Woodbridge Liquidation Trust 10-Q for FY2020 Q2
Woodbridge Liquidation Trust (WBQNL)
10-Q
2020-02-13
For: 2019-12-31
View Original
Added on
April 06, 2026
About this 10-Q
Woodbridge Liquidation Trust filed this 10-Q on February 13, 2020, covering the quarter ended December 31, 2019 (FY2020 Q2).
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| ☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended December 31, 2019
or
| ☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from ______ to _____
Commission File Number: 000-56115
Woodbridge Liquidation Trust
(Exact name of registrant as specified in its charter)
| Delaware | 36-7730868 | |
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employment Identification No.)
|
|
14140 Ventura Boulevard
Suite 302
Sherman Oaks, California
|
91423
|
|
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (310) 765-1550
| Securities registered pursuant to Section 12(b) of the Act: | 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 or a smaller reporting company. See definitions of ‘‘large accelerated
filer,’’ ‘‘accelerated filer,’’ ‘‘non-accelerated filer,’’ and ‘‘smaller reporting company’’ in Rule 12b-2 of the Exchange Act.
(Check one):
|
Large accelerated filer ☐
|
Accelerated filer ☐
|
|
|
Non-accelerated filer ☐
|
Smaller reporting company ☒
|
|
|
(Do not check if smaller reporting company)
|
Emerging growth company ☒
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court.
Yes ☒ No ☐
Woodbridge Liquidation Trust
Form 10-Q
December 31, 2019
|
PART I. FINANCIAL INFORMATION
|
|||
|
Item 1.
|
Financial Statements
|
||
|
2
|
|||
|
3
|
|||
|
4
|
|||
|
Item 2.
|
20
|
||
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Item 3.
|
29
|
||
|
Item 4.
|
29
|
||
|
PART II. OTHER INFORMATION
|
|||
|
Item 1.
|
30
|
||
|
Item 1A.
|
35
|
||
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Item 2.
|
35
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||
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Item 3.
|
36
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||
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Item 4.
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36
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||
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Item 5.
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36
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||
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Item 6.
|
36
|
||
PART I. FINANCIAL INFORMATION
|
Item 1.
|
Financial Statements
|
Woodbridge Liquidation Trust and Subsidiaries
|
As of December 31, and June 30, 2019
|
| (Unaudited, $ in Thousands) |
|
12/31/2019
|
6/30/2019
|
|||||||
|
Assets
|
||||||||
|
Real estate assets held for sale, net (Note 3):
|
||||||||
|
Single family homes under development
|
$
|
234,690
|
$
|
265,340
|
||||
|
Real estate assets available for sale
|
137,806
|
216,336
|
||||||
|
Subtotal
|
372,496
|
481,676
|
||||||
|
Cash
|
98,830
|
34,998
|
||||||
|
Restricted cash (Note 4)
|
2,971
|
3,364
|
||||||
|
Other assets (Note 5)
|
3,596
|
2,436
|
||||||
|
Total assets
|
$
|
477,893
|
$
|
522,474
|
||||
|
Liabilities
|
||||||||
|
Accounts payable and accrued liabilities
|
$
|
297
|
$
|
441
|
||||
|
Distributions payable
|
1,738
|
1,814
|
||||||
|
Accrued liquidation costs (Note 6)
|
141,275
|
190,248
|
||||||
|
Total liabilities
|
$
|
143,310
|
$
|
192,503
|
||||
|
Commitments and Contingencies (Note 12)
|
||||||||
|
Net Assets in Liquidation
|
$
|
334,583
|
$
|
329,971
|
||||
See accompanying notes to unaudited consolidated financial statements.
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 1.
|
Financial Statements (Continued)
|
Woodbridge Liquidation Trust and Subsidiaries
|
For the three and six months ended December 31, 2019
|
|
(Unaudited, $ in Thousands)
|
|
Three Months
Ended
December 31, 2019
|
Six Months
Ended
December 31, 2019
|
|||||||
|
Net Assets in Liquidation as of beginning of period
|
$
|
333,582
|
$
|
329,971
|
||||
|
Change in assets and liabilities (Note 7):
|
||||||||
|
Change in carrying value of assets and liabilities, net
|
960
|
4,535
|
||||||
|
Distributions reversed
|
41
|
77
|
||||||
|
Net change in assets and liabilities
|
1,001
|
4,612
|
||||||
|
Net Assets in Liquidation as of December 31, 2019
|
$
|
334,583
|
$
|
334,583
|
||||
See accompanying notes to unaudited consolidated financial statements.
Formation
Woodbridge Liquidation Trust (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 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; 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 Debtors. The Trust was formed on February 15, 2019 (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 (Wind-Down Entity) or one of the Wind-Down Entity’s 43 wholly-owned single member LLCs (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.
On December 24, 2019, the Trust’s Registration Statement on Form 10 became effective under the Securities Exchange Act of 1934 (Exchange Act).
Description of Business
The Trust is prosecuting various Causes of Action acquired by the Trust pursuant to the Plan and is resolving claims by potential Trust beneficiaries.
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 1.
|
Financial Statements (Continued)
|
Woodbridge Liquidation Trust and Subsidiaries
|
Notes to Consolidated Financial Statements
As of December 31, 2019
|
|
(Unaudited)
|
As of December 31, 2019, the Wind-Down Subsidiaries are constructing twelve single-family homes, primarily located in Los Angeles, California. The Wind-Down Subsidiaries also own real estate that
is available for sale including single-family homes also located in Los Angeles, California, lots, secured loans (performing and non-performing) and other properties.
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. 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). Due to the unpredictability of real estate market values, as well as the uncertainty in the timing of liquidation of the real estate and other assets, net liquidation proceeds, other recoveries and actual liquidation costs may
differ materially from the estimated amounts.
As more fully discussed in Note 2, the Company’s consolidated financial statements do not include any estimate of future recoveries from litigation and settlement, since the Company
cannot reasonably estimate them.
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 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 such distributions may not be made within the timing referenced in the consolidated financial statements.
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 1.
|
Financial Statements (Continued)
|
Woodbridge Liquidation Trust and Subsidiaries
|
Notes to Consolidated Financial Statements
As of December 31, 2019
|
|
(Unaudited)
|
| 2) |
Summary of Significant Accounting Policies
|
Basis of Presentation and Consolidation
The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP) and pursuant to the rules
and regulations of the Securities and Exchange Commission (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 period
presented include all adjustments, which are of a normal and recurring nature, necessary for a fair and consistent presentation of the results for such period. 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.”
All material intercompany accounts and transactions have been eliminated.
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 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 considers 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 6.5%.
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 1.
|
Financial Statements (Continued)
|
Woodbridge Liquidation Trust and Subsidiaries
|
Notes to Consolidated Financial Statements
As of December 31, 2019
|
|
(Unaudited)
|
Liabilities, including estimated costs associated with implementing and completing the Plan, are measured in accordance with U.S. GAAP that otherwise applies to those liabilities. The Company has
also recorded the estimated development costs to be incurred to prepare the assets for sale as well as the estimated holding costs to be incurred until the projected sale date and the estimated general and administrative costs to be incurred
until the completion of the liquidation of the Company. When estimating development costs, the Company considered third party construction contracts and estimates of costs to complete based on construction status, progress and projected
completion timing. Estimated development costs also include the costs of design and furnishings necessary to prepare and stage the homes for marketing. Holding cost estimates consider property taxes, insurance, utilities, maintenance and other
costs to be incurred until the sale of the property is closed. Projected general and administrative cost estimates take into account operating costs through the liquidation of the Company.
