WBQNL 10-Q
Woodbridge Liquidation Trust (WBQNL)
10-Q
2023-05-15
For: 2023-03-31
View Original
Added on
April 06, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended March 31, 2023
or
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from ______ to _____
Commission File Number: 000-56115
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employment Identification No.)
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code: (310 ) 765-1550
Securities registered pursuant to Section 12(b) of the Act: None
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer,’’ ‘‘smaller reporting company’’ and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer ☐
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Accelerated filer ☐
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Smaller reporting company
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Emerging growth company
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Yes ☒ No ☐
| PART I. |
FINANCIAL INFORMATION
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| Item 1. |
Financial Statements
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Woodbridge Liquidation Trust and Subsidiaries
Consolidated
Statements of Net Assets in Liquidation
As of March 31, 2023
and June 30, 2022
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(Unaudited, $ In Thousands)
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3/31/2023
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6/30/2022
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Assets
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Real estate assets held for sale, net (Note 3)
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$ |
$ |
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Cash and cash equivalents
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Restricted cash (Note 4)
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Other assets (Note 5)
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Total assets
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$
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$
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Liabilities
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Accounts payable and accrued liabilities
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$
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$
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Distributions payable
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Accrued liquidation costs (Note 6)
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Total liabilities
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$
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$
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Commitments and Contingencies (Note 14)
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Net Assets in Liquidation
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Restricted for Qualifying Victims (Note 7)
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$ |
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$ |
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All Interestholders
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Total net assets in liquidation
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$
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$
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See accompanying notes to unaudited consolidated financial statements.
| PART I. |
FINANCIAL INFORMATION (CONTINUED)
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| Item 1. |
Financial Statements (Continued)
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Woodbridge Liquidation Trust and Subsidiaries
Consolidated Statements of Changes in Net Assets in Liquidation
For the Three Months Ended March 31, 2023 and 2022
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(Unaudited, $ in Thousands)
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Three Months Ended March 31, 2023
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Three Months Ended March 31, 2022
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Restricted
For Qualifying
Victims
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All
Interestholders
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Total
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Restricted
For Qualifying
Victims
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All
Interestholders
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Total
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Net Assets in Liquidation as of beginning of period
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$
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$
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$
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$
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$ | $ | ||||||||||||||
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Change in assets and liabilities (Note 8):
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Restricted for Qualifying Victims -
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Change in carrying value of assets and liabilities, net
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(
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( |
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All Interestholders:
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Change in carrying value of assets and liabilities, net
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(
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)
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(
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Distributions (declared) reversed, net
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(
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(
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Net change in assets and liabilities
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(
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(
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(
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(
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Net Assets in Liquidation as of end of period
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$
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$
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$
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$
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$
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$
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See accompanying notes to unaudited consolidated financial statements.
| PART I. |
FINANCIAL INFORMATION (CONTINUED)
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| Item 1. |
Financial Statements (Continued)
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Woodbridge Liquidation Trust and Subsidiaries
Consolidated Statements of Changes in Net Assets in Liquidation
For the Nine Months Ended March 31, 2023 and 2022
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(Unaudited, $ in Thousands)
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Nine Months Ended March 31, 2023
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Nine Months Ended March 31, 2022
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Restricted
For Qualifying
Victims
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All
Interestholders
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Total
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Restricted
For Qualifying
Victims
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All
Interestholders
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Total
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Net Assets in Liquidation as of beginning of period
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$ |
$
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$
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$
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$ | $ | |||||||||||||||
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Change in assets and liabilities (Note 8):
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Restricted for Qualifying Victims -
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Change in carrying value of assets and liabilities, net
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( |
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(
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All Interestholders :
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Change in carrying value of assets and liabilities, net
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(
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)
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(
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)
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Distributions (declared) reversed, net
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(
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(
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Net change in assets and liabilities
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(
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(
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(
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(
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Net Assets in Liquidation as of end of period
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$
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$ |
$
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$
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$ | $ | |||||||||||||||
See accompanying notes to unaudited consolidated financial statements.
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1)
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Formation and Description of Business
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Formation
Woodbridge Liquidation Trust (the “Trust”) was established (i) for the purpose of collecting, administering, distributing and liquidating the Trust assets for the benefit of the Trust beneficiaries in
accordance with the Liquidation Trust Agreement of the Trust and the First Amended Joint Chapter 11 Plan of Liquidation of Woodbridge Group of Companies, LLC and its Affiliated Debtors dated August 22, 2018 (as amended, modified, supplemented or
restated from time to time, the “Plan”); (ii) to resolve disputed claims asserted against the Debtors; (iii) to litigate and/or settle causes of action (“Causes of Action”); and (iv) to pay certain allowed claims and statutory fees, as required
by the Plan. Woodbridge Group of Companies, LLC and its affiliated debtors are individually referred to herein as a Debtor and collectively as the Debtors. The Trust was formed on February 15, 2019 (the “Plan Effective Date”) as a statutory trust
under Delaware law.
On the Plan Effective Date, in accordance with the Plan, (a) the following assets automatically vested in the Trust: (i) an aggregate $5,000,000 in cash from the Debtors for the purpose of funding the Trust’s initial expenses of operation; (ii) certain claims and Causes of Action; (iii)
all of the outstanding equity interests of the Wind-Down Entity (as defined below); and (iv) certain other non-real estate related assets, (b) the equity interests of Woodbridge Group of Companies, LLC and Woodbridge Mortgage Investment Fund 1, LLC
(together, the “Remaining Debtors”) were cancelled and new equity interests representing all of the newly issued and outstanding equity interests in the Remaining Debtors were issued to the Trust, (c) all of the other Debtors other than the
Remaining Debtors were dissolved and (d) the real estate-related assets of the Debtors were automatically vested in the Trust’s wholly-owned subsidiary, Woodbridge Wind-Down Entity LLC (the “Wind-Down Entity”) or one of the Wind-Down Entity’s 43 wholly-owned single-member limited liability companies (the “Wind-Down Subsidiaries”) formed to own the respective real estate assets. The Trust, the
Remaining Debtors, the Wind-Down Entity and the Wind-Down Subsidiaries are collectively referred to herein as the “Company.”
As further discussed in Note 10, the Trust
has two classes of liquidation trust interests: Class A Liquidation Trust Interests (“Class A Interests”) and Class B Liquidation Trust
Interests (“Class B Interests”). The holders of Class A Interests and Class B Interests are collectively referred to as “All Interestholders.”
On December 24, 2019, the
Trust’s Registration Statement on Form 10 became effective under the Securities Exchange Act of 1934 (the “Exchange Act”). The trading symbol for the Trust’s Class A Interests is WBQNL. Bid and asked prices for the Trust’s Class A Interests are
quoted on the OTC Link ATS, the SEC-registered alternative trading system. The Class A Interests are eligible for the Depository Trust Company’s Direct Registration System (DRS) services. The Class B Interests
are not registered with the SEC.
Description of
Business
The Trust is
prosecuting various Causes of Action acquired by the Trust pursuant to the Plan and is resolving claims asserted against the Debtors. As of March 31, 2023, the Company is the plaintiff in several pending lawsuits. The Company has accrued an
estimate of the amount of legal costs to be incurred to pursue this litigation, excluding contingent fees. As more fully discussed in Note 2, the Company’s consolidated financial statements do not include any estimate of future net recoveries from
litigation and settlement, since the Company cannot reasonably estimate them.
The Wind-Down
Entities’ operations are almost complete. As of March 31, 2023, the Wind-Down Subsidiaries owned one secured loan and two other
properties (see Note 3.)
4
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
For the Three and Nine Months Ended March 31, 2023 and 2022
(Unaudited)
The Company is required to liquidate its assets and distribute available cash to the Trust beneficiaries. The liquidation activities are carried
out by the Trust, the Wind-Down Entity and the Wind-Down Subsidiaries. As of March 31, 2023, the Company estimates that the liquidation activities will be completed by March 31, 2026 (see Note 6).
