FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________to _________
Commission file number 0-14099
CONSOLIDATED CAPITAL PROPERTIES VI
(Exact name of small business issuer as specified in its charter)
California 94-2940204
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the preceding 12 months (or for such
shorter period that the Partnership was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No___
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
CONSOLIDATED CAPITAL PROPERTIES VI
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
September 30, 2001
Assets
Cash and cash equivalents $ 162
Receivables and deposits 11
Other assets 134
Investment property:
Land $ 916
Buildings and related personal property 10,009
10,925
Less accumulated depreciation (5,121) 5,804
$ 6,111
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 217
Tenant security deposit liabilities 65
Accrued property taxes 95
Other liabilities 139
Mortgage note payable 5,370
Partners' (Deficit) Capital
General partner $ (2)
Special limited partners (84)
Limited partners (181,300 units issued and
outstanding) 311 225
$ 6,111
See Accompanying Notes to Consolidated Financial Statements
b)
CONSOLIDATED CAPITAL PROPERTIES VI
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
Three Months Nine Months
Ended September 30, Ended September 30,
2001 2000 2001 2000
Revenues:
Rental income $ 411 $ 423 $ 1,183 $ 1,281
Other income 51 46 141 125
Total revenues 462 469 1,324 1,406
Expenses:
Operating 283 200 671 588
General and administrative 41 67 183 152
Depreciation 107 104 325 325
Interest 106 109 313 371
Property taxes 19 34 74 109
Total expenses 556 514 1,566 1,545
Net loss $ (94) $ (45) $ (242) $ (139)
Net loss allocated to
general partner (0.2%) $ -- $ -- $ -- $ --
Net loss allocated to
limited partners (99.8%) (94) (45) (242) (139)
$ (94) $ (45) $ (242) $ (139)
Net loss per limited
partnership unit $ (0.51) $ (0.25) $ (1.33) $ (0.77)
Distribution per limited
partnership unit $ -- $ -- $ 2.83 $ --
See Accompanying Notes to Consolidated Financial Statements
c)
CONSOLIDATED CAPITAL PROPERTIES VI
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(Unaudited)
(in thousands, except unit data)
Limited Special
Partnership General Limited Limited
Units Partner Partners Partners Total
Original capital contributions 181,808 $ 1 $ -- $45,452 $45,453
Partners' (deficit) capital
at December 31, 2000 181,300 $ (1) $ (70) $ 1,072 $ 1,001
Amortization of timing
difference -- -- 6 (6) --
Distributions to partners -- (1) (20) (513) (534)
Net loss for the nine
months ended September 30, 2001 -- -- -- (242) (242)
Partners' (deficit) capital
at September 30, 2001 181,300 $ (2) $ (84) $ 311 $ 225
See Accompanying Notes to Consolidated Financial Statements
d)
CONSOLIDATED CAPITAL PROPERTIES VI
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
2001 2000
Cash flows from operating activities:
Net loss $ (242) $ (139)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 325 325
Amortization of loan costs 5 5
Change in accounts:
Receivables and deposits 10 86
Other assets (8) 3
Accounts payable 165 (23)
Tenant security deposit liabilities (17) 4
Accrued property taxes (53) (19)
Other liabilities 73 (104)
Net cash provided by operating activities 258 138
Cash flows from investing activities:
Property improvements and replacements (266) (234)
Net deposits to restricted escrows -- 135
Net cash used in investing activities (266) (99)
Cash flows from financing activities:
Payments on mortgage note payable (106) (83)
Loan costs paid -- (35)
Distributions paid to partners (534) (2,297)
Net cash used in financing activities (640) (2,415)
Net decrease in cash and cash equivalents (648) (2,376)
Cash and cash equivalents at beginning of period 810 3,032
Cash and cash equivalents at end of period $ 162 $ 656
Supplemental disclosure of cash flow information:
Cash paid for interest $ 274 $ 366
Distributions to partners of approximately $2,297,000 were accrued at December
31, 1999 and paid in January 2000.