These estimated amounts are presented in the accompanying consolidated statements of net assets in liquidation included in the consolidated financial statements. All changes in the estimated
liquidation value of the Company’s real estate held for sale, other assets and liabilities are reflected as a change to the Company’s net assets in liquidation.
On a quarterly basis, the Company reviews the estimated net realizable values and liquidation costs 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.
Litigation and Other Recoveries
As of December 31, 2019, the Trust is the plaintiff in several pending lawsuits. These lawsuits are in their early stages and the Trust is unable to estimate the amount of recovery, if any, at
this time. Accordingly, the Company has not recorded any amount for future recoveries from Causes of Action. In addition, no estimate has been included for fair funds or forfeited assets in the accompanying consolidated financial statements
since they also cannot be reasonably estimated. The amounts recovered may be material to the Company’s net assets in liquidation.
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 1.
|
Financial Statements (Continued)
|
Woodbridge Liquidation Trust and Subsidiaries
|
Notes to Consolidated Financial Statements
As of December 31, 2019
|
|
(Unaudited)
|
Other Assets
The Company recognizes recoveries from the settlement of Causes of Action when an agreement is executed and collectability is reasonably assured. Insurance claims are recognized when the
insurance company accepts the claim or if a claim is pending and the recoverable amount can be estimated. In addition, the Company recognizes other amounts to be received based on contractual terms or when the amounts to be received are certain.
Accrued Liquidation Costs
The Company accrues for estimated liquidation costs to the extent they are reasonably determinable. These costs consist of (a) estimated development costs of the single-family homes under
development, other project related costs, architectural and engineering, project management, city fees, bond payments (net of refunds), furnishings, marketing and other costs; (b) estimated holding costs, including property taxes, insurance,
maintenance, utilities and other; and (c) estimated general and administrative costs including payroll, legal and other professional fees, trustee and board fees, rent and other office related expenses, interest on financing and other general and
administrative costs to operate the Company.
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 and restricted cash. At times, balances in any one financial institution
may exceed the Federal Deposit Insurance Corporation insurance limits. The Company believes it mitigates this risk by depositing its cash in high-credit quality financial institutions.
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, and 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.
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 1.
|
Financial Statements (Continued)
|
Woodbridge Liquidation Trust and Subsidiaries
|
Notes to Consolidated Financial Statements
As of December 31, 2019
|
|
(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.
| 3) |
Real Estate Assets Held for Sale
|
The Company’s real estate assets held for sale as of December 31, 2019, with comparative information as of June 30, 2019, is as follows ($ in thousands):
|
December 31, 2019
|
June 30, 2019
|
|||||||||||||||||||||||
|
Number of
Assets
|
Gross Value
|
Closing and
Other Costs
|
Net Value
|
Number of
Assets
|
Net Value
|
|||||||||||||||||||
|
Single-family homes under development
|
12
|
$
|
249,500
|
$
|
(14,810
|
)
|
$
|
234,690
|
14
|
$
|
265,340
|
|||||||||||||
|
Real estate assets available for sale:
|
||||||||||||||||||||||||
|
Single-family homes
|
5
|
133,500
|
(7,300
|
)
|
126,200
|
11
|
182,878
|
|||||||||||||||||
|
Lots
|
19
|
4,410
|
(332
|
)
|
4,078
|
35
|
15,658
|
|||||||||||||||||
|
Secured loans
|
18
|
4,184
|
(209
|
)
|
3,975
|
20
|
5,302
|
|||||||||||||||||
|
Other properties
|
13
|
3,740
|
(187
|
)
|
3,553
|
15
|
12,498
|
|||||||||||||||||
|
Subtotal
|
55
|
145,834
|
(8,028
|
)
|
137,806
|
81
|
216,336
|
|||||||||||||||||
|
Total
|
67
|
$
|
395,334
|
$
|
(22,838
|
)
|
$
|
372,496
|
95
|
$
|
481,676
|
|||||||||||||
As of December 31, 2019, the single-family homes under development, except one, are located in the Los Angeles, California area. Of the real estate assets available for sale, all of the
single-family homes are located in the Los Angeles, California area. Of the lots, two are located in Los Angeles, California and seventeen are located in Colorado. The loans are secured by properties located primarily in the Midwest and Eastern
United States. The other properties are located primarily in Colorado, Hawaii and the Midwest United States.
During the three months ended December 31, 2019, the Company sold four single-family homes, six lots and one other property and collected a principal paydown on one secured loan for total net
proceeds of approximately $82,967,000. During the six months ended December 31, 2019, the Company sold eight single-family homes, sixteen lots, settled two secured loans and sold two other properties and collected a principal paydown on one
secured loan for total net proceeds of approximately $103,929,000.
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 1.
|
Financial Statements (Continued)
|
Woodbridge Liquidation Trust and Subsidiaries
|
Notes to Consolidated Financial Statements
As of December 31, 2019
|
|
(Unaudited)
|
| 4) |
Restricted Cash
|
The Company’s restricted cash as of December 31, 2019, with comparative information as of June 30, 2019, is as follows ($ in thousands):
|
December 31, 2019
|
June 30, 2019
|
|||||||
|
Distributions related to unresolved claims and uncashed distribution checks, restricted by the Company
|
$
|
1,734
|
$
|
1,810
|
||||
|
Fair Funds, legally restricted for distribution
|
1,237
|
1,237
|
||||||
|
Other
|
-
|
317
|
||||||
|
Total restricted cash
|
$
|
2,971
|
$
|
3,364
|
||||
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 1.
|
Financial Statements (Continued)
|
Woodbridge Liquidation Trust and Subsidiaries
|
Notes to Consolidated Financial Statements
As of December 31, 2019
|
|
(Unaudited)
|
| 5) |
Other Assets
|
The Company’s other assets as of December 31, 2019, with comparative information as of June 30, 2019, are as follows ($ in thousands):
|
December 31, 2019
|
June 30, 2019
|
|||||||
|
Insurance claim receivable
|
$
|
1,900
|
$
|
1,900
|
||||
|
Settlement installments receivable
|
988
|
518
|
||||||
|
Other
|
708
|
18
|
||||||
|
Total other assets
|
$
|
3,596
|
$
|
2,436
|
||||
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 1.
|
Financial Statements (Continued)
|
Woodbridge Liquidation Trust and Subsidiaries
|
Notes to Consolidated Financial Statements
As of December 31, 2019
|
|
(Unaudited)
|
| 6) |
Accrued Liquidation Costs
|
The following is a summary of the items included in accrued liquidation costs as of December 31, 2019, with comparative information as of June 30, 2019 ($ in thousands):
|
December 31, 2019
|
June 30, 2019
|
|||||||
|
Development costs:
|
||||||||
|
Construction costs
|
$
|
86,939
|
$
|
115,947
|
||||
|
Construction warranty
|
2,870
|
3,955
|
||||||
|
Indirect costs
|
1,371
|
2,112
|
||||||
|
Bond refunds
|
(1,511
|
)
|
(2,152
|
)
|
||||
|
Total development costs
|
89,669
|
119,862
|
||||||
|
Holding costs:
|
||||||||
|
Property tax
|
4,884
|
6,087
|
||||||
|
Insurance
|
2,714
|
6,345
|
||||||
|
Maintenance, utilities and other
|
2,284
|
2,508
|
||||||
|
Total holding costs
|
9,882
|
14,940
|
||||||
|
General and administrative costs:
|
||||||||
|
Legal and other professional fees
|
18,531
|
26,550
|
||||||
|
Payroll and payroll related
|
11,980
|
13,757
|
||||||
|
Board fees and expenses
|
3,403
|
3,995
|
||||||
|
State, local and other taxes
|
3,207
|
6,062
|
||||||
|
Marketing
|
1,403
|
1,583
|
||||||
|
Other
|
3,200
|
3,499
|
||||||
|
Total general and administrative costs
|
41,724
|
55,446
|
||||||
|
Total accrued liquidation costs
|
$
|
141,275
|
$
|
190,248
|
||||
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 1.
