.
Paid construction costs of approximately $1.57 million relating to single-family homes under development.
Paid holding costs of approximately $0.67 million.
Paid general and administrative costs of approximately $11.34 million, including approximately $0.46 million of board member fees and expenses, approximately $6.46 million of payroll and other general and administrative costs and approximately $4.42 million of professional fees.
28
| o | Paid construction costs of approximately $5.77 million relating to single-family homes under development. |
| o | Paid holding costs of approximately $0.77 million. |
| o | 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 $2.18 million of professional fees. |
NineFor the nine months ended March 31, 2022
The following is a summary of the Consolidated Statement of Changes in Net Assets in Liquidation for the nine months ended March 31, 2022 ($ in thousands):
| | Restricted for Qualifying Victims | | All Interestholders | | Total | | | Restricted for Qualifying Victims | | | All Interestholders | | | Total | |
| | | | | | | | | | | | | | | | |
Net assets in liquidation as of June 30, 2021 | | $ | 3,167 | | $ | 126,373 | | $ | 129,540 | | | $ | 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 | | | | 36 | | | | - | | | | 36 | |
| | | | | | | | | | | | | | | | |
All Interestholders: | | | | | | | | |
All Interestholders- | | | | | | | | | | |
Change in carrying value of assets and liabilities, net | | - | | 45,922 | | 45,922 | | | - | | | 45,922 | | | 45,922 | |
Distributions (declared) reversed, net | | | - | | | (79,236 | ) | | | (79,236 | ) | | | - | | | | (79,236 | ) | | | (79,236 | ) |
Net change in assets and liabilities | | | - | | | (33,314 | ) | | | (33,314 | ) | | | - | | | | (33,314 | ) | | | (33,314 | ) |
| | | | | | | | | | | | | | | | |
Net assets in liquidation, as of March 31, 2022 | | $ | 3,203 | | $ | 93,059 | | $ | 96,262 | | |
Net assets in liquidation, as of March 31, 2023 | | | $ | 3,203 | | | $ | 93,059 | | | $ | 96,262 | |
Net assets in liquidation – Restricted for Qualifying Victims increased by approximately $0.04 million during the nine months ended March 31, 2022.
Net assets in liquidation – All Interestholders decreased by approximately $33.31 million during the nine months ended March 31, 2022. This decrease was due to an increase in the net carrying value of assets and liabilities net of approximately $45.92 million, and from a decrease in net distributions (declared) reversed net of approximately $79.23 million.
The components of the approximately $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):
| | Restricted for Qualifying Victims | | All Interestholders | | Total | | | Restricted for Qualifying Victims | | All Interestholders | | Total | |
Causes of Action, net(1) : | | | | | | | | |
| | | | | | | | |
Causes of Action, net(1): | | | | | | | | |
Comerica Bank | | $ | - | | $ | 23,575 | | 23,575 | | | $ | - | | $ | 23,575 | | $ | 23,575 | |
Other settlement agreements | | - | | 1,777 | | 1,777 | | |
Other settlement recoveries | | | - | | 1,777 | | 1,777 | |
Remeasurement of assets and liabilities, net | | | 36 | | 13,428 | | 13,464 | |
Sales proceeds in excess of carrying value | | - | | 6,460 | | 6,460 | | | - | | 6,460 | | 6,460 | |
Remeasurement of assets and liabilities, net | | 36 | | 13,428 | | 13,464 | | |
Other | | | - | | | 682 | | | 682 | | | | - | | | 682 | | | 682 | |
| | | | | | | | |
Change in carrying value of assets and liabilities, net | | $ | 36 | | $ | 45,922 | | $ | 45,958 | | | $ | 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).during the nine months ended March 31, 2022. |
During the nine months ended March 31, 2022, the Company:
| o | Declared two distributions, both of $3.44 per Class A Interest, which totaled approximately $80.00 million. |
| o | Sold the wine and the gold Forfeited Assets for net proceeds of approximately $0.49 million. |
| o | Completed construction of one single-family home (642 St. Cloud). |
| o | Sold 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. |
| o | Recorded approximately $24.81 million from the settlement of the two pending actions against Comerica Bank, the California Class Action and the Delaware Adversary Action. |
| o | Signed agreements to settle other Causes of Action for payment to the Trust of approximately $1.87 million. |
| o | Paid construction costs of approximately $9.47 million relating to single-family homes under development. |
| o | Paid holding costs of approximately $1.90 million. |
| o | Paid 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 $7.32 million of professional fees. |
For the nine months ended March 31, 2021
The following is a summary of the Consolidated Statement of Changes in Net Assets in Liquidation for the nine months ended March 31, 2021 ($ in thousands):
| | Restricted for Qualifying Victims | | | All Interestholders | | | Total | |
| | | | | | | | | | | | |
Net assets in liquidation as of June 30, 2020 | | $ | - | | | $ | 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 | |
| | | | | | | | | | | | |
All Interestholders: | | | | | | | | | | | | |
Change in carrying value of assets and liabilities, net | | | - | | | | 7,529 | | | | 7,529 | |
Distributions (declared) reversed, net | | | - | | | | (109,554 | ) | | | (109,554 | ) |
Net change in assets and liabilities | | | - | | | | (102,025 | ) | | | (102,025 | ) |
| | | | | | | | | | | | |
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$3.44 per Class A Interest, which totaled approximately $3.46 million during the nine months ended March 31, 2022.