See Accompanying Notes to Consolidated Financial Statements
e)
CONSOLIDATED CAPITAL PROPERTIES VI
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Consolidated
Capital Properties VI (the "Partnership" or "Registrant") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Item 310(b) of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of ConCap Equities, Inc. ("CEI" or the
"General Partner"), all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three and nine months ended September 30, 2001, are not
necessarily indicative of the results that may be expected for the fiscal year
ending December 31, 2001. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Partnership's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 2000. The General
Partner is an affiliate of Apartment Investment and Management Company
("AIMCO"), a publicly traded real estate investment trust.
Principles of Consolidation
The Partnership's financial statements include the accounts of Colony of
Springdale Associates, Ltd. ("Colony Associates"), which holds fee title to the
Colony of Springdale Apartments. The results of its operations are included in
the Partnership's consolidated financial statements. All interentity
transactions between the Partnership and Colony Associates have been eliminated.
Note B - Related Party Transactions
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all Partnership activities.
The Partnership Agreement provides for payments to affiliates for services and
the reimbursement of certain expenses incurred by affiliates on behalf of the
Partnership. The following expenses were paid or accrued to an affiliate of the
General Partner during the nine months ended September 30, 2001 and 2000:
2001 2000
(in thousands)
Property management fees (included in operating expenses) $ 70 $ 69
Reimbursement for services of affiliates (included in
investment property and general and administrative
expenses) 173 85
Partnership management fees (included in general and
administrative expenses) 46 --
During the nine months ended September 30, 2001 and 2000, affiliates of the
General Partner were entitled to receive 5% of gross receipts from the
Partnership's property as compensation for providing property management
services. The Partnership paid to such affiliates approximately $70,000 and
$69,000 for the nine month periods ended September 30, 2001 and 2000,
respectively.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $173,000 and $85,000 for the
nine months ended September 30, 2001 and 2000, respectively. For the nine months
ended September 30, 2001, approximately $95,000 of construction service
reimbursements are included in reimbursements for services of affiliates.
The Partnership Agreement also provides for a special management fee equal to 9%
of the total distributions made from operations to the Limited Partners to be
paid to the General Partner for executive and administrative management
services. The General Partner received approximately $46,000, resulting from a
distribution declared and paid during the nine months ended September 30, 2001.
The General Partner received approximately $102,000 in January 2000, resulting
from the distribution declared and accrued in December 1999. No such fee was
earned in 2000.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 88,697 limited partnership units in
the Partnership representing 48.92% of the outstanding units at September 30,
2001. A number of these units were acquired pursuant to tender offers made by
AIMCO or its affiliates. It is possible that AIMCO or its affiliates will make
one or more additional offers to acquire additional limited partnership
interests in the Partnership for cash or in exchange for units in the operating
partnership of AIMCO either through private purchases or tender offers. Under
the Partnership Agreement, unitholders holding a majority of the Units are
entitled to take action with respect to a variety of matters, which would
include voting on certain amendments to the Partnership Agreement and voting to
remove the General Partner. As a result of its ownership of 48.92% of the
outstanding units, AIMCO is in a position to significantly influence all such
voting decisions with respect to the Registrant. When voting on matters, AIMCO
would in all likelihood vote the Units it acquired in a manner favorable to the
interest of the General Partner because of its affiliation with the General
Partner.
Note C - Change in Status of Non-Corporate General Partner
During the year ended December 31, 1991, the Partnership Agreement was amended
to convert the General Partner interests held by the non-corporate General
Partner, Consolidated Capital Group II ("CCG"), to that of special limited
partners ("Special Limited Partners"). The Special Limited Partners do not have
a vote and do not have any of the other rights of a Limited Partner except the
right to inspect the Partnership's books and records; however, the Special
Limited Partners retained the economic interest in the Partnership which they
previously owned as general partner.