As more fully discussed in Note 2, the Company uses the Liquidation Basis of Accounting. The Trust currently operates as one reportable segment comprised primarily of real estate assets held for sale. Net assets in liquidation represent the remaining estimated aggregate
value available to Trust beneficiaries upon liquidation, with no discount for the timing of proceeds (undiscounted). Net liquidation proceeds, other recoveries and actual liquidation costs may differ materially from the estimated amounts due to
the uncertainty in the timing of completing the liquidation activities.
The Trust’s expectations about the amount of any additional distributions and when
they will be paid are subject to risks and uncertainties and are based on certain estimates and assumptions, one or more of which may prove to be incorrect. As a result, the actual amount of any additional distributions may differ materially,
perhaps in adverse ways, from the Trust estimates. Furthermore, it is not possible to predict the timing of any additional distributions and any such distributions may not be made within the timing referenced in the consolidated financial
statements.
No assurance can be given that total distributions will equal or exceed the estimate of net assets in liquidation presented
in the consolidated statements of net assets in liquidation.
The Company observes
health and safety guidelines, including allowing its employees to work remotely. The Company continues to evaluate the impact of the COVID-19 virus and other global health crises on its activities, including the time needed to prosecute the
Company’s Causes of Action and complete its remaining liquidation activities.
| 2) |
Summary of Significant Accounting Policies
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Basis of Presentation and Consolidation
The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. Generally Accepted
Accounting Principles (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”), including the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, the
consolidated financial statements for the unaudited interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair and consistent presentation of the results for such periods. These consolidated
financial statements have been presented in accordance with Accounting Standards Codification (“ASC”) Subtopic 205-30, “Liquidation Basis of Accounting,” as amended by Accounting Standards Update (“ASU”) No. 2013-07, “Presentation of Financial
Statements (Topic 205), Liquidation Basis of Accounting.” The June 30, 2022 consolidated statement of net assets in liquidation included herein was derived from the audited consolidated financial statements but does not include all disclosures or
notes required by U.S. GAAP for complete financial statements.
All material intercompany accounts and transactions have been eliminated.
5
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
For the Three and Nine Months Ended March 31, 2023 and 2022
(Unaudited)
Use of Estimates
U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the consolidated financial statements and for the period then ended. Actual results could differ from these estimates. Estimates and assumptions are reviewed periodically, and the carrying amounts of
assets and liabilities are revised in the period that available information supports a change in the carrying amount.
Liquidation Basis of Accounting
Under the liquidation basis of accounting, all assets are recorded at their estimated net realizable value or liquidation value, which represents
the estimated amount of net cash that will be received upon the disposition of the assets (on an undiscounted basis). The measurement of real estate assets held for sale is based on 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 considered opinions from qualified real estate professionals and local real estate brokers and, in some cases, obtained third party appraisals. The
estimated selling costs range from 5.0 % to 8.5 %
of the property sales price,including sales commissions, transfer taxes and
other costs.
Liabilities, including estimated costs associated with implementing and completing the Plan, are measured in accordance with U.S. GAAP that
otherwise applies to those liabilities. The Company has also recorded the estimated development costs to be incurred to prepare the assets for sale as well as the estimated holding costs to be incurred until the projected sale date and the
estimated general and administrative costs to be incurred until the completion of the liquidation of the Company and estimated reserves for contingencies. When estimating development costs, the Company considered third party construction contracts
and estimates of costs to complete based on construction status, progress and projected completion timing. Estimated development costs also include the costs of design and furnishings necessary to prepare and stage the homes for marketing as well
as an accrual for potential construction warranty claims. Holding cost estimates consider property taxes, insurance, utilities, maintenance and other costs to be incurred until the sale of the property is closed. Projected general and
administrative cost estimates take into account operating costs through the completion of the liquidation of the Company and an accrual for potential construction warranty claims and the administration of such claims.
These estimated amounts are presented in the accompanying consolidated statements of net assets in liquidation. All changes in the estimated
liquidation value of the Company’s real estate held for sale, or other assets and liabilities are reflected as a change to the Company’s net assets in liquidation.
The Company does not record any amount from the future settlement of unresolved
Causes of Action or recoveries of Fair Funds in the accompanying consolidated financial statements since they cannot be reasonably estimated. The amount recovered may be material to the Company’s net assets in liquidation.
On a quarterly basis, the Company reviews the estimated net realizable values, liquidation costs and the estimated date of the completion of the
liquidation of the Company and records any significant changes. The Company will also revalue an asset when it is under contract for sale and the buyer’s contingencies have been removed. During the period when this occurs, the carrying value of the
asset and the estimated closing and other costs will be adjusted, if necessary. If the Company has a change in its plan for the disposition of an asset, the carrying value will be adjusted to reflect this change in the period that the change is
approved. The change in value may include the accrued liquidation costs related to the asset.
6
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
For the Three and Nine Months Ended March 31, 2023 and 2022
(Unaudited)
Other Assets
The Company recognizes recoveries from the settlement of unresolved Causes of Action when an agreement is executed and
collectability is reasonably assured. An allowance for uncollectible settlement installment receivables is recorded when there is doubt about the collectability of the receivable. Insurance claims are recognized when the insurance company
accepts the claim or if a claim is pending and the recoverable amount can be estimated. The Company records escrow receivables at the amount that is expected to be received when the escrow receivable is released. The Forfeited Assets (Note 7)
received from the United States Department of Justice (the “DOJ”), other than cash, have been recorded at their estimated net realizable value. In addition, the Company recognizes other amounts to be received based on contractual terms or when
the amounts to be received are certain.
Accrued Liquidation Costs
The Company accrues for estimated liquidation costs to the extent they are reasonably determinable. These costs consist of (a) estimated
development costs of the single-family homes, including construction and other project related costs, architectural and engineering, project management, city fees, bond payments (net of refunds), furnishings, marketing, estimated reserves for
potential construction warranty claims and other costs; (b) estimated holding costs, including property taxes, insurance, maintenance, utilities and other; and (c) estimated general and administrative costs including payroll, legal and other
professional fees, trustee and board fees, rent and other office related expenses, and other general and administrative costs to operate the Company and administer warranty claims.
Cash Equivalents
The Company considers short-term investments that have a maturity date of ninety days or less at the time of investment to be a cash equivalent.
Restricted Cash
Restricted cash includes cash that can only be used for certain specified purposes.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents and restricted cash, which are held as
deposits in several financial institutions. The deposit balances in any one financial institution may exceed the Federal Deposit Insurance Corporation (the “FDIC”) insurance limits. The Company mitigates this risk by using sweep accounts to
reduce deposit balances at any one financial institution consistent with FDIC insurance limits. The Company also has deposits in two
Akerman LLP trust accounts for the benefit of the Company (“Trust Accounts”) (see Note 12).
Income Taxes
The Trust is intended to be treated as a grantor trust for income tax purposes and, accordingly, is not subject to federal or state income tax on
any income earned or gain recognized by the Trust. The Trust’s beneficiaries will be treated as the owner of a pro rata portion of each asset, including cash and each liability received by and held by the Trust. Each beneficiary will be required to
report on his or her federal and state income tax return his or her pro rata share of taxable income, including gains and losses recognized by the Trust. Accordingly, there is no provision for federal or state income taxes recorded in the
accompanying consolidated financial statements.
7
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
For the Three and Nine Months Ended March 31, 2023 and 2022
(Unaudited)
The Company regularly analyzes its various federal and state filing positions and only recognizes the income tax effect in the consolidated
financial statements when certain criteria regarding uncertain income tax positions have been met. The Company believes that its income tax positions would more likely than not be sustained upon examination by all relevant taxing authorities.
Therefore, no provision for uncertain income tax positions has been recorded in the consolidated financial statements.
Net Assets in Liquidation - Restricted
for Qualifying Victims
The Company separately
presents the portion of net assets in liquidation that are restricted for Qualifying Victims (Note 7) from the net assets in liquidation that are available to All Interestholders.
| 3) |
Real Estate Assets Held for Sale
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The Company’s real estate assets held for sale as of March 31, 2023, with comparative
information as of June 30, 2022, are as follows ($ in thousands) (unaudited):
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March 31, 2023
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June 30, 2022
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Number
of Assets
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Gross Value
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Closing and
Other Costs
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Net Value
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Number
of Assets
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Gross Value
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Closing and
Other Costs
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Net Value
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Single-family homes
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$
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$
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$
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$
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$ | ( |
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$
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Other real estate assets:
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Secured loans
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(
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Other properties
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(
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(
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Subtotal
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(
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(
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Total
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$
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$
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(
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)
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$ |
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$
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$
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(
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)
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$
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As of March 31, 2023, the loan is secured by a property located in the state of Ohio and the other properties are located in the state of Hawaii and the state of New York. As of March 31, 2023, the property located in the state of New York was under contract.