Net assets in liquidation – All Interestholders decreased approximately $102.02 million during the nine months ended March 31, 2021. This decrease was due to changes in the carrying value of assets and liabilities, net of approximately $7.53 million and distributions (declared) reversed, net of approximately $109.55$79.99 million.
Reversed distributions of approximately $0.76 primarily from claims being disallowed or Class A Interests being cancelled.
Sold the wine and the gold Forfeited Assets for net proceeds of approximately $0.49 million.
Completed construction of one single-family home (642 St. Cloud).
Sold 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.
The componentsRecorded approximately $24.81 million from the settlement of the two pending actions against Comerica Bank and approximately $3.46$1.87 million and $7.53 million change infrom the carrying valuesettlement of assets and liabilities,other Causes of Action, net are as follows ($ in thousands):of 5% payable to the Liquidation Trustee.
| | 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 | | | - | | | | 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 | |
Paid construction costs of approximately $9.47 million relating to single-family homes under development.
(1) | Net of the 5% payable to the Liquidation Trustee of approximately $462 ($ in thousands). |
During the nine months ended March 31, 2021, the Company:Paid holding costs of approximately $1.90 million.
| o | Declared three distributions, two each of $2.56 and one of $4.28 per Class A Interest, which totaled approximately $109.93 million. |
Paid 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.
| o | Sold 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. |
| o | Signed agreements to settle Causes of Action for payment to the Trust of approximately $8.44 million. |
| o | Recorded Forfeited Assets with an estimated net realizable value of approximately $3.46 million. |
| o | Paid construction costs of approximately $22.04 million relating to single-family homes under development. |
| o | Paid holding costs of approximately $4.13 million. |
| o | 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 professional fees. |
Liquidity and Capital Resources
Liquidity
The Company’s primaryonly 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 fromon Causes of Action.Action and proceeds from the sale of Forfeited Assets1. The Company’s primary uses of funds are and will continue to be for distributions, development costs including warranty claims, 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 atas of March 31, 20222023 of approximately $43.49$55.40 million (of which approximately $9.10$4.39 million is restricted), the capital resources available to the Company and its uses of liquidity are as follows:
• | o | Revolving 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. |
| o | Sales of Real Estate Assets:: The Wind-Down Entity and the Wind-Down Subsidiaries areGroup is in the process of developing, marketing and selling theirits few remaining real estate assets, all of which are held for sale. As of March 31, 2022,2023, the Company owned a total of seventhree real estate assets with a gross carrying value of approximately $100.54$2.45 million. The majorityBased on the remaining assets 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 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 likelywill be negligible as compared to be significantly lower. In addition, it may take longer to sell the properties thanproceeds the Company has estimated.realized in prior periods. |
• | o | Recoveries:Causes of Action Recoveries: During the three and nine months ended March 31, 2022,2023, the Company recognized approximately $0.47$0 million and $26.68$0.27 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 duringin prior periods. |
• | Forfeited Assets: Forfeited Assets consist of cash and other assets (jewelry, art, clothing, handbags and shoes). During the three and nine months ended March 31, 2022.2023, the Trust sold some of its Forfeited Assets and received net proceeds of approximately $0.08 million and $0.79 million, respectively. As noted earlier, net sale proceeds from liquidating the Forfeited Assets are to be distributed only to Qualifying Victims. |
Uses of Liquidity
The primary uses of the Company’s liquidity are to pay (a) distributions payable, (b) development costs including warranty claims, (c) holding costs including maintenance and repair costs, and (d) general and administrative costs. As of March 31, 2022,2023, the Company’s total liabilities were approximately $47.50$28.75 million. The total liabilities recorded as of March 31, 20222023 may not be indicative of the costs paid in future periods, which may vary materially from the current estimate.