ConCap Equities, Inc. ("CEI") became the sole general partner of the Partnership
effective December 31, 1991. In connection with CCG's conversion, a special
allocation of gross income was made to the Special Limited Partners in order to
eliminate its tax basis negative capital account.
After the conversion, the various Special Limited Partners transferred portions
of their interests to CEI so that CEI now holds a .2% interest in all allocable
items of income, loss and distribution. The differences between the Special
Limited Partners' capital accounts for financial statement and tax reporting
purposes are being amortized to the Limited Partners' capital accounts as the
components of the timing differences which created the balance reverse.
Note D - Distributions
During the nine months ended September 30, 2001, a distribution of approximately
$534,000 to the partners (approximately $513,000 to the limited partners or
$2.83 per limited partnership unit) consisting of funds from operations was
declared and paid. A distribution of approximately $2,297,000 (approximately
$2,250,000 to the limited partners or $12.41 per limited partnership unit) was
accrued during December 1999 and paid in January 2000. This distribution
consisted of cash from operations of approximately $1,175,000 (approximately
$1,128,000 to the limited partners or $6.22 per limited partnership unit) and
refinancing proceeds of approximately $1,122,000 to the limited partners ($6.19
per limited partnership unit). No distributions were declared during the nine
months ended September 30, 2000.
Note E - Segment Reporting
Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosure about
Segments of an Enterprise and Related Information" established standards for the
way that public business enterprises report information about operating segments
in annual financial statements and requires that those enterprises report
selected information about operating segments in interim financial reports. It
also established standards for related disclosures about products and services,
geographic areas, and major customers. As defined in SFAS No. 131, the
Partnership has only one reportable segment. The General Partner believes that
segment-based disclosures will not result in a more meaningful presentation than
the consolidated financial statements as currently presented.
Note F - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of California for the County of San Mateo. The plaintiffs named as
defendants, among others, the Partnership, its General Partner and several of
their affiliated partnerships and corporate entities. The action purports to
assert claims on behalf of a class of limited partners and derivatively on
behalf of a number of limited partnerships (including the Partnership) which are
named as nominal defendants, challenging, among other things, the acquisition of
interests in certain general partner entities by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia; past
tender offers by the Insignia affiliates to acquire limited partnership units;
management of the partnerships by the Insignia affiliates; and the series of
transactions which closed on October 1, 1998 and February 26, 1999 whereby
Insignia and Insignia Properties Trust, respectively, were merged into AIMCO.
The plaintiffs seek monetary damages and equitable relief, including judicial
dissolution of the Partnership. On June 25, 1998, the General Partner filed a
motion seeking dismissal of the action. In lieu of responding to the motion, the
plaintiffs filed an amended complaint. The General Partner filed demurrers to
the amended complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Court, at which time
the Court set a final approval hearing for December 10, 1999. Prior to the
December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the General Partner and its affiliates terminated the
proposed settlement. In February 2000, counsel for some of the named plaintiffs
filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated
the settlement. On June 27, 2000, the Court entered an order disqualifying them
from the case and an appeal was taken from the order on October 5, 2000. On
December 4, 2000, the Court appointed the law firm of Lieff Cabraser Heimann &
Bernstein LLP as new lead counsel for plaintiffs and the putative class.
Plaintiffs filed a third amended complaint on January 19, 2001. On March 2,
2001, the General Partner and its affiliates filed a demurrer to the third
amended complaint. On May 14, 2001, the Court heard the demurrer to the third
amended complaint. On July 10, 2001, the Court issued an order sustaining
defendants' demurrer on certain grounds. On July 20, 2001, plaintiffs filed a
motion for reconsideration of the Court's July 10, 2001 order granting in part
and denying in part defendants' demurrer. On September 7, 2001, plaintiffs filed
a fourth amended class and derivative action complaint. On September 12, 2001,
the Court denied plaintiffs' motion for reconsideration. On October 5, 2001, the
General Partner and affiliated defendants filed a demurrer to the fourth amended
complaint, which, together with a demurrer filed by other defendants, is
currently scheduled to be heard on November 15, 2001. The Court has set the
matter for trial in January 2003.
