SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): August 30, 2002
IBF VI - SECURED LENDING CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware 333-71091 52-2139510
(State of Incorporation) (Commission File No.) (IRS Employer
Identification No.)
1733 Connecticut Avenue, N.W.
Washington, D.C. 20009
(Address of principal executive offices, including zip code)
(202) 588-7500
(Registrant's telephone number, including area code)
Item 5. Other
The Bankruptcy Court Proceedings
On December 3, 2001, the Securities and Exchange Commission commenced a
formal investigation of the Company, our parent and certain of our affiliates.
The Company was unable to reach a settlement with the SEC in connection with the
investigation due, in large part, to the fact that the SEC indicated that a
settlement would require the appointment of a receiver which, in our view, would
have effectively required a severely discounted liquidation of our assets. In
light of the nature of our assets, we believe that this course would lead to
recovery of only a limited portion of asset value and thus would be detrimental
to our bond holders. Accordingly, on June 7, 2002, we, our parent company, and
an affiliated company (the "Companies") filed voluntary petitions for
reorganization under Chapter 11 of the United States Bankruptcy Code. The
bankruptcy filings were undertaken to preserve investor value. We believe that
the Companies have sufficient liquidity and that they have not experienced a
material adverse change in the quality of their overall asset base. The
petitions were filed in the United States Bankruptcy Court for the Southern
District of New York (our Case No. 02-41591). No trustee, receiver, fiscal agent
or similar officer has been appointed with respect to the Companies, which
continue to operate their businesses as debtors in possession.
On September 5, 2002, the Companies asked the Bankruptcy Court for
permission to retain and employ Morgan Joseph & Co. (formally Morgan Lewins &
Co.) to provide independent financial advisory services to the Companies. Morgan
Joseph has already commenced work and will provide valuation and liquidity
analyses, plan feasibility studies, a liquidation analysis and other such work
as Morgan Joseph and the Company may agree. Morgan Joseph will work closely with
the Companies and the Creditors' Committee.
On September 12, 2002, the Companies' management team and Morgan Joseph
met with the Creditors' Committee and presented the results of Morgan Joseph's
valuation study comparing the value of the Companies' assets on a liquidation
basis, which generally assumes a sale within three to six months, with their
value on a going-concern basis, which assumes a sale over a longer horizon,
which we generally believe to be five years. The study confirmed our belief that
a liquidation of the assets would be severely detrimental to our goal of
maximizing full value for the investors.
The SEC proceedings
On July 23, 2002, the Commission filed a complaint alleging, among
other things, that the Company is operating unlawfully as an unregistered
investment company in violation of the Investment Company Act of 1940 and that
we misrepresented and omitted material facts in its offering and disclosure
documents. With respect to the Company, the complaint seeks an injunction
barring further violations of the securities laws, an order appointing a trustee
to take possession of our assets, and disgorgement of all of our offering
proceeds, among other things. The complaint was filed in the United States
District Court for the Southern District of New York and is titled Securities
and Exchange Commission v. IBF Collateralized Finance Corporation, IBF VI -
Secured Lending Corporation, InterBank Funding Corporation and Simon A. Hershon.
We believe that this action by the SEC is without merit and we intend to
vigorously defend it.
On September 13, 2002, the Companies and Simon Hershon filed motions jointly in
the U.S. District Court and the U.S. Bankruptcy Court to coordinate the District
Court and Bankruptcy Court proceedings. The motion proposes that the Companies
and their creditors/investors be permitted to complete a bankruptcy
reorganization, with the participation of the SEC, before the most expensive
portions of the SEC action proceed. In this regard, the motion requests that
until a Plan of Reorganization is completed and confirmed, the District Court
proceedings in the SEC action be limited to matters that will not threaten to
drain the Companies of significant assets or interfere with the reorganization
effort, noting that many aspects of the SEC action could become moot once a
reorganization is approved. The Companies believe that the coordination, if
approved, will maximize the value of the assets available for distribution to
the Companies' investors and will minimize unnecessary or redundant litigation
in the District Court.
Item 7. Financial Statements and Exhibits
In light of our voluntary petition for reorganization under Chapter 11 of the
United States Bankruptcy Code and the Commission's investigation and complaint,
the Company has determined to file reports on Form 8-K in lieu of the quarterly
reports on Form 10-Q. The financial statements that are included in this filing,
which cover the periods August 1 through August 31, 2002 and September 1 through
September 30, 2002 have also been submitted to the Bankruptcy Court. These
reports have not been prepared in accordance with generally accepted accounting
principles, or GAAP, in that they do not consolidate a subsidiary that is 100%
owned by the Company because that subsidiary is a bankruptcy-remote entity and
accordingly is not affected by the bankruptcy proceedings. The value of the
Company's investment in the subsidiary is included on the balance sheet,
however. The fair value assigned to the investments described in our financials
are based on available information and do not necessarily represent amounts that
might ultimately be realized, since such amounts depend on future circumstances.
Investment valuation is conducted by management at least annually and more
frequently if circumstances warrant. Unrealized appreciation or depreciation on
investments as a result of changes in management's estimate of investment fair
value is recorded on the statement of operations. Realized gains and losses
include those amounts that result from the disposition of investments, as well
as loan charge-offs and recoveries.
(c) Exhibits
Exhibit No. Description
99.1 Unconsolidated, Unaudited Monthly
Operating Reports dated August 31, 2002 and
September 30, 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IBF VI - SECURED LENDING CORPORATION
/s/ Simon A. Hershon
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Simon A. Hershon
Chief Executive Officer
Dated: October 18, 2002