1The 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 as of March 31, 2023 are presented in the consolidated statement of net assets as restricted net assets in liquidation. As of March 31, 2023, 11,436,259 of the 11,514,190 Class A Interests were held by Qualifying Victims. Of the 13,875 Class A Interests relating to unresolved claims as of March 31, 2023, 1,880 would be significantly higher.held by Qualifying Victims.
Given current cash and cash equivalent balances, projected sales of real estate assets, availability under the LOC,estimated 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 unresolved Causes of Action.
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, 2022,12, 2023, the Liquidation Trustee has declared nineeleven distributions to the Class A Interestholders. The distributions are paidinclude a cash distribution on account of the then-allowed claims and a deposit is made into a restricted cash account for amounts that are or may become payable (a) payable forin respect of Class A Interests that may be issued in the future upon the allowance of unresolved bankruptcy claims, (b) in respect of Class A Interests 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.
31As 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 26, 2022, “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 distribution(s) on account of Class A Interests, but does not currently know the timing or amount of any such distribution(s).
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 havehad 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 holderseach recipient that, unless such holders contact the Trust no later thanwas contacted on or before February 28, 2022, such recipient’s reserved and future distributions would be deemed forfeited 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, 20222023 and from February 15, 2019 (inception) through May 13, 2022:12, 2023:
| 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) | | | | | | During the Period from
February 15, 2019 (inception)
through March 31, 2023 ($ in Millions) | | | During the Period from February 15, 2019 (inception) through May 12, 2023 ($ in Millions) | |
| | Total Declared | | Paid | | | Restricted Cash Account | | | Total Declared | | Paid | | | Restricted Cash Account | | Date Declared | | $ per Class A Interest | | | Total Declared | | Paid | | | Restricted Cash Account | | | Total Declared | | Paid | | | Restricted Cash Account | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Distributions Declared | Distributions Declared | | | | | | | | | | | | | | | | Distributions Declared | | | | | | | | | | | | | | | |
First | 3/15/2019 | | $ | 3.75 | | $ | 44.70 | | $ | 42.32 | | $ | 2.38 | | $ | 44.70 | | $ | 42.32 | | $ | 2.38 | | 3/15/2019 | | $ | 3.75 | | $ | 44.70 | | $ | 42.32 | | $ | 2.38 | | $ | 44.70 | | $ | 42.32 | | 2.38 | |
Second | 1/2/2020 | | 4.50 | | 53.43 | | 51.19 | | 2.24 | | 53.43 | | 51.19 | | 2.24 | | 1/2/2020 | | 4.50 | | 53.43 | | 51.19 | | 2.24 | | 53.43 | | 51.19 | | 2.24 | |
Third | 3/31/2020 | | 2.12 | | 25.00 | | 24.19 | | 0.81 | | 25.00 | | 24.19 | | 0.81 | | 3/31/2020 | | 2.12 | | 25.00 | | 24.19 | | 0.81 | | 25.00 | | 24.19 | | 0.81 | |
Fourth | 7/13/2020 | | 2.56 | | 29.97 | | 29.24 | | 0.73 | | 29.97 | | 29.24 | | 0.73 | | 7/13/2020 | | 2.56 | | 29.97 | | 29.24 | | 0.73 | | 29.97 | | 29.24 | | 0.73 | |
Fifth | 10/19/2020 | | 2.56 | | 29.95 | | 29.20 | | 0.75 | | 29.95 | | 29.20 | | 0.75 | | 10/19/2020 | | 2.56 | | 29.95 | | 29.20 | | 0.75 | | 29.95 | | 29.20 | | 0.75 | |
Sixth | 1/7/2021 | | 4.28 | | 50.01 | | 48.67 | | 1.34 | | 50.01 | | 48.67 | | 1.34 | | 1/7/2021 | | 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 | | 5/13/2021 | | 2.58 | | 30.02 | | 29.33 | | 0.69 | | 30.02 | | 29.33 | | 0.69 | |
Eighth | 10/8/2021 | | 3.44 | | 40.02 | | 39.14 | | 0.88 | | 40.02 | | 39.14 | | 0.88 | | 10/8/2021 | | 3.44 | | 40.01 | | 39.13 | | 0.88 | | 40.01 | | 39.13 | | 0.88 | |