|
Financial Statements (Continued)
|
Woodbridge Liquidation Trust and Subsidiaries
|
Notes to Consolidated Financial Statements
As of December 31, 2019
|
|
(Unaudited)
|
| 7) |
Net Change In Assets and Liabilities
|
The following provides details of the net change in assets and liabilities during the three months ended December 31, 2019 ($ in thousands):
|
Cash
Activities
|
Remeasure-
ment
|
Total
|
||||||||||
|
Real estate assets, net
|
$
|
(82,967
|
)
|
$
|
(7,040
|
)
|
$
|
(90,007
|
)
|
|||
|
Cash
|
61,843
|
-
|
61,843
|
|||||||||
|
Restricted cash
|
(358
|
)
|
-
|
(358
|
)
|
|||||||
|
Other assets
|
(968
|
)
|
1,950
|
982
|
||||||||
|
Total assets
|
$
|
(22,450
|
)
|
$
|
(5,090
|
)
|
$
|
(27,540
|
)
|
|||
|
Accounts payable and accrued liabilities
|
$
|
(365
|
)
|
$
|
117
|
$
|
(248
|
)
|
||||
|
Accrued liquidation costs
|
(25,839
|
)
|
(2,413
|
)
|
(28,252
|
)
|
||||||
|
Total liabilities
|
$
|
(26,204
|
)
|
$
|
(2,296
|
)
|
$
|
(28,500
|
)
|
|||
|
Change in carrying value of assets and liabilities, net
|
$
|
3,754
|
$
|
(2,794
|
)
|
$
|
960
|
|||||
As a result of claims being disallowed, during the three months ended December 31, 2019 approximately $41,000 was released from the restricted cash account and distributions payable were reduced
by the same amount.
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 1.
|
Financial Statements (Continued)
|
Woodbridge Liquidation Trust and Subsidiaries
|
Notes to Consolidated Financial Statements
As of December 31, 2019
|
|
(Unaudited)
|
The following provides details of the net change in assets and liabilities during the six months ended December 31, 2019 ($ in thousands):
|
Cash
Activities
|
Remeasure-
ment
|
Total
|
||||||||||
|
Real estate assets, net
|
$
|
(103,929
|
)
|
$
|
(5,251
|
)
|
$
|
(109,180
|
)
|
|||
|
Cash
|
63,832
|
-
|
63,832
|
|||||||||
|
Restricted cash
|
(394
|
)
|
-
|
(394
|
)
|
|||||||
|
Other assets
|
(1,396
|
)
|
2,556
|
1,160
|
||||||||
|
Total assets
|
$
|
(41,887
|
)
|
$
|
(2,695
|
)
|
$
|
(44,582
|
)
|
|||
|
Accounts payable and accrued liabilities
|
$
|
(370
|
)
|
$
|
226
|
$
|
(144
|
)
|
||||
|
Accrued liquidation costs
|
(46,231
|
)
|
(2,742
|
)
|
(48,973
|
)
|
||||||
|
Total liabilities
|
$
|
(46,601
|
)
|
$
|
(2,516
|
)
|
$
|
(49,117
|
)
|
|||
|
Change in carrying value of assets and liabilities, net
|
$
|
4,714
|
$
|
(179
|
)
|
$
|
4,535
|
|||||
As a result of claims being disallowed, during the six months ended December 31, 2019 approximately $77,000 was released from the restricted cash account and distributions payable were reduced by the same amount.
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 1.
|
Financial Statements (Continued)
|
Woodbridge Liquidation Trust and Subsidiaries
|
Notes to Consolidated Financial Statements
As of December 31, 2019
|
|
(Unaudited)
|
| 8) |
Revolving Line of Credit
|
WB Propco, LLC, a subsidiary of the Wind-Down Entity is the borrower under a $21,985,000 revolving line of credit (LOC) with a financial institution. The Wind-Down Entity is a guarantor under the
LOC. The LOC matures on May 1, 2020. Outstanding borrowings bear interest at the prime rate (the prime rate was 4.75% at December 31, 2019), provided however, that the interest rate can never be lower than 5.25% per annum. The interest rate is
adjusted monthly. The carrying value of the collateral for the LOC was approximately $100,000,000 at December 31, 2019. As of December 31, 2019, WB Propco, LLC was in compliance with the financial covenants of the LOC.
No amounts were outstanding under the LOC as of December 31, 2019.
| 9) |
Beneficial Interests
|
The following table summarizes the Liquidation Trust Interests (rounded) as of June 30, 2019 and December 31, 2019:
|
Liquidation Trust Interests
|
Class A
|
Class B
|
||||||
|
Outstanding at June 30, 2019
|
11,433,623
|
655,261
|
||||||
|
Allowed claims
|
84,855
|
21,334
|
||||||
|
5% enhancement for certain allowed claims
|
459
|
5
|
||||||
|
Settlement of claims by reducing Liquidation Trust Interests
|
(2,663
|
)
|
(761
|
)
|
||||
|
Outstanding at December 31, 2019
|
11,516,274
|
675,839
|
||||||
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 1.
|
Financial Statements (Continued)
|
Woodbridge Liquidation Trust and Subsidiaries
|
Notes to Consolidated Financial Statements
As of December 31, 2019
|
|
(Unaudited)
|
At the Plan Effective Date, certain claims were disputed. As the claims are resolved, additional Class A and Class B Interests are issued for allowed claims and no Class A and Class B Interests are issued for
disallowed claims. The following table summarizes the Trust’s unresolved claims relating to Liquidation Trust Interests (rounded) as of June 30, 2019 and December 31, 2019:
|
Liquidation Trust Interests
|
Class A
|
Class B
|
||||||
|
Reserved for unresolved claims at June 30, 2019
|
482,734
|
34,697
|
||||||
|
Allowed claims
|
(84,855
|
)
|
(21,334
|
)
|
||||
|
Disallowed claims
|
(41,688
|
)
|
(5,406
|
)
|
||||
|
Reserved for unresolved claims at December 31, 2019
|
356,191
|
7,957
|
||||||
| 10) |
Distributions
|
No distributions were declared during the three or six months ended December 31, 2019. During the three and six months ended December 31, 2019, as claims were resolved, distributions of
approximately $26,000 and $670,000, respectively, were paid from the restricted cash account relating to the Class A Interests that were issued.