During the third quarter of 2001, a complaint (the "Heller action") was filed
against the same defendants that are named in the Nuanes action, captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended complaint. The first amended complaint in the Heller action is
brought as a purported derivative action, and asserts claims for among other
things breach of fiduciary duty; unfair competition; conversion, unjust
enrichment; and judicial dissolution. Plaintiffs in the Nuanes action filed a
motion to consolidate the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed without leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the General Partner and affiliated defendants
moved to strike the first amended complaint in its entirety for violating the
Court's July 10, 2001 order granting in part and denying in part defendants'
demurrer in the Nuanes action, or alternatively, to strike certain portions of
the complaint based on the statute of limitations. Other defendants in the
action demurred to the fourth amended complaint, and, alternatively, moved to
strike the complaint. The matters are currently scheduled to be heard on
November 15, 2001.
The General Partner does not anticipate that any costs, whether legal or
settlement costs, associated with these cases will be material to the
Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this Form 10-QSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-QSB and the other filings with the
Securities and Exchange Commission made by the Partnership from time to time.
The discussion of the Partnership's business and results of operations,
including forward-looking statements pertaining to such matters, does not take
into account the effects of any changes to the Partnership's business and
results of operation. Accordingly, actual results could differ materially from
those projected in the forward-looking statements as a result of a number of
factors, including those identified herein.
The Partnership's investment property consists of one apartment complex, Colony
of Springdale Apartments, located in Springdale, Ohio. The average occupancy for
the nine month periods ended September 30, 2001 and 2000, was 90% and 92%,
respectively.
Results of Operations
The Partnership realized a net loss of approximately $94,000 and $242,000
compared to a net loss of approximately $45,000 and $139,000 for the three and
nine months ended September 30, 2001 and 2000, respectively. The increase in net
loss for the nine months ended September 30, 2001 is due to a decrease in total
revenues partially offset by a decrease in total expenses. The increase in net
loss for the three months ended September 30, 2001 is due to a decrease in total
revenues. The decrease in total revenues for the three and nine months ended
September 30, 2001 resulted from a decrease in rental income partially offset by
an increase in other income. Rental income decreased primarily due to a decrease
in occupancy as well as an increase in concessions and bad debt expenses
partially offset by an increase in average rental rates. Other income increased
as a result of increased late charge fees partially offset by a decrease in
lease cancellation fees and a decrease in interest income due to lower average
cash balances in interest bearing accounts.
Total expenses decreased for the nine months ended September 30, 2001 due to
decreases in interest and property tax expenses, partially offset by an increase
in general and administrative and operating expenses. While total expenses
remained relatively constant for the three months ended September 30, 2001, the
increase in operating expense was offset by a decrease in general and
administrative expense. Interest expense decreased due to additional interest
being paid during the nine months ended September 30, 2000, related to the
refinancing of the Partnership's mortgage which occurred in October 1999. The
decrease in property tax expense is due to timing of the receipt of the tax
bills, which affected the recording of the associated accrual. Operating expense
increased due to an increase in the cost of preparing vacant units for release
and due to an increase in advertising directed at obtaining new tenants. The
increase in general and administrative expenses is due to the special management
fee of 9% on distributions from operations earned during the first quarter of
2001. No such fee was earned during the nine months ended September 30, 2000.
Also included in general and administrative expenses are cost of services in the
management reimbursements to the General Partner as allowed under the
Partnership Agreement and costs associated with the quarterly and annual
communications with investors and regulatory agencies and the annual audit
required by the Partnership Agreement.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of its investment property to assess the
feasibility of increasing rents, maintaining or increasing occupancy levels and
protecting the Partnership from increases in expenses. As part of this plan, the
General Partner attempts to protect the Partnership from the burden of
inflation-related increases in expenses by increasing rents and maintaining a
high overall occupancy level. However, due to changing market conditions, which
can result in the use of rental concessions and rental reductions to offset
softening market conditions, there is no guarantee that the General Partner will
be able to sustain such a plan.