See Note 15.
During the three months ended March 31, 2023, the Company sold one single-family home and settled one secured loan for approximately $25,400 ,000 in the aggregate. During the three months ended March 31, 2022, the Company settled one secured loan for
approximately $725 ,000.
During the nine months ended March 31, 2023,
the Company sold one single-family home and settled one secured loan for approximately $25,400 ,000
in the aggregate. During the nine months ended March 31, 2022, the Company sold four single-family homes and settled two secured loan for net proceeds of approximately $64,405 ,000 in
the aggregate.
8
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
For the Three and Nine Months Ended March 31, 2023 and 2022
(Unaudited)
| 4) |
Restricted Cash
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The Company’s restricted cash as of March 31, 2023, with comparative information as of June 30, 2022, is as follows ($ in thousands) (unaudited):
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March 31, 2023
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June 30, 2022
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| Forfeited Assets (Note 7) | $ | $ | ||||||
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Distributions restricted by the Company related to unresolved claims, distributions for recently allowed claims, uncashed distribution checks, distributions withheld due to pending
avoidance actions and distributions that the Trust is waiting for further beneficiary information
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Total restricted cash
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$ | $ | ||||||
At March 31, 2023, the Company’s restricted cash is held in Trust Accounts. At June 30, 2022, the Company’s restricted cash was deposited with one financial
institution.
| 5) |
Other Assets
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The Company’s other assets as of March 31, 2023, with comparative information as of June 30, 2022, are as follows ($ in thousands) (unaudited):
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March 31, 2023
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June 30, 2022
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|||||||
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Forfeited Assets (Note 7)
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$ |
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$ |
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||||
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Settlement installment receivables, net (a)
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| Escrow receivables (b) |
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Other
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Total other assets
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$
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$
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|||||
(a) The allowance for uncollectible settlement installment receivables was approximately $63 ,000 and $7 ,000 as of March 31, 2023 and June 30, 2022,
respectively.
(b) Escrow receivables as of March 31, 2023 relate to one single-family home that was sold during the nine months ended March 31, 2023 and one single-family home that was sold during the year ended June 30, 2022. Escrow receivables as of June 30, 2022 relate to two single-family homes that were sold during the year ended June 30, 2022 and one single-family home sold prior to June 30, 2021. Amounts are typically released upon the completion of punch list items and/or obtaining a certificate of occupancy. In
some cases, escrow receivable amounts may be used to pay for the cost of completing punch list items.
9
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
For the Three and Nine Months Ended March 31, 2023 and 2022
(Unaudited)
| 6) |
Accrued Liquidation Costs
|
The following is a summary of the items included in accrued liquidation costs as of March 31, 2023, with comparative information as of June 30,
2022 ($ in thousands) (unaudited):
|
March 31, 2023
|
June 30, 2022
|
|||||||
|
Development costs:
|
||||||||
|
Construction warranty
|
$ | $ | ||||||
|
Construction costs
|
|
|
||||||
|
Indirect costs
|
|
|
||||||
|
Bond refunds
|
(
|
)
|
(
|
)
|
||||
|
Total development costs
|
|
|
||||||
|
Holding costs:
|
||||||||
|
Maintenance, utilities and other
|
|
|
||||||
|
Property tax
|
||||||||
|
Insurance (refund)
|
(
|
)
|
|
|||||
|
Total holding costs
|
|
|
||||||
|
General and administrative costs:
|
||||||||
|
Legal and other professional fees
|
|
|
||||||
|
Directors and officers insurance
|
||||||||
|
Payroll and payroll-related
|
|
|
||||||
|
Board fees and expenses
|
|
|
||||||
|
State, local and other taxes
|
|
|
||||||
|
Other
|
|
|
||||||
|
Total general and administrative costs
|
|
|
||||||
|
Total accrued liquidation costs
|
$
|
|
$
|
|
||||
During the quarter ended March 31, 2023, the Company concluded that its liquidation activities would not be completed by February 15, 2024, the current outside
termination date of the Trust. There have been significant delays in the Company’s legal proceedings where the Company is the plaintiff and the Company estimates that it may require up to an additional two years to complete its operations. The revised estimated completion date for the Company’s operations is approximately March 31, 2026. Furthermore, the ultimate recovery
amount from these legal proceedings cannot be determined until they are settled.
The change of the estimated completion date of the Company’s liqudation activities resulted in an additional accrual of 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 the Company’s liquidation activities are completed.
The Company is required to file a motion with the Bankruptcy Court to extend the termination date of the Trust beyond February 15, 2024. The motion is required to be
filed within six months before February 15, 2024. The Company expects that the motion will be filed as required and that the Bankruptcy
Court will grant the motion as the extension is needed to pursue additional Trust actions that are expected to yield additional proceeds to the Trust.
|
7)
|
Forfeited Assets - Restricted for Qualifying Victims
|
The Trust entered into a resolution agreement with the DOJ which provided that the Trust would receive the assets
forfeited (“Forfeited Assets”) by Robert and Jeri Shapiro. The agreement provided for the release of specified Forfeited Assets by the DOJ to the Trust and for the Trust to liquidate those assets and distribute the net sale proceeds to Qualifying
Victims. Qualifying Victims include the vast majority of Trust beneficiaries (specifically, all former holders of allowed Class 3 and 5 claims and their permitted assigns), but do not include former holders of Class 4 claims. Distributions to
Qualifying Victims are to be allocated pro-rata based on their net allowed claims without considering the (i) 5 % enhancement for
contributing their causes of action and (ii) 72.5 % Class 5 coefficient.
10
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
For the Three and Nine Months Ended March 31, 2023 and 2022
(Unaudited)
In March 2021, the Trust received certain Forfeited Assets from the DOJ, including cash, wine, jewelry, handbags, clothing, shoes, art, gold, an
automobile and other assets. The Company recorded the total estimated net realizable value of the Forfeited Assets of approximately $3,459 ,000.
During the three and nine months ended March 31, 2023, the Company sold the automobile, some of the jewelry, handbags, clothing, shoes and art. During the year ended June 30, 2022, the Company sold the wine and gold and some of the handbags,
clothing and shoes. The Forfeited Assets included in the Company’s March 31, 2023 and June 30, 2022 consolidated financial statements are as follows ($ in thousands) (unaudited):
|
March 31, 2023
|
June 30, 2022
|
|||||||
|
Restricted cash (Note 4)
|
$
|
|
$
|
|
||||
|
Other assets (Note 5)
|
|
|
||||||
| Accounts payable and accrued liabilities | ( |
) | ||||||
|
Accrued liquidation costs - primarily legal and professional fees
|
(
|
)
|
(
|
)
|
||||
|
Net assets in liquidation - restricted for Qualifying Victims
|
$
|
|
$
|
|
||||
On February 7, 2023, the Trust was informed that the DOJ had received additional Forfeited Assets from a co-defendant of Robert Shapiro and that the DOJ proposes to transfer these Forfeited Assets to the Trust. The Trust has not yet entered into an agreement with the DOJ for the transfer of any additional Forfeited Assets. It is expected that the proceeds from any additional Forfeited Assets would be distributed to Qualifying Victims. The Trust is unable to estimate the amount or timing of the transfer of any such Forfeited Assets.