Ninth | 2/4/2022 | | | 3.44 | | | 39.98 | | 39.15 | | 0.83 | | | 39.98 | | 39.15 | | 0.83 | | 2/4/2022 | | 3.44 | | 39.98 | | 39.15 | | 0.83 | | 39.98 | | 39.15 | | 0.83 | |
Tenth | | 6/15/2022 | | 5.63 | | 65.01 | | 64.18 | | 0.83 | | 65.01 | | 64.18 | | 0.83 | |
| | 5/10/2023
| | | 2.18
| | | -
|
| -
|
| -
|
|
| 25.01
|
| -
|
| -
| |
Subtotal | Subtotal | | $ | 29.23 | | $ | 343.08 | | $ | 332.43 | | | 10.65 | | $ | 343.08 | | $ | 332.43 | | | 10.65 | | | | $ | 37.04 | | $ | 408.08 | | $ | 396.60 | | | $ | 11.48 | | $ | 433.09 | | $ | 396.60 | | | $ | 11.48 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Distributions Reversed | | | | | | | | | | | | | | | | |
Disallowed/cancelled (b) | | | | | | | | (3.57 | ) | | | | | | (3.62 | ) | |
Returned (c) | | | | | | | | | 0.73 | | | | | | | 0.73 | | |
Distributions Returned / (Reversed) | | Distributions Returned / (Reversed) | | | | | | | | | | | | | |
Disallowed/cancelled (c) | | Disallowed/cancelled (c) | | | | | | | | (6.27 | ) | | | | | | (6.27 | ) |
Returned (d) | | | | | | | | | | 0.74 | | | | | | 0.74 | |
Forfeited (e) | | | | | | | | | | | (1.15 | ) | | | | | | | (1.15 | ) |
Subtotal | Subtotal | | | | | | | | | (2.84 | ) | | | | | | | (2.89 | ) | | | | | | | | | | (6.68 | ) | | | | | | | (6.68 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Distributions Paid from Reserve Account (d) | | | | | | | (2.78 | ) | | | | | | | (2.87 | ) | |
Distributions Paid from Reserve Account (f) | | Distributions Paid from Reserve Account (f) | | | | | | | (3.58 | ) | | | | | | | (3.58 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Distributions Payable, Net | Distributions Payable, Net | | | | | | as of 3/31/2022: | | $ | 5.03 | | | | as of 5/13/2022: | | $ | 4.89 | | Distributions Payable, Net | | | | | | as of 3/31/2023: | | $ | 1.22 | | | | as of 5/12/2023: | | $ | 1.22 | |
(a) | The seventh distribution included the cash the Trust received from recoveries of Fair Funds. |
(b) | Payable on or before June 12, 2023. |
(c) | As a result of claims being disallowed or Class A Interests cancelled. |
(c)(d) | Distribution checks returned or not cashed. |
(d)(e) | Distributions forfeited as Interestholders did not cash checks that were over 180 days old. |
(f) | Paid as claims are allowed or resolved. |
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 propertyestate 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 (if any) and timing of which are difficult to determine.
Contractual Obligations
As of March 31, 2022,2023, the Company has contractual commitments related to construction contracts totaling approximately $5.20$0.22 million. The Company expects to complete the construction of the single-family homes during the fiscal year ending June 30, 2022. The Company has an office lease that expires in July 2022.2023. The Company has twoone six-month optionsoption to extend the lease. The Company expects that it will continue to lease office space until the liquidation process is completed. The Wind-Down Entity has part-time employment agreements with its two executive officers through December 31, 2023.
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, potential construction warranty claims, and general and administrative costs to be incurred until the completion of the liquidation activities of the Company.Company and estimated reserves for potential construction warranty claims and the administration of such claims after the Company's liquidation activities are completed. 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 basisLiquidation Basis of accounting,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 from the future settlement of unresolved Causes of Action or recoveries of Fair Fund recoveriesFunds 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 considered 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, has obtained third party appraisals.