In October 2019, approximately $112,000 was received from the Company’s transfer agent relating to distribution checks that were returned or not cashed. This amount was deposited into the
restricted cash account and distributions payable were increased by the same amount.
| 11) |
Related Party Transactions
|
Terry Goebel, a member of the Supervisory Board, is president and a principal owner of G3 Group LA, a construction firm specializing in the development of high-end luxury residences. G3 Group LA
is owned by Terry Goebel and his son Kelly Goebel. As of December 31, 2019, the Company is under contract with G3 Group LA for the development of one single-family home in the Los Angeles area. One additional construction contract was assumed by
the buyer of a single-family home in November 2019. As of December 31, 2019, the amounts payable under these contracts was approximately $12,000,000, including payables under the contract assumed by a third party buyer in November 2019. During
the three and six months ended December 31, 2019, approximately $1,654,000 and $5,924,000, respectively, was paid by the Company related to these contracts.
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 1.
|
Financial Statements (Continued)
|
Woodbridge Liquidation Trust and Subsidiaries
|
Notes to Consolidated Financial Statements
As of December 31, 2019
|
|
(Unaudited)
|
The liquidation trustee of the Trust is entitled to receive 5% of the total gross amount recovered by the Trust from the pursuit of Trust claims and Causes of Action. During the three and six
months ended December 31, 2019, approximately $81,000 and $190,000 was accrued as amounts due to the liquidation trustee, respectively. As of December 31, and June 30, 2019, approximately $261,000 and $82,000, respectively was payable to the
liquidation trustee. This amount is included in accounts payable and accrued liabilities in the accompanying consolidated statements of net assets in liquidation.
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.
The executive officers of the Wind-Down Entity are entitled to a discretionary bonus based on the Wind-Down Entity achieving certain specified cumulative amounts of distributions to the Trust.
Based on the carrying amounts of the net assets in liquidation included in the accompanying consolidated statements of net assets in liquidation, approximately $3,800,000 was accrued as of December 31, and June 30, 2019, as the estimated amount
of the bonus including payroll taxes. This amount is included in the payroll and payroll related costs portion of accrued liquidation costs in the accompanying consolidated statements of net assets in liquidation.
| 12) |
Commitments and Contingencies
|
As of December 31, 2019, the Company had construction contracts under which approximately $52 million was unpaid, including future costs and amounts payable.
The Company has a lease for its office space that expires on August 31, 2020. The amount of rent paid, including common area maintenance and parking charges, during the three and six months ended
December 31, 2019 was approximately $68,000 and $135,000, respectively.
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 1.
|
Financial Statements (Continued)
|
Woodbridge Liquidation Trust and Subsidiaries
|
Notes to Consolidated Financial Statements
As of December 31, 2019
|
|
(Unaudited)
|
The Company is not presently the defendant in any material litigation nor, to the Company’s knowledge, is any material litigation threatened against the Company.
The Company is not aware of any environmental liabilities that it believes would have a material adverse effect on its net assets in liquidation.
| 13) |
Subsequent Events
|
The Company evaluates subsequent events up until the date the unaudited consolidated financial statements are issued.
On January 2, 2020, a distribution in the amount of approximately $53,426,000 was declared which represents $4.50 per Class A Interest. Total distributions of approximately $51,188,000 were paid on January 10, 2020. A deposit of
approximately $2,238,000 was made into a restricted cash account for distributions (a) payable in respect of Class A Interests that in the future may be issued upon the allowance of currently disputed claims, (b) payable to holders of Class A
Interests who failed to cash distribution checks mailed in respect of the initial distribution and (c) payable in respect of allowed Class A Interests, the legal owners of which remain unidentified.
The following table summarizes the Trust’s claims relating to Class A and Class B Interests during the period from January 1, 2020 through February 12, 2020:
|
Liquidation Trust Interests
|
Class A
|
Class B
|
||||||
|
Reserved for unresolved claims at January 1, 2020
|
356,191
|
7,957
|
||||||
|
Allowed claims
|
-
|
-
|
||||||
|
Disallowed claims
|
(79,071
|
)
|
-
|
|||||
|
Reserved for unresolved claims at February 12, 2020
|
277,120
|
7,957
|
||||||
During the period from January 1, 2020 through February 12, 2020, as claims were allowed, distributions of approximately $10,000 were paid from the restricted cash account relating to the Class A
Interests that were issued. In addition, approximately $67,000 was paid from the restricted cash account relating to holders of Class A Interests that provided a current address or the legal owner of the Class A Interest was identified. As a
result of claims being disallowed, approximately $652,000 was released from the restricted cash account and distributions payable was reduced by the same amount.
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 1.
|
Financial Statements (Continued)
|
Woodbridge Liquidation Trust and Subsidiaries
|
Notes to Consolidated Financial Statements
As of December 31, 2019
|
|
(Unaudited)
|
During the period from January 1, 2020 through February 12, 2020, the Company sold one lot and settled one secured loan and realized net proceeds of approximately $833,000. As of February 12,
2020, the Company had one single-family home under contract. Although the contingencies relating to this pending sale have been removed, no assurance can be given that the sale will close.
During the period from January 1, 2020 through February 12, 2020, the Trust recorded approximately $860,000 from the settlement of Causes of Action. The Company recorded approximately $42,000 as
the amount due to the liquidation trustee.
A tender offer by Contrarian Liquidity Option, LLC and its affiliates to purchase up to 2,015,305 outstanding Class A Interests, which offer commenced on or about December 12, 2019 and was
thereafter amended, expired at 5:00PM New York City time on January 31, 2020. Based on public filings by the offeror, an aggregate of 22,637.19 Class A Interests were tendered and received, and not validly withdrawn, prior to the expiration and
the offeror accepted for payment all such Class A Interests.
PART I. FINANCIAL INFORMATION (CONTINUED)
The following discussion and analysis should be read in conjunction with the accompanying 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
expectations of future financial condition, changes in net assets in liquidation, cash flows, plan, targets, goals, objectives, and performance of the Company. Such forward-looking statements also include statements that are preceded by, followed
by, or that include the words “believes”, “estimates”, “plans”, “expects”, “intends”, “is anticipated”, “will continue”, “project”, “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 possibility of properties being sold for amounts that differ from the ascribed values, timing and amount of funds needed to complete construction of single-family homes, amount of general and administrative costs, the number and
amount of successful litigations and/or settlements and the ability to recover thereon, the amount of funding required to continue litigations, interest rates, adverse weather conditions in the regions in which properties to be sold are located,
economic and political conditions, changes in tax and other governmental rules and regulations applicable to the Trust and its subsidiaries and other risks and uncertainties identified in Item 1A. Risk Factors of the Company’s Registration
Statement on Form 10, as amended, or contained in any of the Trust’s subsequent filings with the Securities and Exchange Commission (SEC). These risks and uncertainties are beyond the ability of the Company 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.
Because of these factors, risks and uncertainties, the Company cautions against placing undue reliance on forward-looking statements. Although the Company believes that the assumptions underlying the
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 Company does not undertake any obligation 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 statements were made.
PART I. FINANCIAL INFORMATION (CONTINUED)
Overview
Pursuant to the Plan, the Trust was formed on February 15, 2019 to hold, either directly or indirectly through the Wind-Down Entity and the Wind-Down Subsidiaries, the assets and equity interests formerly owned by
the Debtors. Each of the real properties formerly owned by the Debtors was, as of February 15, 2019, owned by one of the Wind-Down Subsidiaries. The purpose of the Wind-Down Entity and the Wind-Down Subsidiaries is to develop (as applicable),
market and sell those properties to generate cash. Assets formerly owned by the Debtors other than real estate assets and certain cash were transferred to the Trust. The purpose of the Trust is to receive remittances of cash from the Wind-Down
Entity, to resolve disputed claims, to prosecute the Causes of Action, to pay allowed unimpaired claims and, subject to the payment of Trust expenses and the retention of various reserves, to make distributions of cash to Interestholders in
accordance with the Plan.