|
8)
|
Net Change In Assets and Liabilities
|
Restricted for Qualifying Victims
The following provides details of the change in the carrying value of assets and liabilities, net during the three months ended March 31, 2023 ($ in thousands) (unaudited):
| Cash | Remeasure- | |||||||||||
|
Activities
|
ment
|
Total
|
||||||||||
|
Real estate assets held for sale, net
|
$
|
|
$
|
|
$
|
|
||||||
| Cash and cash equivalents | ||||||||||||
|
Restricted cash
|
||||||||||||
|
Other assets
|
( |
) | ( |
) | ( |
) | ||||||
|
Total assets
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|||
|
Accounts payable and accrued liabilities
|
$ |
$
|
|
$
|
|
|||||||
|
Accrued liquidation costs
|
( |
) | ( |
) | ||||||||
|
Total liabilities
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
||||
|
Change in carrying value of assets and liabilities, net
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
11
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
For the Three and Nine Months Ended March 31, 2023 and 2022
(Unaudited)
The following provides details of the change in the carrying value of assets and liabilities, net during the three months ended March 31, 2022 ($ in thousands) (unaudited):
| Cash | Remeasure- | |||||||||||
|
Activities
|
ment
|
Total
|
||||||||||
|
Real estate assets held for sale, net
|
$
|
|
$
|
|
$
|
|
||||||
| Cash and cash equivalents | ||||||||||||
|
Restricted cash
|
||||||||||||
|
Other assets
|
( |
) | ( |
) | ||||||||
|
Total assets
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
||||
|
Accounts payable and accrued liabilities
|
$ |
$
|
|
$
|
|
|||||||
|
Accrued liquidation costs
|
( |
) | ( |
) | ||||||||
|
Total liabilities
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
||||
|
Change in carrying value of assets and liabilities, net
|
$
|
|
$
|
|
$
|
|
||||||
The following provides details of the change in the carrying value of assets and liabilities, net during the nine months ended March
31, 2023 ($ in thousands) (unaudited):
|
Cash
|
Remeasure-
|
|||||||||||
|
Activities
|
ment
|
Total
|
||||||||||
|
Real estate assets held for sale, net
|
$
|
|
$
|
|
$
|
|
||||||
|
Cash and cash equivalents
|
|
|
|
|||||||||
|
Restricted cash
|
|
|
|
|||||||||
|
Other assets
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Total assets
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|||
|
Accounts payable and accrued liabilities
|
$
|
|
$
|
|
$
|
|
||||||
|
Accrued liquidation costs
|
(
|
)
|
|
(
|
)
|
|||||||
|
Total liabilities
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
||||
|
Change in carrying value of assets and liabilities, net
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
12
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
For the Three and Nine Months Ended March 31, 2023 and 2022
(Unaudited)
The following provides details of the change in the carrying value of assets and liabilities, net during the nine months ended March
31, 2022 ($ in thousands) (unaudited):
|
Cash
|
Remeasure-
|
|||||||||||
|
Activities
|
ment
|
Total
|
||||||||||
|
Real estate assets held for sale, net
|
$
|
|
$
|
|
$
|
|
||||||
|
Cash and cash equivalents
|
|
|
|
|||||||||
|
Restricted cash
|
|
|
|
|||||||||
|
Other assets
|
(
|
)
|
|
(
|
)
|
|||||||
|
Total assets
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
||||
|
Accounts payable and accrued liabilities
|
$
|
|
$
|
|
$
|
|
||||||
|
Accrued liquidation costs
|
(
|
)
|
|
(
|
)
|
|||||||
|
Total liabilities
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
||||
|
Change in carrying value of assets and liabilities, net
|
$
|
|
$
|
|
$
|
|
||||||
All Interestholders
The following provides details of the change in the carrying value of assets and liabilities, net during the three months ended March 31, 2023 ($ in thousands) (unaudited):
| Cash | Remeasure- | |||||||||||
|
Activities
|
ment
|
Total
|
||||||||||
|
Real estate assets held for sale, net
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|||
|
Cash and cash equivalents
|
||||||||||||
|
Restricted cash
|
|
|
|
|||||||||
|
Other assets
|
(
|
)
|
||||||||||
|
Total assets
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|||
|
Accounts payable and accrued liabilities
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||
|
Accrued liquidation costs
|
(
|
)
|
|
|
||||||||
|
Total liabilities
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||
|
Change in carrying value of assets and liabilities, net
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
13
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
For the Three and Nine Months Ended March 31, 2023 and 2022
(Unaudited)
The following provides details of the distributions (declared) reversed, net during the three months ended March 31, 2023 ($ in thousands) (unaudited):
|
Distributions declared
|
$
|
(
|
)
|
|
|
Distributions reversed
|
||||
|
Distributions (declared) reversed, net
|
$
|
|
Distributions payable did no t change during the three months ended March 31, 2023.
The following provides details of the change in the carrying value of assets and liabilities, net during the three months ended March 31, 2022 ($ in thousands) (unaudited):
| Cash | Remeasure- | |||||||||||
|
Activities
|
ment
|
Total
|
||||||||||
|
Real estate assets held for sale, net
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||
| Cash and cash equivalents |
|
|
|
|||||||||
|
Restricted cash
|
|
|
|
|||||||||
|
Other assets
|
(
|
)
|
|
(
|
)
|
|||||||
|
Total assets
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||
|
Accounts payable and accrued liabilities
|
$
|
|
$
|
|
$
|
|
||||||
|
Accrued liquidation costs
|
(
|
)
|
|
(
|
)
|
|||||||
|
Total liabilities
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
||||
|
Change in carrying value of assets and liabilities, net
|
$
|
|
$
|
|
$
|
|
||||||
The following provides details of the distributions (declared) reversed, net during the three months ended March 31, 2022 ($ in thousands) (unaudited):
|
Distributions declared
|
$
|
(
|
)
|
|
|
Distributions reversed
|
||||
|
Distributions (declared) reversed, net
|
$
|
(
|
)
|
Distributions payable decreased by approximately $137 ,000
during the three months ended March 31, 2022.
14
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
For the Three and Nine Months Ended March 31, 2023 and 2022
(Unaudited)
The following provides details of the change in the carrying value of assets and liabilities, net during the nine months ended March 31, 2023 ($ in thousands) (unaudited):
|
Cash
|
Remeasure-
|
|||||||||||
|
Activities
|
ment
|
Total
|
||||||||||
|
Real estate assets held for sale, net
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|||
| Cash and cash equivalents |
|
|
|
|||||||||
|
Restricted cash
|
|
|
|
|||||||||
|
Other assets
|
(
|
)
|
( |
) | ||||||||
|
Total assets
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|||
|
Accounts payable and accrued liabilities
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||
|
Accrued liquidation costs
|
(
|
)
|
|
(
|
)
|
|||||||
|
Total liabilities
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
||||
|
Change in carrying value of assets and liabilities, net
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
The following provides details of the distributions (declared) reversed, net during the nine months ended March 31, 2023 ($ in thousands) (unaudited):
|
Distributions declared
|
$
|
(
|
)
|
|
|
Distributions reversed
|
||||
|
Distributions (declared) reversed, net
|
$
|
|
Distributions payable decreased by
approximately $67,547 ,000 during the nine months ended March 31, 2023.
15
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
For the Three and Nine Months Ended March 31, 2023 and 2022
(Unaudited)
The following provides details of the change in the carrying value of assets and liabilities, net during the nine months ended March 31, 2022 ($ in thousands) (unaudited):
| Cash | Remeasure- | |||||||||||
|
Activities
|
ment
|
Total
|
||||||||||
|
Real estate assets held for sale, net
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
||||
| Cash and cash equivalents |
|
|
|
|||||||||
|
Restricted cash
|
|
|
|
|||||||||
|
Other assets
|
(
|
)
|
|
|
||||||||
|
Total assets
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||
|
Accounts payable and accrued liabilities
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||
|
Accrued liquidation costs
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Total liabilities
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
||||
|
Change in carrying value of assets and liabilities, net
|
$
|
|
$
|
|
$
|
|
||||||
The following provides details of the distributions (declared) reversed, net during the nine months ended March 31, 2022 ($ in thousands) (unaudited):
|
Distributions declared
|
$
|
(
|
)
|
|
|
Distributions reversed
|
||||
|
Distributions (declared) reversed, net
|
$
|
(
|
)
|
Distributions payable increased by
approximately $344 ,000 during the nine months ended March 31, 2022.
| 9) |
Credit Agreement
|
The Company does no t currently have any outstanding
credit agreements. On May 16, 2022, the Company terminated its prior credit agreement. Also, the Company never had outstanding borrowings on its credit agreement.