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 remaining development costs to be incurred to prepare the assetspaid and an accrual for salepotential construction warranty claims as well as the estimated holding, maintenance and repair 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.Company and estimated reserves for contingent liabilities.
Changes in Carrying Value
On a quarterly basis, the Company reviews the estimated net realizable values, 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.
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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 |
Disclosure Controls and Procedures
As of the end of the period covered by this report, management 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, without 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 control over financial reporting, as 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, 2022.2023. In making that assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the 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, 2022,2023, 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, 20222023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Below
is a descriptionare descriptions 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 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.
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.
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.
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’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 22-29,22 and 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 June 30, 2022, Davis Graham & Stubbs LLP filed its reply brief in support of its cross-appeal of the order denying a portion of its special motion to strike. The matter is currently fully briefed and the court has scheduled oral argument commencing on June 9, 2023.
The appeal of the award granting fees and costs to Sidley Austin LLP remains pending. The appeal is fully briefed and will be decided following the disposition of the appeal of the underlying order.
In April 2023, the Trust reached a settlement in principal with Bailey Cavalieri LLC and Thomas Geyer that will resolve all litigation between them.
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. On April 23, 2021 the federal court entered an order granting those motions, but has not yet entered a final judgment.
Comerica Bank litigation. On August 6, 2021, the Trust agreed to the terms of a settlement of two 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, and these actions arise out of the Debtors’ former banking relationships with Comerica Bank. The Comerica Settlement Agreement is referenced hereto as Exhibit 10.16.
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.), was a consolidated putative class action in District Court brought on behalf of former noteholders and unitholders 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 and, as consolidated, asserted claims for aiding and abetting fraud, aiding and abetting breach of fiduciary duty, negligence, and violations of California’s unfair competition law. The Trust believes that it is the largest member of the putative class in the California Class Action, as holder of approximately 60.9% of all claims against Comerica based on the claims contributed to the Trust by former investors of the Debtors.
The other action resolved by the settlement, captioned Michael I. Goldberg as trustee for the Woodbridge Liquidation Trust v. Comerica Bank, Adv. Pro. No. 20-ap-50452-BLS (Bankr. D. Del.), is an adversary proceeding in the Bankruptcy Court, in which the Trust asserted claims against Comerica Bank for fraudulent transfers under the California Civil Code the (the “Delaware Adversary Action”). The Delaware Adversary Action also incorporated the claims asserted against Comerica Bank in the California Class Action to the extent that such claims may ultimately be determined to belong to the Debtors’ estates rather than to individual former noteholders and unitholders.
Under the terms of the Comerica Settlement Agreement, the California Class Action has been settled as a class action on the basis of a class defined to consist of (i) the Trust, as assignee of the claims of the holders of Net Claims (as defined in the Settlement 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 Contributing Claimants (as defined in the Plan) and (ii) the holders of Net Claims (as defined in the Settlement 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 Contributing Claimants (as defined in the Plan). For purposes of distributions under the Settlement Agreement, the holders of Net Claims who are not Contributing Claimants are deemed to be the holders of 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 December 17, 2021, the court entered an order granting final approval to the settlement of the California 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 Bank (or its insurers) and the Trust has commenced administration of that payment. The Trust has recorded approximately $24.81 million from the settlement, comprised of (i) the Trust’s share (approximately 60.9%) of the Net Class Consideration (without reduction for costs of administration or incentive awards) and (ii) the $300,000 FT Payment (without reduction for any reason).
Avoidance actions. The Trust is currently prosecuting numerousseveral 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”“Bankruptcy Court”), are pending before the Honorable J. Kate Stickles, and generally fall into the following categories:
| o• | Preferential transfers and/or fraudulent transfers (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 DebtorsDebtors: (1) during the 90 days prior to the December 4, 2017 bankruptcy filing, including payments to miscellaneous vendors and former Noteholders and Unitholders. |
| 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 Unitholders; and/or recover payments made by the Debtors(2) 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.