The Trust operates pursuant to the Plan and the Trust Agreement. The Trust was formed as a Delaware statutory trust and is administered by the liquidation trustee under the supervision of its Supervisory Board. The
Wind-Down Entity, a wholly-owned subsidiary of the Trust, operates pursuant to the Plan and the Wind-Down Entity LLC Agreement. The Wind-Down Entity was formed as a Delaware limited liability company and is administered by its Board of Managers,
one of which is the chief executive officer. 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 its subsidiaries.
As of December 31, 2019 and February 12, 2020, the number of Liquidation Trust Interests outstanding in each class is as follows:
|
Class of Interest
|
Number Outstanding
|
|||
|
Class A Liquidation Trust Interests
|
11,516,274
|
|||
|
Class B Liquidation Trust Interests
|
675,839
|
|||
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. On December 24, 2019, the
Trust’s Registration Statement on Form 10 became effective under the Exchange Act. As a result, the Class A Liquidation Trust Interests became transferable on that date.
Since the Plan Effective Date through December 31, 2019, the Wind-Down Subsidiaries have disposed of approximately 97 properties for aggregate net sales proceeds of approximately $183.73 million. During the period
from January 1, 2020 through February 12, 2020, the Wind-Down Subsidiaries sold one lot and settled one secured loan and realized net proceeds of approximately $.83 million. As of February 12, 2020, the Company had one single-family home under
contract. Although the contingencies relating to this pending sale have been removed, no assurance can be given that the sale will close. There can be no assurance that the amount of net sales proceeds that the Company will receive in the future
will be consistent with the amount received from the Plan Effective Date through December 31, 2019 or during the period from January 1, 2020 through February 12, 2020. The Wind-Down Entity expects that the liquidation of the Wind-Down
Subsidiaries’ assets will be completed during the fiscal year ending June 30, 2022.
PART I. FINANCIAL INFORMATION (CONTINUED)
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
The Trust is required to be terminated, and the liquidation trustee discharged from duties, at such time as: (a) the liquidation trustee determines that the pursuit of additional causes of action
held by the Trust is not likely to yield sufficient additional proceeds to justify further pursuit of such causes of action and (b) all distributions required to be made by the liquidation trustee to the holders of allowed claims and to the
Interestholders under the Plan and the Trust Agreement have been made. Notwithstanding the above, the Trust must be terminated no later than February 15, 2024 unless the Bankruptcy Court, upon motion made within the six month period before such
date, determines that a fixed period extension is necessary to facilitate or complete the recovery on, and liquidation of, the Trust’s assets, except that the Bankruptcy Court may not grant an extension that, together with any prior extensions,
exceeds three years unless the Trust has obtained a favorable letter ruling from the Internal Revenue Service to the effect that the further extension would not adversely affect the status of the Trust as a liquidating trust for federal income
tax purposes.
Discussion of the Company’s Operations
The Trust, the Wind-Down Entity and the Wind-Down Subsidiaries were formed on February 15, 2019 and had no operations before that date. Therefore, this discussion does not contain comparisons between periods.
Consolidated Statement of Changes in Net Assets in Liquidation
For the three months ended December 31, 2019
|
Net assets in liquidation, as of September 30, 2019
|
$
|
333,582
|
||
|
Change in assets and liabilities:
|
||||
|
Change in carrying value of assets and liabilities, net
|
960
|
|||
|
Distributions reversed
|
41
|
|||
|
Net change in assets and liabilities
|
1,001
|
|||
|
Net assets in liquidation, as of December 31, 2019
|
$
|
334,583
|
PART I. FINANCIAL INFORMATION (CONTINUED)
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
Net assets in liquidation increased approximately $1.00 million during the three month period ended December 31, 2019. This increase was due to changes in the carrying value of assets and liabilities of
approximately $.96 million and distributions that were reversed for disallowed claims of approximately $.04 million. The components of the net change in assets and liabilities are as follows ($ in thousands):
|
Reduction of state, local and other taxes
|
$
|
2,890
|
||
|
Settlement recoveries recognized, net
|
1,402
|
|||
|
Sales proceeds in excess of carrying value
|
1,424
|
|||
|
Remeasurement of assets and liabilities, net
|
(5,040
|
)
|
||
|
Other
|
284
|
|||
|
Change in carrying value of assets and liabilities, net
|
$
|
960
|
During the three months ended December 31, 2019, the Company:
| - |
Sold four single-family homes, six lots and one other property and collected a principal paydown on one secured loan for total net proceeds of approximately $82.97 million.
|
| - |
Signed agreements to settle Causes of Action for payment to the Trust of approximately $1.48 million.
|
| - |
Paid construction costs of approximately $11.45 million relating to single-family homes under development.
|
| - |
Paid holding costs of approximately $5.16 million.
|
| - |
Paid general and administrative costs of approximately $6.06 million, including approximately $.31 million of board member fees and expenses, approximately $1.17 million of payroll and other general and administrative costs and
approximately $4.58 million of post Plan Effective Date professional fees.
|
| - |
Paid professional fees incurred before the Plan Effective Date of approximately $.36 million.
|
The following is a summary of the Company's operations during the six months ended December 31, 2019:
Consolidated Statement of Changes in Net Assets in Liquidation
For the Six months ended December 31, 2019
|
Net assets in liquidation, as of June 30, 2019
|
$
|
329,971
|
||
|
Change in assets and liabilities:
|
||||
|
Change in carrying value of assets and liabilities, net
|
4,535
|
|||
|
Distributions reversed
|
77
|
|||
|
Net change in assets and liabilities
|
4,612
|
|||
|
Net assets in liquidation, as of December 31, 2019
|
$
|
334,583
|
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
Net assets in liquidation increased approximately $4.61 million during the six month period ended December 31, 2019. This increase was due to changes in the carrying value of assets and liabilities of
approximately $4.53 million and distributions that were reversed for disallowed claims of approximately $.08 million. The components of the net changes in assets and liabilities are as follows ($ in thousands):
|
Reduction of state, local and other taxes
|
$
|
2,890
|
||
|
Settlement recoveries recognized, net
|
3,476
|
|||
|
Sales proceeds in excess of carrying value
|
3,291
|
|||
|
Remeasurement of assets and liabilities, net
|
(5,314
|
)
|
||
|
Other
|
192
|
|||
|
Change in carrying value of assets and liabilities, net
|
$
|
4,535
|
During the six months ended December 31, 2019, the Company:
| - |
Sold eight single-family homes, 16 lots, settled two secured loans, sold two other properties and collected a principal paydown on one secured loan for total net proceeds of approximately $103.93 million.
|
| - |
Signed agreements to settle Causes of Action for payment to the Trust of approximately $3.66 million
|
| - |
Paid construction costs of approximately $25.54 million relating to single-family homes under development.
|
| - |
Paid holding costs of approximately $6.58 million.
|
| - |
Paid general and administrative costs of approximately $11.57 million, including approximately $.59 million of board member fees and expenses, approximately $2.54 million of payroll and other general and administrative costs and
approximately $8.44 million of post Plan Effective Date professional fees.
|
| - |
Paid professional fees incurred before the Plan Effective Date of approximately $.36 million.
|
Liquidity and Capital Resources
Liquidity
The Company’s primary sources for meeting its capital requirements are its cash, availability under WB Propco, LLC’s revolving line of credit (LOC), proceeds from the sale of its real estate assets and recoveries
on Causes of Action. The Company’s primary uses of funds are and will continue to be for distributions, development costs, holding costs and general and administrative costs, all of which the Company expects to be able to adequately fund over the
next 12 months from its primary sources of capital.