16
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
For the Three and Nine Months Ended March 31, 2023 and 2022
(Unaudited)
| 10) |
Beneficial Interests
|
The following table summarizes the Liquidation Trust Interests (rounded) for the nine months ended March 31, 2023 and 2022 (unaudited):
| For the Nine Months Ended March 31, | ||||||||||||||||
| 2023 |
2022 |
|||||||||||||||
|
Liquidation Trust Interests
|
Class A
|
Class B
|
Class A
|
Class B
|
||||||||||||
|
Outstanding at beginning of period
|
|
|
|
|
||||||||||||
|
Allowed claims
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
||||||||||||
|
Settlement of claims by cancelling Liquidation Trust Interests
|
(
|
)
|
|
(
|
)
|
(
|
)
|
|||||||||
|
Outstanding at end of period
|
|
|
|
|
||||||||||||
Of the 11,514,190 Class A Interests outstanding at
March 31, 2023, 11,436,259 are held by Qualifying Victims (Note 7).
At the Plan Effective Date, certain claims were disputed. As those disputed claims are resolved,
additional Class A Interests and (if applicable) Class B Interests are issued on account of allowed claims or Class A Interests and (if applicable) Class B Interests are cancelled. No Class A Interests or Class B Interests are issued on account
of disallowed claims. The following table summarizes the unresolved claims against the Debtors as they relate to Liquidation Trust Interests (rounded) for the nine months ended March 31, 2023 and
2022 (unaudited):
|
For the Nine Months Ended March 31,
|
||||||||||||||||
| 2023 | 2022 | |||||||||||||||
|
Liquidation Trust Interests
|
Class A
|
Class B
|
Class A
|
Class B
|
||||||||||||
|
Reserved for unresolved claims at beginning of period
|
|
|
|
|
||||||||||||
|
Allowed claims
|
(
|
)
|
|
(
|
)
|
|
||||||||||
|
|
|
|
|
|
||||||||||||
|
Disallowed claims
|
(
|
)
|
|
(
|
)
|
(
|
)
|
|||||||||
|
Reserved for unresolved claims at end of period
|
|
|
|
|
||||||||||||
Of the 13,875 Class A Interests relating to unresolved
claims at March 31, 2023, 1,880 would be held by Qualifying Victims (Note 7).
17
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
For the Three and Nine Months Ended March 31, 2023 and 2022
(Unaudited)
| 11) |
Distributions
|
The Plan provides for a distribution waterfall that specifies the priority and manner of distribution of available cash to all Interestholders,
excluding distributions of the net sales proceeds from Forfeited Assets (Note 7). Distributions are to be made (a) to the Class A Interests until they have received distributions of $75.00 per Class A Interest; thereafter (b) to the Class B Interests until they have received distributions of $75.00 10 %, compounded annually, accrued on the
aggregate principal amount of all Net Note Claims, Allowed General Unsecured Claims and Net Unit Claims, all as defined in the Plan, treating each distribution pursuant to (a) and (b) above as reductions of such principal amount; and thereafter (d)
to the holders of Allowed Subordinated Claims, as defined in the Plan, until such claims are paid in full, including interest, at a per annum fixed rate of 10 % or such higher rate as may be agreed to, as provided for in the Plan, compounded annually, accrued on the principal amount of each Allowed Subordinated Claim, as defined.
|
Three months ended March 31, 2023
|
Three months ended March 31, 2022
|
|||||||||||||||||||||||||||||
|
Date
Declared
|
$ per
Class A
Interest
|
Total
Declared
|
Paid
|
Deposits Into
Restricted
Cash
Account
|
Total
Declared
|
Paid
|
Deposits Into
Restricted
Cash
Account
|
|||||||||||||||||||||||
| Ninth |
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||||||
|
Nine months ended March 31, 2023
|
Nine months ended March 31, 2022
|
|||||||||||||||||||||||||||||
|
Date
Declared
|
$ per
Class A
Interest
|
Total
Declared
|
Paid
|
Deposits Into
Restricted
Cash
Account
|
Total
Declared
|
Paid
|
Deposits Into
Restricted
Cash
Account
|
|||||||||||||||||||||||
| Tenth |
|
(a)
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
| Eighth |
|
$ |
|
|
|
|
|
|
|
|||||||||||||||||||||
| Ninth | $ |
|||||||||||||||||||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
(a) The distribution was declared on June 15, 2022 and paid on July 15, 2022.
For every distribution, a deposit is made into a restricted cash account for
amounts (a) payable for Class A Interests that may be issued in the future upon the allowance of unresolved claims, (b) in respect of Class A Interests issued on account of recently allowed claims, (c) for holders of Class A Interests who
failed to cash distribution checks mailed in respect of prior distributions, (d) for distributions that were withheld due to pending avoidance actions, and (e) for holders of Class A Interests for which the Trust is waiting for further
beneficiary information.
During the three months ended March 31, 2023 and 2022, as (a) claims were
resolved, (b) claims were recently
allowed, (c) addresses for holders of uncashed distribution checks were obtained, (d) pending avoidance actions were resolved and (e) further beneficiary information was received, distributions of approximately $14 ,000 and $495 ,000, respectively,
and during the nine months ended March 31, 2023 and 2022, approximately $718 ,000 and $608 ,000, respectively, were paid to holders of Class A Interests from the restricted cash account and distributions payable were reduced by the same amount.
During the three months ended March 31, 2023 and 2022, as a result of claims
being disallowed or Class A Interests being cancelled, approximately $0 and $472 ,000, respectively, and during the nine months ended March 31, 2023 and 2022, approximately $2,638 ,000 and $761 ,000 were released from the restricted cash account and
distributions payable were reduced by the same amount.
18
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
For the Three and Nine Months Ended March 31, 2023 and 2022
(Unaudited)
During the
three and nine months ended March 31, 2023, approximately $20 no
As a result of distribution checks that had not been cashed within 180 days of
their issuance, Interestholders were deemed to have forfeited their rights to reserved and future Class A Interest distributions. During the three and nine months ended March 31, 2023, some Interestholders that had previously been deemed to
have forfeited their rights to receive Class A Interest distributions responded and therefore approximately $14 ,000 and $26 ,000, respectively, was added to the restricted cash account and distributions payable were increased by the same amount. During the three and
nine months ended March 31, 2022, no
| 12) |
Related Party Transactions
|
Terry Goebel, a member of the Trust Supervisory Board, is president and a principal owner of G3 Group LA (“G3”), a construction firm specializing
in the development of high-end luxury residences. G3 is owned by Terry Goebel and his son Kelly Goebel. As of March 31, 2023, the Company was under contract with G3 for the development of one single-family home in Los Angeles, California. As of March 31, 2023 and June 30, 2022 the remaining amounts payable under this contract were approximately $220 ,000 and $438 ,000, respectively. During the three months ended March 31, 2023 and 2022, approximately $0 and $267 ,000, respectively, and during the nine months ended March 31, 2023 and 2022,
approximately, $0 and $3,443 ,000
were paid by the Company to G3 related to this contract.
The Liquidation Trustee of the Trust is entitled to receive 5 % of the total gross amount recovered by the Trust from the pursuit of the Causes of Action. During the three months ended March 31, 2023 and 2022, approximately $21 ,000 and $23 ,000, respectively, and during the nine months ended March 31,
2023 and 2022, approximately, $30 ,000 and $1,334 ,000,
respectively, were accrued as amounts due to the
Liquidation Trustee, respectively. As of March 31,
2023 and June 30, 2022, approximately $28 ,000 and $81 ,000, respectively, were payable to the Liquidation Trustee. These amounts are included in accounts payable and accrued liabilities in the accompanying consolidated statements of net assets in liquidation. During the
three months ended March 31, 2023 and 2022, approximately $83 ,000 and $0 , respectively, and during the nine months ended March 31, 2023 and 2022, approximately, $83 ,000 and $184 ,000, respectively, were paid to the
Liquidation Trustee.
In November 2019, the Trust entered into an arrangement with Akerman LLP, a law firm based in Miami, Florida of which the Liquidation Trustee is a partner, for the
provision, at the option of the Trust on an as-needed basis, of e-discovery and related litigation support services in connection with the Trust’s prosecution of the Causes of Action. Under the arrangement, the Trust is charged for the services
at scheduled rates per task which, depending on specific task, include flat rates, rates based on volume of data processed, rates based on the number of data users, the hourly rates of Akerman LLP personnel, or other rates. During the three
months ended March 31, 2023 and 2022, respectively, approximately $41 ,000 and $137 ,000, respectively, and during the nine months ended March 31, 2023 and 2022, respectively, approximately $235 ,000 and $351 ,000 were paid related to these services and
there are no
In March 2023, as a result of the failure of two large financial institutions, as a protective measure, the Company deposited the restricted cash relating to Forfeited Assets and distribution reserves into separate Trust Accounts held by Akerman LLP for the benefit of the Company. The balance in these accounts at March 31, 2023 was approximately $
The executive officers of the Wind-Down Entity are entitled to a bonus based on the Wind-Down Entity achieving certain specified cumulative amounts of distributions to the
Trust. Based on the carrying amounts of the net assets in liquidation included in the accompanying consolidated statements of net assets in liquidation, approximately $0 and $3,000 ,000 were accrued as of March 31, 2023 and June 30, 2022, respectively, as the estimated amount of the
bonus (including associated payroll taxes). This amount is included in the payroll and payroll-related costs portion of accrued liquidation costs in the accompanying consolidated statement of net assets in liquidation. During the
three and nine months ended March 31, 2023 and 2022, $0 and $692 ,000, respectively, and $3,373 ,000 and $692 ,000, respectively, were paid related to executive bonuses.
19
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
For the Three and Nine Months Ended March 31, 2023 and 2022
(Unaudited)
| 13) |
Causes of Action
|
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.
The 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.
|
For the Three Months Ended March 31,
|
For the Nine Months
Ended March 31,
|
|||||||||||||||
|
2023
|
2022
|
2023
|
2022
|
|||||||||||||
|
Other settlement recoveries
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Comerica Bank
|
|
|
|
|
||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
The 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, 2023, the Company had
construction contracts under which approximately $220 ,000 was unpaid.
The Company had a lease for its office space that expired on August 31, 2021. On June 4, 2021, the Company entered into a new office lease at a different location. The new lease, which commenced on August 1,
2021 and expired on July 31, 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 six-month option to extend. As of March 31,
2023, the Company had not exercised its six-month option to extend.
The current monthly base rent is approximately $4 ,000 plus common area maintenance charges. The
amount of rent paid, including common area maintenance and parking charges, during the three months ended March 31, 2023 and 2022, was approximately $13 ,000 and $0 , respectively, and during the nine months ended March 31, 2023 and 2022, was approximately $38 ,000 and $50 ,000, 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 material litigation nor, to the Company’s knowledge, is any material litigation threatened against the Company.
20
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
For the Three and Nine Months Ended March 31, 2023 and 2022
(Unaudited)
| 15) |
Subsequent Events
|
The Company evaluates subsequent events up until the date the
unaudited consolidated financial statements are issued.
Sale of Real Estate Asset
During the period from April 1, 2023 through May 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 are resolved, (b) claims that were recently
allowed, (c) addresses for holders of uncashed distribution checks are obtained, (d) pending avoidance actions are resolved and (e) further beneficiary information is received
21
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (Continued)
Woodbridge Liquidation Trust and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
For the Three and Nine Months Ended March 31, 2023 and 2022
(Unaudited)
Causes of Action
In April 2023, the Trust reached a
settlement in principal with Bailey Cavalieri LLC and Thomas Geyer that will resolve all litigation between them.
Forfeited Assets
During the period from April 1, 2023 through May 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 Accounts to one of the 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 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.
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 termination 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”, “will continue”, “project”, “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 liquidation activities, amount of funds needed for 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 litigations and/or settlements and the ability to recover thereon, the amount of funding required to continue 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 transferred, on the effective date of the Plan to one of the Wind-Down Subsidiaries. The purpose of the Wind-Down Group 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 on 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.
23
PART I. FINANCIAL INFORMATION (CONTINUED)
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
|
The Trust operates pursuant to the Plan and the Trust Agreement. The Trust was formed as a Delaware statutory trust and is administered by the Liquidation Trustee under the
supervision of its Supervisory Board. The Wind-Down Entity, a wholly-owned subsidiary of the Trust, operates pursuant to the Plan and the Wind-Down Entity LLC Agreement. The Wind-Down Entity was formed as a Delaware limited liability company and
is administered by its Board of Managers. One 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, 2023, the number of Liquidation Trust Interests outstanding in each class is as follows:
|
Class of Interest
|
Number Outstanding
|
|
Class A Liquidation Trust Interets
|
11,514,190
|
|
Class B Liquidation Trust 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, 2023, the Wind-Down Subsidiaries have disposed of approximately 147 properties for aggregate net sales proceeds of approximately
$574.44 million. As of March 31, 2023, the Company owned three real estate assets (including one other real estate asset under contract) with a gross carrying value of approximately $2.45 million. Given the significantly smaller inventory of
remaining real estate assets when compared to the inventory as of the Plan Effective Date, the amount of net proceeds from the sale of real estate assets in the future will be negligible as compared to the amount realized from the Plan Effective
Date through March 31, 2023. The Company expects to complete its liquidation activities no later than the fiscal year ending June 30, 2026.
24
PART I. FINANCIAL INFORMATION (CONTINUED)
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
|
Discussion of the Company’s Operations
Three months ended March 31, 2023
The following is a summary of the Consolidated Statement of Changes in Net Assets in Liquidation for the three months ended March 31, 2023 ($ 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.
|
25
PART I. FINANCIAL INFORMATION (CONTINUED)
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
|
| • |
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
|
||||||||||
|
Net assets in liquidation as of December 31, 2021
|
$
|
3,203
|
$
|
124,302
|
$
|
127,505
|
||||||
|
Change in assets and liabilities:
|
||||||||||||
|
Restricted for Qualifying Victims - change in carrying value of assets and liabilities, net
|
-
|
-
|
-
|
|||||||||
|
All Interestholders-
|
||||||||||||
|
Change in carrying value of assets and liabilities, net
|
-
|
8,266
|
8,266
|
|||||||||
|
Distributions (declared) reversed, net
|
-
|
(39,509
|
)
|
(39,509
|
)
|
|||||||
|
Net change in assets and liabilities
|
-
|
(31,243
|
)
|
(31,243
|
)
|
|||||||
|
Net assets in liquidation, as of March 31, 2022
|
$
|
3,203
|
$
|
93,059
|
$
|
96,262
|
||||||
There was no change to net assets in liquidation – Restricted for Qualifying Victims during the three months ended March 31, 2022.
Net assets in liquidation – All Interestholders decreased 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 of approximately $8.27 million and a decrease from net distributions (declared) reversed of approximately $39.51 million.
The components of the change in the carrying value of assets and liabilities, net are as follows ($ in thousands):
|
Restricted for
Qualifying Victims
|
All
Interestholders
|
Total
|
||||||||||
|
Other settlement recoveries recognized, net
|
$
|
-
|
$
|
445
|
$
|
445
|
||||||
|
Remeasurement of assets and liabilities, net
|
-
|
7,627
|
7,627
|
|||||||||
|
Other
|
-
|
194
|
194
|
|||||||||
|
Change in carrying value of assets and liabilities, net
|
$
|
-
|
$
|
8,266
|
$
|
8,266
|
||||||
| (1) |
Net of the 5% payable to the Liquidation Trustee of approximately $22 ($ in thousands) for other settlement agreements during the three months ended March 31, 2022.
|
26
PART I. FINANCIAL INFORMATION (CONTINUED)
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
|
During the three months ended March 31, 2022, the Company:
| • |
Declared a distribution of $3.44 per Class A Interest totaling approximately $39.98 million.
|
| • |
Reversed distributions of approximately $0.47 million primarily from claims being disallowed or Class A Interests being cancelled.
|
| • |
Sold the rest of the gold Forfeited Assets for net proceeds of approximately $0.12 million.
|
| • |
Completed 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 settlement 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 $2.03 million of professional fees.
|
Nine months ended March 31, 2023
The following is a summary of the Consolidated Statement of Changes in Net Assets in Liquidation for the nine months ended March 31, 2023 ($ in thousands):
|
Restricted for
Qualifying Victims
|
All
Interestholders
|
Total
|
||||||||||
|
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
|
(27
|
)
|
-
|
(27
|
)
|
|||||||
|
All Interestholders-
|
||||||||||||
|
Change in carrying value of assets and liabilities, net
|
-
|
(7,066
|
)
|
(7,066
|
)
|
|||||||
|
Distributions (declared) reversed, net
|
-
|
2,644
|
2,644
|
|||||||||
|
Net change in assets and liabilities
|
-
|
(4,422
|
)
|
(4,422
|
)
|
|||||||
|
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 $0.03 million during the nine months ended March 31, 2023.
Net assets in liquidation – All Interestholders decreased by approximately $4.42 million during the nine months ended March 31, 2023. This decrease was due to a decrease in the
net carrying value of assets and liabilities of approximately $7.06 million, and from an increase in net distributions (declared) reversed of approximately $2.64 million.
27
PART I. FINANCIAL INFORMATION (CONTINUED)
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
|
The components of the changes in the carrying value of assets and liabilities, net are as follows ($ in thousands):
|
Restricted for
Qualifying Victims
|
All
Interestholders
|
Total
|
||||||||||
|
Remeasurement of assets and liabilities, net
|
$
|
(27
|
)
|
$
|
(6,486
|
)
|
$
|
(6,513
|
)
|
|||
|
Carrying value in excess of sales proceeds
|
-
|
(1,555
|
)
|
(1,555
|
)
|
|||||||
|
Settlement recoveries recognized, net (1)
|
-
|
144
|
144
|
|||||||||
|
Other
|
-
|
831
|
831
|
|||||||||
|
Change in carrying value of assets and liabilities, net
|
$
|
(27
|
)
|
$
|
(7,066
|
)
|
$
|
(7,093
|
)
|
|||
| (1) |
Net of 5% payable to the Liquidation Trustee of approximately $31 and an increase in the allowance for uncollectible settlement installment receivables of approximately $56 during the nine months ended
March 31, 2023.
|
During the nine months ended March 31, 2023, the Company:
| • |
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.
|
| • |
Received net proceeds from the sale of Forfeited Assets of approximately $0.79 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 $4.42 million of professional fees.
|
28
PART I. FINANCIAL INFORMATION (CONTINUED)
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
|
For the nine months ended March 31, 2022
The following is a summary of the Consolidated Statement of Changes in Net Assets in Liquidation for the nine months ended March 31, 2022 ($ in thousands):
|
Restricted for
Qualifying Victims
|
All
Interestholders
|
Total
|
||||||||||
|
Net assets in liquidation as of June 30, 2021
|
$
|
3,167
|
$
|
126,373
|
$
|
129,540
|
||||||
|
Change in assets and liabilities:
|
||||||||||||
|
Restricted for Qualifying Victims - change in carrying value of assets and liabilities, net
|
36
|
-
|
36
|
|||||||||
|
All Interestholders-
|
||||||||||||
|
Change in carrying value of assets and liabilities, net
|
-
|
45,922
|
45,922
|
|||||||||
|
Distributions (declared) reversed, net
|
-
|
(79,236
|
)
|
(79,236
|
)
|
|||||||
|
Net change in assets and liabilities
|
-
|
(33,314
|
)
|
(33,314
|
)
|
|||||||
|
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 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 of approximately $45.92 million, and from a decrease in net distributions (declared) reversed of approximately $79.23 million.
The components of the change in the carrying value of assets and liabilities, net are as follows ($ in thousands):
|
Restricted for
Qualifying Victims
|
All
Interestholders
|
Total
|
||||||||||
|
Causes of Action, net(1):
|
||||||||||||
|
Comerica Bank
|
$
|
-
|
$
|
23,575
|
$
|
23,575
|
||||||
|
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
|
|||||||||
|
Other
|
-
|
682
|
682
|
|||||||||
|
Change in carrying value of assets and liabilities, net
|
$
|
36
|
$
|
45,922
|
$
|
45,958
|
||||||
| (1) |
Net of 5% payable to the Liquidation Trustee of approximately $1,241 for Comerica Bank and $93 for other settlement agreements during the nine months ended March 31, 2022.
|
During the nine months ended March 31, 2022, the Company:
| • |
Declared two distributions, both of $3.44 per Class A Interest, which totaled approximately $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.
|
29
PART I. FINANCIAL INFORMATION (CONTINUED)
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
|
| • |
Recorded approximately $24.81 million from the settlement of the two pending actions against Comerica Bank and approximately $1.87 million from the settlement of other Causes of Action, net of 5% payable to
the Liquidation Trustee.
|
| • |
Paid construction costs of approximately $9.47 million relating to single-family homes under development.
|
| • |
Paid holding costs of approximately $1.90 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.
|
Liquidity and Capital Resources
Liquidity
The Company’s only sources for meeting its capital requirements are its cash and cash equivalents, proceeds from the sale of its real estate assets, recoveries on Causes of 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 as of March 31, 2023 of approximately $55.40 million (of which approximately $4.39 million is restricted), the capital
resources available to the Company are as follows:
| • |
Sales of Real Estate: The Wind-Down Group is in the process of marketing and selling its few remaining real estate assets, all of which are held for sale. As of March 31, 2023, the Company owned a total
of three real estate assets with a gross carrying value of approximately $2.45 million. Based on the remaining assets of the Company, future net proceeds will be negligible as compared to the proceeds the Company has realized in prior
periods.
|
| • |
Causes of Action Recoveries: During the three and nine months ended March 31, 2023, the Company recognized approximately $0 million and $0.27 million, respectively, from the settlement of Causes of
Action. 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 in 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, 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, 2023, the Company’s total liabilities were approximately $28.75 million. The total liabilities recorded as of March 31, 2023 may not be indicative of the costs paid in future
periods, which may vary materially from the current estimate.
1 The Trust is required to distribute the net sale proceeds from liquidating the Forfeited Assets
to the Qualifying Victims. Qualifying Victims are the former holders of Class 3 and Class 5 claims and their permitted assigns. Former holders of Class 4 claims are not Qualifying Victims. Because of the requirement to distribute the net sale
proceeds of the Forfeited Assets to the Qualifying Victims only, the Forfeited Assets 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 held by Qualifying Victims.
30
PART I. FINANCIAL INFORMATION (CONTINUED)
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
|
Given current cash and cash equivalent balances, projected sales of real estate assets, 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 12, 2023, the
Liquidation Trustee has declared eleven distributions to the Class A Interestholders. The distributions include 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) in 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.
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 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 had 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 each
recipient that, unless the Trust was contacted on or before February 28, 2022, such recipient’s reserved and future distributions would be deemed forfeited in accordance with the Plan 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.
31
PART I. FINANCIAL INFORMATION (CONTINUED)
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
|
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, 2023 and from February 15, 2019 (inception) through May 12, 2023:
|
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) |
||||||||||||||||||||||||||||
|
|
Date Declared |
$ per
Class A Interest |
Total Declared
|
Paid
|
Restricted Cash Account
|
Total Declared
|
Paid
|
Restricted Cash Account
|
|||||||||||||||||||||
|
Distributions Declared
|
|||||||||||||||||||||||||||||
|
First
|
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
|
|||||||||||||||||||||
|
Third
|
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
|
|||||||||||||||||||||
|
Fifth
|
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
|
|||||||||||||||||||||
|
Seventh (a)
|
5/13/2021
|
2.58
|
30.02
|
29.33
|
0.69
|
30.02
|
29.33
|
0.69
|
|||||||||||||||||||||
|
Eighth
|
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
|
|||||||||||||||||||||
|
Tenth
|
6/15/2022
|
5.63
|
65.01
|
64.18
|
0.83
|
65.01
|
64.18
|
0.83
|
|||||||||||||||||||||
|
Eleventh (b)
|
5/10/2023 |
2.18 |
- |
- |
- |
25.01 |
- |
- |
|||||||||||||||||||||
|
Subtotal
|
$
|
37.04
|
$
|
408.08
|
$
|
396.60
|
$
|
11.48
|
$
|
433.09 |
$
|
396.60
|
$
|
11.48
|
|||||||||||||||
|
Distributions Returned / (Reversed)
|
|||||||||||||||||||||||||||||
|
Disallowed/cancelled (c)
|
(6.27
|
)
|
(6.27
|
)
|
|||||||||||||||||||||||||
|
Returned (d)
|
0.74
|
0.74
|
|||||||||||||||||||||||||||
|
Forfeited (e)
|
(1.15
|
)
|
(1.15
|
)
|
|||||||||||||||||||||||||
|
Subtotal
|
(6.68
|
)
|
(6.68
|
)
|
|||||||||||||||||||||||||
|
Distributions Paid from Reserve Account (f)
|
(3.58
|
)
|
(3.58
|
)
|
|||||||||||||||||||||||||
|
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.
|
| (d) |
Distribution checks returned or not cashed.
|
| (e) |
Distributions forfeited as Interestholders did not cash checks that were over 180 days old.
|
| (f) |
Paid as claims are allowed or resolved.
|
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 estate 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, 2023, the Company has contractual commitments related to construction contracts totaling approximately $0.22 million. The Company has an office lease that expires
in July 2023. The Company has one six-month option 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.
32
PART I. FINANCIAL INFORMATION (CONTINUED)
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
|
Critical Accounting Policies and Practices
The Company’s consolidated financial statements are prepared in accordance with U.S. GAAP. The accounting policies and practices that the Company believes are the most critical
are discussed below. These accounting policies and practices require management to make decisions on subjective and/or complex matters that may inherently be uncertain. Estimates are required to prepare the consolidated financial statements in
conformity with U.S. GAAP. Significant estimates, judgments and assumptions are required in a number of areas, including, but not limited to, the sales price of real estate assets, selling costs, development costs, holding costs, potential
construction warranty claims, and general and administrative costs to be incurred until the completion of the liquidation activities of the 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 Basis of Accounting, all assets are recorded at their estimated net realizable value or liquidation value, which represents the estimated amount of net cash
that may be received upon the disposition of the assets (on an undiscounted basis). Liabilities are measured in accordance with U.S. GAAP that otherwise applies to those liabilities. The Company has not recorded any amount from the future
settlement of unresolved Causes of Action or recoveries of Fair Funds 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 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 paid and an accrual for potential construction warranty claims as well as the estimated holding, maintenance and repair costs to be incurred and the estimated general and administrative costs to be
incurred until the completion of the liquidation of the 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.
Not applicable, as the Company is a “smaller reporting company” within the meaning of Rule 12b-2 of the Exchange Act.
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, 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, 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, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting.
PART II. OTHER INFORMATION
Below are 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 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.
Avoidance actions. The Trust is currently prosecuting several legal
actions to recover preferential payments, fraudulent transfers, and other funds subject to recovery by the bankruptcy estate. These actions were filed in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”), are pending before the Honorable J. Kate Stickles, and generally fall into the following categories:
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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 Debtors: (1)
during the 90 days prior to the December 4, 2017 bankruptcy filing, including payments to miscellaneous vendors and former Noteholders and Unitholders; and/or (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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Fraudulent transfers (Shapiro personal expenses). Two 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.
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Fraudulent transfers and fraud (against former agents). Certain 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 Bankruptcy Court 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.
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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.
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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, 2023, the Trust has entered into settlements in approximately 227 legal actions and approximately 245 potential avoidance
claims for which litigation was not filed, resulting in aggregate settlements of approximately $18.18 million of cash payments made or due to the Trust and approximately $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:
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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.
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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 as well as an automobile. Some of the jewelry, art, clothing, handbags and shoes have also been sold.
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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 requested costs of $9,874.71). Plaintiffs appealed the judgment. The appeal was fully briefed and oral
argument took place before the Court of 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.
| Item 1A. |
Risk Factors
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In addition to other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the following risk factor, which supplements and should be read in conjunction with
the information appearing under Item 1.A. Risk Factors in Part I in our Annual Report on Form 10-K filed with the SEC on September 26, 2022.
Our cash and cash equivalents may be exposed to the failure of banking institutions. While we seek to minimize our exposure to third-party losses of our cash 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 May 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 other 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 transact business enter into receivership
or become insolvent, there can be no guarantee that the Department of the Treasury, 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
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
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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 26, 2022. During the period from February 15, 2019 (inception) through March 31, 2023 the Trust has issued an
aggregate of 11,542,087 Class A Interests and an aggregate of 677,790 Class B Interests. As of March 31, 2023, the Trust had 11,514,190 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, 2023, the Trust did not issue any Liquidation Trust Interests.
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
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None.
| Item 4. |
Mine-Safety Disclosures
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None.
| Item 5. |
Other Information
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None.
| Item 6. |
Exhibits
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Exhibit Description
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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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First Amendment to Limited Liability Agreement of Woodbridge Wind-Down Entity LLC dated November 30, 2022, incorporated herein by reference to the Current Report on Form 8-K filed by
the Trust on December 1, 2022.
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Second Amendment to Limited Liability Agreement of Woodbridge Wind-Down Entity LLC dated as of March 27, 2023, incorporated herein by reference to the Current Report on Form 8-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 1, 2023. | |
| Employment Agreement dated November 12, 2019 between Woodbridge Wind-Down Entity LLC and Marion W. Fong, incorporated herein by reference to Amendment No. 1 to Registration Statement on Form 10 filed by the Trust on December 13, 2019. | |
| First Amendment to Employment Agreement dated September 24, 2020 between Woodbridge Wind-Down Entity LLC and Marion W. Fong, incorporated herein by reference to the Form 10-K filed by the Trust on September 28, 2020. | |
| Indemnification Agreement dated November 12, 2019 between Woodbridge Wind-Down Entity LLC and Marion W. Fong, incorporated herein by reference to Amendment No. 1 to Registration Statement on Form 10 filed by the Trust on December 13, 2019. | |
| 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. |
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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. | |
| Stipulation and Settlement Agreement between the United States and Woodbridge Liquidation Trust, as approved by order of the United States Bankruptcy Court for the District of Delaware entered September 17, 2020, incorporated herein by reference to the Form 10-K filed by the Trust on September 28, 2020. | |
| Settlement Agreement dated August 6, 2021 by and among Mark Baker, Jay Beynon as Trustee for the Jay Beynon Family Trust DTD 10/23/1998, Alan and Marlene Gordon, Joseph C. Hull, Lloyd and Nancy Landman, and Lilly A. Shirley on behalf of themselves and the proposed Settlement Class, Michael I. Goldberg, as Trustee for Woodbridge Liquidation Trust, and Comerica Bank, incorporated herein by reference to the Form 10-K filed by the Trust on September 27, 2021. | |
| Certification of Liquidation Trustee pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| Certification of Liquidation Trustee pursuant to 18 U.S.C. 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| Findings of Fact, Conclusions of Law, and Order Confirming the First Amended Joint Chapter 11 Plan of Liquidation of Woodbridge Group of Companies, LLC and its Affiliated Debtors, entered October 26, 2018, incorporated herein by reference to the Registration Statement on Form 10 filed by the Trust on October 25, 2019. | |
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101
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The following financial statements from the Woodbridge Liquidation Trust Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, formatted in eXtensible Business Reporting Language (XBRL): (i) consolidated statements of net assets in liquidation as of March 31, 2023 and June 30, 2022, (ii) consolidated statements of changes in net assets in liquidation for the three months ended March 31, 2023 and 2022, (iii) consolidates statements of changes in net assets in liquidation for the six months ended March 31, 2023 and 2021, (iv) the notes to the 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
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Cover Page Interactive Data File (Formatted as Inline XBRL and contained in Exhibit 101) |
*Filed herewith
42
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.
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Woodbridge Liquidation Trust
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Date: May 12, 2023
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By:
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/s/ Michael I. Goldberg
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Michael I. Goldberg,
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Liquidation Trustee
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