Liquidity and Capital Resources
At September 30, 2001, the Partnership had cash and cash equivalents of
approximately $162,000 as compared to approximately $656,000 at September 30,
2000. For the nine months ended September 30, 2001, cash and cash equivalents
decreased by approximately $648,000 from the Partnership's year ended December
31, 2000. The decrease in cash and cash equivalents is due to approximately
$640,000 of cash used in financing activities and approximately $266,000 of cash
used in investing activities slightly offset by approximately $258,000 of cash
provided by operating activities. Cash used in financing activities consisted of
distributions to the partners and principal payments made on the mortgage
encumbering the Partnership's property. Cash used in investing activities
consisted of property improvements and replacements. The Partnership invests its
working capital reserves in interest bearing accounts.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the property to adequately maintain the physical asset
and other operating needs of the Registrant and to comply with Federal, state,
and local legal and regulatory requirements. Capital improvements planned for
the Partnership's property are discussed below.
Colony of Springdale Apartments
During the nine months ended September 30, 2001, the Partnership completed
approximately $266,000 of budgeted and non-budgeted capital improvements at
Colony of Springdale Apartments, consisting of appliance and floor covering
replacements, roof replacements, HVAC upgrades and swimming pool improvements.
The improvements were funded through operating cash flow. The Partnership has
budgeted, but is not limited to, capital improvements of approximately $176,000
for the year 2001 at this property which consist of floor covering and roof
replacements, countertops and structural upgrades. Additional improvements may
be considered and will depend on the physical condition of the property as well
as replacement reserves and anticipated cash flow generated by the property. The
capital expenditures will be incurred only if cash is available from operations.
To the extent that such budgeted capital improvements are completed, the
Registrant's distributable cash flow, if any, may be adversely affected at least
in the short term.
The Partnership's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Partnership. The mortgage
indebtedness of approximately $5,370,000 is amortized over 240 months and
matures December 1, 2019 at which time the mortgage will be fully amortized.
During the nine months ended September 30, 2001, a distribution of approximately
$534,000 to the partners (approximately $513,000 to the limited partners or
$2.83 per limited partnership unit) consisting of funds from operations was
declared and paid. A distribution of approximately $2,297,000 (approximately
$2,250,000 to the limited partners or $12.41 per limited partnership unit) was
accrued during December 1999 and paid in January 2000. This distribution
consisted of cash from operations of approximately $1,175,000 (approximately
$1,128,000 to the limited partners or $6.22 per limited partnership unit) and
refinancing proceeds of approximately $1,122,000 to the limited partners ($6.19
per limited partnership unit). No distributions were declared during the nine
months ended September 30, 2000. Future cash distributions will depend on the
levels of net cash generated from operations, the availability of cash reserves
and the timing of the debt maturity, refinancing and/or property sale. The
Registrant's distribution policy is reviewed on a monthly basis. There can be no
assurance that the Partnership will generate sufficient funds from operations,
after required capital expenditures, to permit additional distributions to its
partners during the remainder of 2001 or subsequent periods.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 88,697 limited partnership units in
the Partnership representing 48.92% of the outstanding units at September 30,
2001. A number of these units were acquired pursuant to tender offers made by
AIMCO or its affiliates. It is possible that AIMCO or its affiliates will make
one or more additional offers to acquire additional limited partnership
interests in the Partnership for cash or in exchange for units in the operating
partnership of AIMCO either through private purchases or tender offers. Under
the Partnership Agreement, unitholders holding a majority of the Units are
entitled to take action with respect to a variety of matters, which would
include voting on certain amendments to the Partnership Agreement and voting to
remove the General Partner. As a result of its ownership of 48.92% of the
outstanding units, AIMCO is in a position to significantly influence all such
voting decisions with respect to the Registrant. When voting on matters, AIMCO
would in all likelihood vote the Units it acquired in a manner favorable to the
interest of the General Partner because of its affiliation with the General
Partner.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of California for the County of San Mateo. The plaintiffs named as
defendants, among others, the Partnership, its General Partner and several of
their affiliated partnerships and corporate entities. The action purports to
assert claims on behalf of a class of limited partners and derivatively on
behalf of a number of limited partnerships (including the Partnership) which are
named as nominal defendants, challenging, among other things, the acquisition of
interests in certain general partner entities by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia; past
tender offers by the Insignia affiliates to acquire limited partnership units;
management of the partnerships by the Insignia affiliates; and the series of
transactions which closed on October 1, 1998 and February 26, 1999 whereby
Insignia and Insignia Properties Trust, respectively, were merged into AIMCO.