Capital Resources
In addition to consolidated cash at December 31, 2019 of approximately $101.80 million (of which approximately $2.97 million is restricted), the capital resources available to the Company and its uses of liquidity
are as follows:
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
Revolving Line of Credit
WB Propco, LLC, a subsidiary of the Wind-Down Entity, is the borrower under a $21.98 million LOC with a financial institution. The Wind-Down Entity is a guarantor under the LOC. The LOC matures on May 1, 2020.
Outstanding borrowings bear interest at the prime rate (4.75% as of December 31, 2019), provided, however, that the interest rate can never be lower than 5.25% per annum. The interest rate is adjusted monthly. The carrying value of the collateral
for the line of credit was approximately $100 million at December 31, 2019. As of December 31, 2019, WB Propco, LLC was in compliance with the financial covenants of the line of credit.
No amounts were outstanding under the LOC as of December 31, 2019.
Sales of Real Estate Assets
The Wind-Down Subsidiaries are in the process of developing, marketing and selling its real estate assets, all of which are available for sale, with the exception of 12 single-family homes which were under
development as of December 31, 2019. There can be no assurance as to the amount of net proceeds that the Company will receive from the sale of real estate assets or when the net sales proceeds will be received. The net proceeds for the three and
six months ended December 31, 2019 may not be indicative of future net proceeds, which may be significantly lower. In addition, it may take longer to sell the properties than the Company has estimated.
Recoveries
During the three and six months ended December 31, 2019, the Company recognized approximately $1.47 million and $3.65 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 during the three and six months ended December 31, 2019.
Uses of Liquidity
The primary uses of the Company’s liquidity are to pay (a) development costs, (b) holding costs, and (c) general and administrative costs. As of December 31, 2019, the Company’s total liabilities were approximately
$143.31 million. The total liabilities recorded as of December 31, 2019 may not be indicative of the costs paid in future periods, which may be significantly higher.
Given current cash balances, projected sales of real estate assets, availability under the line of credit, Causes of Action recoveries, distributions declared and expected cash needs, the Company does not expect a
deficiency in liquidity in the next 12 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 Causes of Action.
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
Distributions
No distributions were declared during the three and six months ended December 31, 2019. In respect of a distribution declared in March 2019, as of September 30, 2019 an amount equal to approximately $1.69 million
had been held by the Company in a restricted cash account in respect of claims that were unresolved as of the date of the distribution. Approximately $.03 million was paid to holders of Class A Interests in respect of claims that became allowed
during the three months ended December 31, 2019. An amount of approximately $.04 million was released from the restricted cash account and distributions were reduced by the same amount in respect to disallowed claims during the three months ended
December 31, 2019. In October 2019, approximately $.12 million was received from the Company’s transfer agent relating to distribution checks that were returned or not cashed. This amount was deposited into the restricted cash account and
distributions payable were increased by the same amount. As of December 31, 2019, approximately $1.74 million remains in a restricted cash account in respect of unresolved claims.
On January 2, 2020, a distribution in the amount of approximately $53,426,000 was declared which represents $4.50 per Class A Interest. Total distributions of approximately $51,188,000 were paid on January 10,
2020. A deposit of approximately $2,238,000, was made into a restricted cash account for distributions (a) payable in respect of Class A Interests that in the future may be issued upon the allowance of currently disputed claims, (b) payable to
holders of Class A Interests, who failed to cash distribution checks mailed in respect of the initial distribution and (c) payable in respect of allowed Class A Interests, the legal owners of which remain unidentified.
The liquidation trustee will continue to assess the adequacy of funds held and expects to make additional distributions of excess Trust assets to Interestholders, but does not currently know the timing or amount of
any such distribution(s).
Contractual Obligations
As of December 31, 2019, the Company has contractual commitments related to construction contracts totaling approximately $52 million, including future costs and amounts payable. The Company expects to complete the
construction of these single-family homes by the end of its fiscal year ending June 30, 2022. The Company has an office lease that expires in August 2020. The Company expects that it will lease office space until the liquidation process is
completed.
PART I. FINANCIAL INFORMATION (CONTINUED)
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
The following table summarizes the future contractual obligations and commitments as of December 31, 2019 ($ in thousands):
|
Less than
1 year
|
1-3 years
|
3-5 years
|
5 years
|
Total
|
||||||||||||
|
Construction contracts (1)
|
$
|
52,000
|
||||||||||||||
|
Office lease
|
$
|
160
|
$
|
- |
$
|
- |
$
|
- |
160
|
|||||||
|
Total
|
$
|
160
|
$
|
- |
$
|
- |
$
|
- |
$
|
52,160
|
||||||
| (1) |
Since the construction contracts do not contain payment dates, the Company is not able to allocate the total obligation by period.
|
Off-Balance Sheet Arrangements
As of December 31, 2019, the Company did not have any off-balance sheet arrangements, other than those disclosed under “Contractual Obligations” above, that have or are reasonably likely to have a material effect
on its consolidated financial statements, liquidity or capital resources.
Inflation
Until the Company completes the liquidation of its assets, it may be exposed to inflation risks relating to increases in the costs of construction and other accrued liquidation costs.
Critical Accounting Policies and Practices
The Company’s consolidated financial statements are prepared in accordance with U.S. GAAP. The accounting policies and practices that the Company believes are the most critical are discussed below. These accounting
policies and practices require management to make decisions on subjective and/or complex matters that may inherently be uncertain. Estimates are required to prepare the consolidated financial statements in conformity with U.S. GAAP. Significant
estimates, judgments and assumptions are required in a number of areas, including, but not limited to, the sales price of real estate assets, selling costs, development costs, holding costs and general and administrative costs to be incurred
until the completion of the liquidation of the Company. In many instances, changes in the accounting estimates are likely to occur from period to period. Actual results may differ from the estimates. The Company believes the current assumptions
and other considerations used in 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 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.
PART I. FINANCIAL INFORMATION (CONTINUED)
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
The Company has not recorded any amount from the future settlement of Causes of Action, fair funds or forfeited asset recoveries in the accompanying consolidated financial statements because they cannot be
reasonably estimated.
Valuation of Real Estate
The measurement of real estate assets held for sale is based on current contracts (if any), estimates and other indications of sales value, net of estimated selling costs.
Accrued Liquidation Costs
The estimated costs associated with implementing and completing the Company’s plan of liquidation are recorded as accrued liquidation costs. The Company has also recorded the estimated development costs to be
incurred to prepare the assets for sale as well as the estimated holding costs to be incurred until the projected sale date and the estimated general and administrative costs to be incurred until the completion of the liquidation of the Company.
Changes in Carrying Value
All of the changes in the estimated liquidation value of the Company’s assets, real estate held for sale, other assets and liabilities are reflected as a change to the Company’s net assets in
liquidation.
On a quarterly basis, the Company reviews the estimated net realizable values and liquidation costs and record any significant variances. 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.
PART I. FINANCIAL INFORMATION (CONTINUED)
Not applicable, as the Company is a “smaller reporting company” within the meaning of Rule 12b-2 of the Exchange Act.
This quarterly report does not include a report of management’s assessment of internal controls over financial reporting due to a transition period established by rules of the SEC for newly public companies.
Below is a description of pending litigation. In accordance with the Company’s accounting policy, no recoveries have been recorded in the Company’s consolidated financial
statements for these legal proceedings.
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.
PART II. OTHER INFORMATION (CONTINUED)
| Item 1. |
Legal Proceedings (Continued)
|
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.
PART II. OTHER INFORMATION (CONTINUED)
| Item 1. |
Legal Proceedings (Continued)
|
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 December 20, 2019, the court entered an initial status conference
order setting a status conference for February 28, 2020.
Comerica Bank litigation. There are two pending actions in the United States District Court for the Central District of California against
Comerica Bank, the institution at which the Debtors maintained all of their bank accounts, alleging various causes of action:
(1) In re Woodbridge Investments Litigation, Case No. 2:18-cv-00103-DMG-MRW (C.D. Cal.), is a consolidated class action brought on behalf
of former Noteholders and Unitholders against Comerica Bank. It is comprised of five separate lawsuits filed between January 4, 2018 and April 26, 2018. The five lawsuits were consolidated, Lead Class Counsel was appointed, and Lead Class Counsel
filed a Consolidated Class Action Complaint on September 19, 2019. The Consolidated Class Action Complaint asserts claims for aiding and abetting fraud (Count 1), aiding and abetting breach of fiduciary duty (Count 2), negligence (Count 3), and
violations of California’s unfair competition law (Count 4).
On November 1, 2019, Comerica moved to dismiss the Consolidated Class Action Complaint under Federal Rule of Civil Procedure 12(b)(6) (failure to state a claim upon which relief
can be granted) and Federal Rule of Civil Procedure 12(b)(1) (lack of subject matter jurisdiction). With respect to Count 1 (aiding and abetting fraud) and Count 2 (aiding and abetting breach of fiduciary duty), Comerica argues that the Class
Plaintiffs’ allegations do not demonstrate that Comerica had actual knowledge of the underlying fraud and breach of fiduciary duty that Comerica is alleged to have aided and abetted; with respect to Count 3 (negligence), Comerica argues that
there is no duty of care owed to non-customers of Comerica; and with respect to Count 4 (California Unfair Competition Law), Comerica argues that a claim for unfair competition fails when there is no actual knowledge of fraud or breach of
fiduciary duty and no duty owed. In addition, Comerica argues that all causes of action fail to state a claim for the additional reason that Comerica’s filing or non-filing of a Suspicious Activity Report under federal law cannot support any of
the causes of action, and that the court lacks subject matter jurisdiction because all of the causes of action belong to the Liquidation Trust such that the Class Plaintiffs lack standing to pursue them. As of December 31, 2019, Comerica’s motion
to dismiss was scheduled for hearing on January 24, 2020. On January 22, 2020, the court entered an order determining that the motion is appropriate for decision without oral argument, taking the matter under submission. No ruling has yet been
issued.
The Trust holds a beneficial interest of approximately 60% of this action based on the claims contributed to the Trust by former Noteholders and Unitholders.
(2) Goldberg vs. Comerica Bank, Adv. Pro. No. 20-ap-50452-BLS (Bankr.D.Del., originally filed Apr. 26, 2019 in California and transferred
on February 5, 2020 to Delaware), is an action by the Trust against Comerica Bank alleging fraudulent transfer liability under the California Civil Code. The Trust’s complaint also incorporates the claims asserted against Comerica Bank in the
class action (referenced in paragraph (1) above) to the extent that such claims are ultimately determined to belong to the Trust rather than to individual former Noteholders and Unitholders.
PART II. OTHER INFORMATION (CONTINUED)
| Item 1. |
Legal Proceedings (Continued)
|
On June 28, 2019, Comerica filed three motions: (i) a motion to transfer venue to the Bankruptcy Court; (ii) alternatively, a motion to dismiss the action for failure to state a
claim; and (iii) a motion to strike the portion of the Complaint that incorporates the class action claims. Comerica argued that venue should be transferred to the Bankruptcy Court on the grounds that, inter
alia, that court is familiar with the facts underlying the litigation and is best positioned to adjudicate it. In the alternative, in the event that the court declines to transfer venue, Comerica argued that the Complaint should be
dismissed on the grounds that, among other grounds, (i) the Trust’s claims are barred by the doctrine of in pari delicto, and (ii) the transfers that the Trust seeks to recover are not avoidable as a
matter of law because the payment of a secured banking obligation cannot be the subject of a fraudulent transfer claim.
On July 22, 2019, the Trust filed its omnibus opposition to the three Comerica motions. On September 19, 2019, the court entered an order finding that the motions were appropriate
for decision without oral argument and taking them under submission. As of December 31, 2019, the motions remained under submission. On February 5, 2020, the court entered an order granting Comerica’s motion to transfer the case to the Bankruptcy
Court in Delaware, and denying the remaining two motions (to dismiss and to strike) as moot in light of the transfer, without prejudice to renewal by Comerica in the Bankruptcy Court. On February 6, 2020, the Bankruptcy Court opened the
above-referenced docket number for the transferred case.
Avoidance actions. The Trust is currently prosecuting numerous legal actions, and informally pursuing numerous other potential legal
actions, to object to, subordinate, and/or reclassify claims asserted against the Debtors and/or to recover preferential payments, fraudulent transfers, and other funds subject to recovery by the bankruptcy estate. The Trust has filed
approximately 490 legal actions of this nature. These actions were filed in the United States Bankruptcy Court for the District of Delaware, are pending before the Honorable Brendan L. Shannon, and generally fall into the following categories:
| • |
Preferential transfers. Certain of the actions include claims arising under chapter 5 of the Bankruptcy Code, and seek to avoid or recover payments made by the
Debtors during the 90 days prior to the December 4, 2017 bankruptcy filing, including payments to miscellaneous vendors and former Noteholders and Unitholders.
|
| • |
Fraudulent transfers (Interest to Noteholders and Unitholders). Certain of the actions include claims arising under chapter 5 of the Bankruptcy Code, and seek to
avoid or recover payments made by the Debtors during the course of the Ponzi scheme (from July 2012 through the December 4, 2017 bankruptcy filing) for interest paid to former Noteholders and Unitholders.
|
| • |
Fraudulent transfers (Shapiro personal expenses). Certain of the actions include claims arising under chapter 5 of the Bankruptcy Code, and seek to avoid and recover
payments made by the Debtors during the course of the Ponzi scheme (from July 2012 through the December 4, 2017 bankruptcy filing) for the personal expenses of Robert and Jeri Shapiro, including those identified in a forensic report
prepared in connection with an SEC enforcement action in the United States District Court for the Southern District of Florida.
|
PART II. OTHER INFORMATION (CONTINUED)
| Item 1. |
Legal Proceedings (Continued)
|
In addition, other legal proceedings are being prosecuted by the Trust and United States governmental authorities, which actions may result in recoveries in favor of the Trust.
Such actions currently include:
| • |
Fraudulent transfers and fraud (against former agents). These actions, which arise under chapter 5 of the Bankruptcy Code and applicable state law governing
fraudulent transfers, seek to avoid and recover payments made by the Debtors during the course of the Ponzi scheme (from July 2012 through the December 4, 2017 bankruptcy filing) for commissions to former agents, as well as for fraud,
aiding and abetting fraud, and the unlicensed sale of securities asserted by the Trust based on claims contributed to the Trust by defrauded investors. These actions were filed by the Trust in the United States Bankruptcy Court for
the District of Delaware between November 15, 2019 and December 4, 2019. Actions of this type are also being pursued by the SEC, and it is the Trust’s understanding that any recoveries obtained by the SEC will be transmitted to the
Trust pursuant to a “Fair Fund” established by the SEC.
|
| • |
Actions regarding the Shapiro’s personal assets. On December 4, 2019, the Trust filed an action in the United States Bankruptcy Court for the District of Delaware,
Adv. Pro. No. 10-51076 (BLS), Woodbridge Liquidation Trust v. Robert Shapiro, Jeri Shapiro, 3X a Charm, LLC, Carbondale Basalt Owners, LLC, Davana Sherman Oaks Owners, LLC, In Trend Staging, LLC,
Midland Loop Enterprises, LLC, Schwartz Media Buying Company, LLC and Stover Real Estate Partners LLC. In this action, the Trust asserts claims under chapter 5 of the Bankruptcy Code and applicable state law for avoidance of
preferential and fraudulent transfers together with claims for fraud, aiding and abetting fraud, the unlicensed sale of securities, breach of fiduciary duty and unjust enrichment. The Trust seeks to recover damages and assets held in
the names of Robert Shapiro, Jeri Shapiro and their family members and entities owned or controlled by them, which assets the Trust contends are beneficially owned by the Debtors or for which the Debtors are entitled to recover based
on the Shapiros’ defalcations, including over $20 million in avoidable transfers. The Trust is engaged in discussions with the DOJ regarding the transfer by the DOJ to the Trust of any forfeited assets for distribution to the
Interestholders.
|
PART II. OTHER INFORMATION (CONTINUED)
Please see the applicable risks in Item 1A of Amendment No. 2 to our Form 10 Registration Statement filed with the SEC on January 6, 2020.
In accordance with the Plan, Liquidation Trust Interests were issued on the Plan Effective Date and from time to time thereafter as soon as practicable as and when claims in
respect of which Liquidation Trust Interests were issuable have become allowed. During the three months ended December 31, 2019, the Trust issued the following Liquidation Trust Interests:
|
Date of Sale
|
Number of
Class A
Interests Sold
|
Number of
Class B
Interests Sold
|
Nature of the
Transaction
|
Consideration
Received
|
||||||||
|
October 7, 2019
|
547.43
|
-
|
Surrender of
claims
|
Surrender of
claims
|
||||||||
|
October 31, 2019
|
6,130.88
|
-
|
Surrender of
claims
|
Surrender of
claims
|
||||||||
|
November 11, 2019
|
2,618.48
|
608.16
|
Surrender of
claims
|
Surrender of
claims
|
||||||||
|
November 25, 2019
|
5,019.83
|
1,780.82
|
Surrender of
claims
|
Surrender of
claims
|
||||||||
|
December 10, 2019
|
48,095.23
|
18,243.02
|
Surrender of
claims
|
Surrender of
claims
|
||||||||
|
Total
|
62,411.85
|
20,632.00
|
||||||||||
As of December 31, 2019 and February 12, 2020, the aggregate number of outstanding Class A Liquidation Trust Interests was 11,516,274 and the aggregate number of outstanding Class
B Liquidation Trust Interests was 675,839.
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.
None.
None.
None.
|
First Amended Joint Chapter 11 Plan of Liquidation of Woodbridge Group of Companies, LLC and its Affiliated Debtors dated August 22, 2018
|
|
|
Certificate of Trust of Woodbridge Liquidation Trust filed February 14, 2019 and effective February 15, 2019
|
|
|
Liquidation Trust Agreement of Woodbridge Liquidation Trust dated February 15, 2019, as amended by Amendment No. 1 dated August 21, 2019 and Amendment No. 2 dated September 13, 2019
|
|
|
Amendment No. 3 to Liquidation Trust Agreement dated as of November 1, 2019
|
|
|
Amendment No. 4 to Liquidation Trust Agreement dated as of February 5, 2020
|
|
|
Amended and Restated Bylaws of Woodbridge Liquidation Trust effective August 21, 2019
|
|
|
Limited Liability Company Agreement of Woodbridge Wind-Down Entity LLC dated February 15, 2019
|
|
|
Loan Agreement (Revolving Line of Credit) dated April 9, 2019 between and WB Propco, LLC and First Republic Bank
|
|
|
Amended and Restated Employment Agreement dated July 31, 2019 between Woodbridge Wind-Down Entity LLC and Frederick Chin
|
|
|
Indemnification Agreement dated February 27, 2019 between Woodbridge Wind-Down Entity LLC and Frederick Chin
|
PART II. OTHER INFORMATION (CONTINUED)
|
Employment Agreement dated November 12, 2019 between Woodbridge Wind-Down Entity LLC and Marion W. Fong
|
|
|
Indemnification Agreement dated November 12, 2019 between Woodbridge Wind-Down Entity LLC and Marion W. Fong
|
|
|
Employment Agreement dated November 12, 2019 between Woodbridge Wind-Down Entity LLC and David Mark Kemper II
|
|
|
Indemnification Agreement dated November 12, 2019 between Woodbridge Wind-Down Entity LLC and David Mark Kemper II
|
|
|
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 by reference to the Registration Statement on Form 10 filed by the Trust on October 25, 2019.
|
|
**
|
Incorporated by reference to Amendment No. 1 to Registration Statement on Form 10 filed by the Trust on December 13, 2019.
|
|
***
|
Incorporated by reference to the Current Report on Form 8-K filed by the Trust on February 6, 2020. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
Woodbridge Liquidation Trust
|
||
|
Date: February 13, 2020
|
By:
|
/s/ Michael I. Goldberg
|
|
Michael I. Goldberg,
|
||
|
Liquidation Trustee
|
||
37
Exhibit 31.1
Certification of Liquidation Trustee pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
I, Michael I. Goldberg, certify that:
| 1. |
I have reviewed this quarterly report on Form 10-Q of Woodbridge Liquidation Trust;
|
| 2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made,
not misleading with respect to the period covered by this report;
|
| 3. |
Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the net assets in liquidation and changes in net assets in liquidation of
the registrant as of, and for, the periods presented in this report;
|
| 4. |
I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
| a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to me by other within those entities, particularly during the period in which this report is being prepared;
|
| b) |
(Omitted pursuant to SEC Release Nos. 33-8238/34-47986 and 33-8392/34-4933);
|
| c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
|
| d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
| 5. |
I have disclosed, based on my recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent
functions):
|
| a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
|
Exhibit 31.1 (Continued)
Certification of Liquidation Trustee pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
| b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
Date: February 13, 2020
|
By:
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/s/ Michael I. Goldberg
|
|
Michael I. Goldberg,
|
||
|
Liquidation Trustee
|
Exhibit 32.1
Certification of Liquidation Trustee pursuant to 18 U.S.C. 1350,
as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q of Woodbridge Liquidation Trust (the “Registrant”) for the quarter ended December 31, 2019, as filed with the Securities and exchange
Commission on the date hereof (the “Report”), the undersigned, Michael I. Goldberg, Liquidation Trustee of the Registrant, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that, to the best of his knowledge and belief:
| 1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
| 2. |
The information contained in the Report fairly presents, in all material respects, the net assets in liquidation and changes in net assets in liquidation of the Registrant.
|
|
Date: February 13, 2020
|
By:
|
/s/ Michael I. Goldberg
|
|
Michael I. Goldberg,
|
||
|
Liquidation Trustee
|