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| o• | Fraudulent transfers (Shapiro personal expenses). Certain of theTwo remaining 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. |
| o• | Fraudulent transfers and fraud (against former agents). TheseCertain of the 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. |
• | Fraudulent transfers (Kenneth Halbert). The Trust is pursuing fraudulent transfer claims against Kenneth Halbert to avoid and recover prepetition payments of principal and interest to Mr. Halbert. The Trust filed its initial complaint on December 1, 2019 and the operative first amended complaint on December 7, 2021. Fact discovery closed on April 24, 2023 and expert discovery is currently underway. The court has not yet set a trial date. |
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. As of April 30, 2023, 46 legal actions remain pending.
Since inception and as of April 30, 2022,2023, the Trust has obtained judgments of approximately $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 210227 legal actions and in an additional approximately 245 potential avoidance claims for which litigation was not filed, resulting in aggregate settlements of approximately $17.17$18.18 million of cash payments made or due to the Trust and approximately $9.98$11.21 million in reductions of claims against the Trust.
Additionally, the Trust has obtained judgments of approximately $158.96 million, including default judgments of approximately $150.98 million and stipulated judgments of approximately $7.98 million. It is unknown at this time how much, if any, will ultimately be collected on the judgments. Stipulated and default judgments are commonly obtained where the defendant has insufficient assets with which to respond to a judgment. As a result, the prospect of any recoveries on the judgments is subject to various extrinsic factors, including collectability, that impact whether any sums will be recovered.
Other legal proceedings. In addition, other legal proceedings were prosecuted by the Trust and United States governmental authorities, which actions resulted in recoveries in favor of the Trust. Such actions include:
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:
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| 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.assets as well as an automobile. Some of the jewelry, art, clothing, handbags and shoes have also been sold. |
Wind-Down Group litigation. 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 ($110,829.43), less all amounts paid by the defendant in respect of claims under the policy ($97,770.38) and less defendant’s costs (defendant has requested costs of $9,874.71). Plaintiffs have appealed the judgment. The appeal has beenwas fully briefed and is awaiting oral argument took place before the Court of Appeal.Appeal on November 21, 2022. After extending its time to rule on the submitted matter, the Court of Appeal entered its ruling on April 19, 2023. In an unpublished opinion, the Court of Appeal affirmed the judgment of the Superior Court and awarded costs on appeal to the respondent Underwriters. Although the Wind Down Entity has a right to petition the California Supreme Court for review, such petitions are rarely granted, and counsel does not believe that there is a realistic chance that the petition would be granted, particularly since the Court of Appeal opinion is unpublished and will not be citable precedent in California. If no petition for review is filed, the Court of Appeal opinion becomes final in 30 days after entry.
Please seeIn addition to other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the applicablefollowing risk factor, which supplements and should be read in conjunction with the information appearing under Item 1A. of1.A. Risk Factors in Part I in our Annual Report on Form 10-K filed with the SEC on September 27, 202126, 2022.
Our cash and Item 1A.cash equivalents may be exposed to the failure of banking institutions. While we seek to minimize our exposure to third-party losses of our Quarterly Reportcash and cash equivalents, we hold our balances in a number of large financial institutions. Notwithstanding their size and reserves, such institutions remain subject to the risk of failure. The Company did have a banking relationship with First Republic Bank, which was seized and sold to JP Morgan on Form 10-Q filedMay 1, 2023. The Company’s deposits were within the FDIC insurance limits. The recent failures of First Republic Bank, Silicon Valley Bank and Signature Bank have had and may continue to have an adverse impact on February 11, 2022other financial institutions, the extent of which impact cannot be foreseen at this time. If, in the future, the financial institutions with which we maintain deposits or contained in anytransact business enter into receivership or become insolvent, there can be no guarantee that the Department of the Trust’s subsequent filingsTreasury, the Federal Reserve or the FDIC will intercede to protect depositors and customers. If, at any time, our deposits with any financial institution exceed the SEC.FDIC insurance limit, the Company’s deposits may be subject to loss. The Company’s access to its cash and cash equivalents could also become limited, impairing the Company’s ability to fund its remaining liquidation activities. In addition, if any parties with which we conduct business are unable to access funds pursuant to lending relationships or their deposit accounts with such a financial institution, the ability of such parties to continue to perform their obligations to us could be adversely affected, which, in turn, could have a material adverse effect on our liquidation activities and changes in net assets in liquidation.
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 27, 2021.26, 2022. During the period from February 15, 2019 (inception) through March 31, 2022,2023 the Trust has issued an aggregate of 11,539,28111,542,087 Class A Interests and an aggregate of 677,624677,790 Class B Interests. As of March 31, 2022,2023, the Trust had 11,516,43911,514,190 Class A Interests and 675,617 Class B Interests outstanding. All Liquidation Trust Interests were issued on the Plan Effective Date or from time to time thereafter as soon as practicable as and when claims in Class 3, Class 4 or Class 5 have become allowed.
During the three months ended March 31, 2022,2023, the Trust issued the followingdid not issue any Liquidation Trust Interests:Interests.
Date of Sale | | Number of
Class A
Interests Sold
| | Number of
Class B
Interests Sold
| | Nature of the
Transaction
| | Consideration
Received
|
| | | | | | | | |
January 31, 2022 | | 4,674.25 | | - | | Allowance of claims | | Allowance of claims |
| | | | | | | | |
Total | | 4,674.25 | | - | | | | |
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 under the Plan.
Item 3. | Defaults upon Senior Securities |
None.
Item 4. | Mine SafetyMine-Safety Disclosures |
None.
None.
Exhibit DescriptionItem 6. | Exhibits |
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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. |
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| 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. |
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| 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. |
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| 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. |
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| 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. |
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| 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. |
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| 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. |
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| Loan and SecurityFirst Amendment to Limited Liability Agreement dated June 19, 2020 by and among WB Propco, LLC and WB 141 S. Carolwood, LLC, as Borrowers,of Woodbridge Wind-Down Entity LLC as Guarantor, and City National Bank of Florida, as Lender,dated November 30, 2022, incorporated herein by reference to Amendment No. 1 to the Current Report on Form 8-K filed by the Trust on June 29, 2020.December 1, 2022. |
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| Agreement andSecond Amendment to Loan and SecurityLimited Liability Agreement dated December 18, 2020 by and among WB Propco, LLC and WB 141 S. Carolwood, LLC, as Borrowers,of Woodbridge Wind-Down Entity LLC dated as Guarantor, and City National Bank of Florida, as Lender,March 27, 2023, incorporated herein by reference herein to the Current Report on Form 10-Q8-K filed by the Trust on March 29, 2023. |
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| Third Amendment to Limited Liability Agreement of Woodbridge Wind-Down Entity LLC dated as of April 28, 2023, incorporated herein by reference to the Current Report on Form 8-K filed by the Trust on May 17, 2021. |
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| 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, incorporated by reference herein to the Form 10-Q filed by the Trust on May 17, 2021.1, 2023. |
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| 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, incorporated by reference herein to the Form 10-Q filed by the Trust on May 17, 2021. |
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| 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. |
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| 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. |
| 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. |
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| 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. |
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| 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. |
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| 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. |
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| Part-Time Employment Agreement dated November 30, 2022 between Woodbridge Wind-Down Entity and Marion W. Fong, incorporated herein by reference to the Current Report on Form 8-K filed by the Trust on December 1, 2022. |
| 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. |
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| 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. |
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| Part-Time Employment Agreement dated November 30, 2022 between Woodbridge Wind-Down Entity and David Mark Kemper, incorporated herein by reference to the Current Report on Form 8-K filed by the Trust on December 1, 2022. |
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| 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. |
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| 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. |
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| 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. |
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| 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.
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| Certification of Liquidation Trustee pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
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| Certification of Liquidation Trustee pursuant to 18 U.S.C. 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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| 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. |
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101 | The following financial statements from the Woodbridge Liquidation Trust Quarterly Report on Form 10-Q for the quarter ended March 31, 2022,2023, formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Statementsconsolidated statements of Net Assetsnet assets in Liquidationliquidation as of March 31, 20222023 and June 30, 2021,2022, (ii) Consolidated Statementsconsolidated statements of Changeschanges in Net Assetsnet assets in Liquidationliquidation for the three months ended March 31, 2023 and 2022, and 2021, (iii) Consolidated Statementsconsolidates statements of Changeschanges in Net Assetsnet assets in Liquidationliquidation for the ninesix months ended March 31, 20222023 and 2021, (iv) the Notesnotes to the Consolidated Financial sSatements.consolidated financial statements. XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
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104 | Cover Page Interactive Data File (Formatted as Inline XBRL and contained in Exhibit 101). |
* Filed *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 |
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Date: May 13, 202212, 2023 | By: | /s/ Michael I. Goldberg |
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| Michael I. Goldberg, |
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| Liquidation Trustee |
45