The plaintiffs seek monetary damages and equitable relief, including judicial
dissolution of the Partnership. On June 25, 1998, the General Partner filed a
motion seeking dismissal of the action. In lieu of responding to the motion, the
plaintiffs filed an amended complaint. The General Partner filed demurrers to
the amended complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Court, at which time
the Court set a final approval hearing for December 10, 1999. Prior to the
December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the General Partner and its affiliates terminated the
proposed settlement. In February 2000, counsel for some of the named plaintiffs
filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated
the settlement. On June 27, 2000, the Court entered an order disqualifying them
from the case and an appeal was taken from the order on October 5, 2000. On
December 4, 2000, the Court appointed the law firm of Lieff Cabraser Heimann &
Bernstein LLP as new lead counsel for plaintiffs and the putative class.
Plaintiffs filed a third amended complaint on January 19, 2001. On March 2,
2001, the General Partner and its affiliates filed a demurrer to the third
amended complaint. On May 14, 2001, the Court heard the demurrer to the third
amended complaint. On July 10, 2001, the Court issued an order sustaining
defendants' demurrer on certain grounds. On July 20, 2001, plaintiffs filed a
motion for reconsideration of the Court's July 10, 2001 order granting in part
and denying in part defendants' demurrer. On September 7, 2001, plaintiffs filed
a fourth amended class and derivative action complaint. On September 12, 2001,
the Court denied plaintiffs' motion for reconsideration. On October 5, 2001, the
General Partner and affiliated defendants filed a demurrer to the fourth amended
complaint, which, together with a demurrer filed by other defendants, is
currently scheduled to be heard on November 15, 2001. The Court has set the
matter for trial in January 2003.
During the third quarter of 2001, a complaint (the "Heller action") was filed
against the same defendants that are named in the Nuanes action, captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended complaint. The first amended complaint in the Heller action is
brought as a purported derivative action, and asserts claims for among other
things breach of fiduciary duty; unfair competition; conversion, unjust
enrichment; and judicial dissolution. Plaintiffs in the Nuanes action filed a
motion to consolidate the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed without leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the General Partner and affiliated defendants
moved to strike the first amended complaint in its entirety for violating the
Court's July 10, 2001 order granting in part and denying in part defendants'
demurrer in the Nuanes action, or alternatively, to strike certain portions of
the complaint based on the statute of limitations. Other defendants in the
action demurred to the fourth amended complaint, and, alternatively, moved to
strike the complaint. The matters are currently scheduled to be heard on
November 15, 2001.
The General Partner does not anticipate that any costs, whether legal or
settlement costs, associated with these cases will be material to the
Partnership's overall operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
None.
b) Reports on Form 8-K:
None filed during the quarter ended September 30, 2001.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CONSOLIDATED CAPITAL PROPERTIES VI
By: CONCAP EQUITIES, INC.
General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
and Controller
Date: