QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employment Identification No.)
|
|
|
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated filer ☐
|
Accelerated filer ☐
|
|
Smaller reporting company
|
|
Emerging growth company
|
PART I. FINANCIAL INFORMATION
|
|||
Item 1.
|
|||
1 |
|||
2
|
|||
3
|
|||
Item 2.
|
19
|
||
Item 3.
|
27
|
||
Item 4.
|
27
|
||
PART II. OTHER INFORMATION
|
|||
Item 1.
|
28
|
||
Item 1A.
|
33
|
||
Item 2.
|
33
|
||
Item 3.
|
33
|
||
Item 4.
|
33
|
||
Item 5.
|
33
|
||
Item 6.
|
34
|
PART I. |
FINANCIAL INFORMATION
|
Item 1. |
Financial Statements
|
Woodbridge Liquidation Trust and Subsidiaries
Consolidated
Statements of Net Assets in Liquidation
As of September 30, 2022
and June 30, 2022
|
(Unaudited, $ In Thousands)
|
|
9/30/2022
|
6/30/2022
|
||||||
Assets
|
||||||||
Real estate assets held for sale, net (Note 3)
|
$ |
$ |
||||||
Cash and cash equivalents
|
|
|
||||||
Restricted cash (Note 4)
|
|
|||||||
Other assets (Note 5)
|
|
|
||||||
Total assets
|
$
|
|
$
|
|
||||
Liabilities
|
||||||||
Accounts payable and accrued liabilities
|
$
|
|
$
|
|
||||
Distributions payable
|
|
|
||||||
Accrued liquidation costs (Note 6)
|
|
|
||||||
Total liabilities
|
$
|
$
|
||||||
Commitments and Contingencies (Note 14)
|
||||||||
Net Assets in Liquidation
|
||||||||
Restricted for Qualifying Victims (Note 7)
|
$ |
|
$ |
|
||||
All Interestholders
|
|
|
||||||
Total net assets in liquidation
|
$
|
|
$
|
|
PART I. |
FINANCIAL INFORMATION (CONTINUED)
|
Item 1. |
Financial Statements (Continued)
|
Woodbridge Liquidation Trust
and Subsidiaries
For the Three
Months Ended September 30, 2022 and 2021
|
(Unaudited, $ in Thousands)
|
Three Months Ended September 30, 2022
|
Three Months Ended September 30, 2021
|
|||||||||||||||||||||||
Restricted
For Qualifying
Victims
|
All
Interestholders
|
Total
|
Restricted
For Qualifying
Victims
|
All
Interestholders
|
Total
|
|||||||||||||||||||
Net Assets in Liquidation as of beginning of period
|
$
|
|
$
|
|
$
|
|
$
|
|
$ | $ | ||||||||||||||
Change in assets and liabilities (Note 8):
|
||||||||||||||||||||||||
Restricted for Qualifying Victims -
|
||||||||||||||||||||||||
Change in carrying value of assets and liabilities, net
|
(
|
)
|
|
( |
) |
|
|
|
||||||||||||||||
All Interestholders-
|
||||||||||||||||||||||||
Change in carrying value of assets and liabilities, net
|
|
|
|
|
|
|
||||||||||||||||||
Distributions (declared) reversed, net
|
|
|
|
|
|
|
||||||||||||||||||
Net change in assets and liabilities
|
|
|
|
|
|
|
||||||||||||||||||
Net Assets in Liquidation as of end of period
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
1)
|
Formation and Description of Business
|
Table of Contents |
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 1. Financial Statements (Continued)
|
Woodbridge Liquidation Trust and Subsidiaries
|
Notes to Consolidated Financial Statements
|
For the Three Months Ended September 30, 2022 and 2021
|
(Unaudited)
|
2) |
Summary of Significant Accounting Policies
|
Table of Contents |
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 1. Financial Statements (Continued)
|
Woodbridge Liquidation Trust and Subsidiaries
|
Notes to Consolidated Financial Statements
|
For the Three Months Ended September 30, 2022 and 2021
|
(Unaudited)
|
Table of Contents |
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 1. Financial Statements (Continued)
|
Woodbridge Liquidation Trust and Subsidiaries
|
Notes to Consolidated Financial Statements
|
For the Three Months Ended September 30, 2022 and 2021
|
(Unaudited)
|
Table of Contents |
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 1. Financial Statements (Continued)
|
Woodbridge Liquidation Trust and Subsidiaries
|
Notes to Consolidated Financial Statements
|
For the Three Months Ended September 30, 2022 and 2021
|
(Unaudited)
|
3) |
Real Estate Assets Held for Sale
|
September 30, 2022
|
June 30, 2022
|
|||||||||||||||||||||||||||||||
Number
of Assets
|
Gross Value
|
Closing and
Other Costs
|
Net Value
|
Number
of Assets
|
Gross Value
|
Closing and
Other Costs
|
Net Value
|
|||||||||||||||||||||||||
Single-family homes
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|
$
|
|
$ | ( |
) |
$
|
|
||||||||||||||||
Other real estate assets:
|
||||||||||||||||||||||||||||||||
Secured loans
|
|
|
(
|
)
|
|
|
|
(
|
)
|
|
||||||||||||||||||||||
Other properties
|
|
|
(
|
)
|
|
|
|
(
|
)
|
|
||||||||||||||||||||||
Subtotal
|
|
|
(
|
)
|
|
|
|
(
|
)
|
|
||||||||||||||||||||||
Total
|
|
$
|
|
$
|
(
|
)
|
$ |
|
$
|
|
$
|
(
|
)
|
$
|
|
Table of Contents |
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 1. Financial Statements (Continued)
|
Woodbridge Liquidation Trust and Subsidiaries
|
Notes to Consolidated Financial Statements
|
For the Three Months Ended September 30, 2022 and 2021
|
(Unaudited)
|
4) |
Restricted Cash
|
September 30, 2022
|
June 30, 2022
|
|||||||
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
|
$
|
|
$ |
|
||||
Forfeited Assets (Note 7) | ||||||||
Total restricted cash
|
$
|
$ |
5) |
Other Assets
|
September 30, 2022
|
June 30, 2022
|
|||||||
Escrow receivables (a) | $ |
$ |
||||||
Forfeited Assets, net (Note 7)
|
|
|
|
|
||||
Settlement installment receivables, net (b)
|
|
|||||||
Other
|
|
|
||||||
Total other assets
|
$
|
|
$
|
Table of
Contents |
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 1. Financial Statements (Continued)
|
Woodbridge Liquidation Trust and Subsidiaries
|
Notes to Consolidated Financial Statements
|
For the Three Months Ended September 30, 2022 and 2021
|
(Unaudited)
|
6) |
Accrued Liquidation Costs
|
September 30, 2022
|
June 30, 2022
|
|||||||
Development costs:
|
||||||||
Construction costs
|
$
|
|
$
|
|
||||
Construction warranty
|
|
|
||||||
Indirect costs
|
|
|
||||||
Bond refunds
|
(
|
)
|
(
|
)
|
||||
Total development costs
|
|
|
||||||
Holding costs:
|
||||||||
Property tax
|
|
|
||||||
Maintenance, utilities and other
|
|
|
||||||
Insurance
|
|
|
||||||
Total holding costs
|
|
|
||||||
General and administrative costs:
|
||||||||
Legal and other professional fees
|
|
|
||||||
Payroll and payroll-related
|
|
|
||||||
Directors and officers insurance |
||||||||
Board fees and expenses
|
|
|
||||||
State, local and other taxes
|
|
|
||||||
Other
|
|
|
||||||
Total general and administrative costs
|
|
|
||||||
Total accrued liquidation costs
|
$
|
|
$
|
|
7)
|
Forfeited Assets - Restricted for Qualifying Victims
|
Table of Contents |
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 1. Financial Statements (Continued)
|
Woodbridge Liquidation Trust and Subsidiaries
|
Notes to Consolidated Financial Statements
|
For the Three Months Ended September 30, 2022 and 2021
|
(Unaudited)
|
September 30, 2022
|
June 30, 2022
|
|||||||
Restricted cash (Note 4)
|
$
|
|
$
|
|
||||
Other assets, net of selling costs (Note 5)
|
|
|
||||||
Accrued liquidation costs -primarily legal and professional fees
|
(
|
)
|
(
|
)
|
||||
Net assets in liquidation - restricted for Qualifying Victims
|
$
|
|
$
|
|
8)
|
Net Change In Assets and Liabilities
|
Cash | Remeasure- | |||||||||||
Activities
|
ment
|
Total
|
||||||||||
Real estate assets, 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
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
Table of
Contents |
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 1. Financial Statements (Continued)
|
Woodbridge Liquidation Trust and Subsidiaries
|
Notes to Consolidated Financial Statements
|
For the Three Months Ended September 30, 2022 and 2021
|
(Unaudited)
|
Cash | Remeasure- | |||||||||||
Activities
|
ment
|
Total
|
||||||||||
Real estate assets, 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
|
$
|
|
$
|
|
$
|
|
Table of
Contents |
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 1. Financial Statements (Continued)
|
Woodbridge Liquidation Trust and Subsidiaries
|
Notes to Consolidated Financial Statements
|
For the Three Months Ended September 30, 2022 and 2021
|
(Unaudited)
|
Cash | Remeasure- | |||||||||||
Activities
|
ment
|
Total
|
||||||||||
Real estate assets, 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
|
$
|
|
$
|
|
$
|
|
Distributions declared
|
$
|
|
||
Distributions reversed
|
|
|||
Distributions declared, net
|
$
|
|
Table of
Contents |
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 1. Financial Statements (Continued)
|
Woodbridge Liquidation Trust and Subsidiaries
|
Notes to Consolidated Financial Statements
|
For the Three Months Ended September 30, 2022 and 2021
|
(Unaudited)
|
Cash | Remeasure- | |||||||||||
Activities
|
ment
|
Total
|
||||||||||
Real estate assets, 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
|
$
|
|
$
|
|
$
|
|
Distributions declared
|
$
|
|
||
Distributions reversed
|
|
|||
Distributions declared, net
|
$
|
|
9) |
Credit Agreement
|
Table of Contents |
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 1. Financial Statements (Continued)
|
Woodbridge Liquidation Trust and Subsidiaries
|
Notes to Consolidated Financial Statements
|
For the Three Months Ended September 30, 2022 and 2021
|
(Unaudited)
|
10) |
Beneficial Interests
|
For the Three Months Ended September 30, | ||||||||||||||||
2022 |
2021 |
|||||||||||||||
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
|
|
|
|
|
For the Three Months Ended September 30,
|
||||||||||||||||
2022 | 2021 | |||||||||||||||
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
|
|
|
|
|
Table of Contents |
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 1. Financial Statements (Continued)
|
Woodbridge Liquidation Trust and Subsidiaries
|
Notes to Consolidated Financial Statements
|
For the Three Months Ended September 30, 2022 and 2021
|
(Unaudited)
|
11) |
Distributions
|
Deposits Into | ||||||||||||||||||
|
$ per |
|
Restricted | |||||||||||||||
Date |
Class A
|
Total
|
Cash
|
|||||||||||||||
Declared
|
Interest |
Declared
|
Paid | Account | ||||||||||||||
|
|
|||||||||||||||||
Tenth Distribution |
(a) | $ |
$ | $ |
$
|
(a)
|
|
Table of
Contents |
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 1. Financial Statements (Continued)
|
Woodbridge Liquidation Trust and Subsidiaries
|
Notes to Consolidated Financial Statements
|
For the Three Months Ended September 30, 2022 and 2021
|
(Unaudited)
|
12) |
Related Party Transactions
|
13) |
Causes of Action
|
Table of
Contents |
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 1. Financial Statements (Continued)
|
Woodbridge Liquidation Trust and Subsidiaries
|
Notes to Consolidated Financial Statements
|
For the Three Months Ended September 30, 2022 and 2021
|
(Unaudited)
|
14) |
Commitments and Contingencies
|
15) |
Subsequent Events
|
Table of
Contents |
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 1. Financial Statements (Continued)
|
Woodbridge Liquidation Trust and Subsidiaries
|
Notes to Consolidated Financial Statements
|
For the Three Months Ended September 30, 2022 and 2021
|
(Unaudited)
|
Item 2. Management’s Discussion and Analysis of
Financial Condition and Results of Operations
|
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 2. Management’s Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
|
Class of Interest
|
Number Outstanding
|
|||
Class A Liquidation Trust Interests
|
11,514,190
|
|||
Class B Liquidation Trust Interests
|
675,617
|
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
|
Restricted for
|
All
|
|||||||||||
Qualifying Victims
|
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
|
(2
|
)
|
-
|
(2
|
)
|
|||||||
All Interestholders-
|
||||||||||||
Change in carrying value of assets and liabilities, net
|
-
|
885
|
885
|
|||||||||
Distributions (declared) reversed, net
|
-
|
2,638
|
2,638
|
|||||||||
Net change in assets and liabilities
|
-
|
3,523
|
3,523
|
|||||||||
Net assets in liquidation, as of September 30, 2022
|
$
|
3,483
|
$
|
34,433
|
37,916
|
Restricted for
|
All
|
|||||||||||
Qualifying Victims
|
Interestholders
|
Total
|
||||||||||
Remeasurement of assets and liabilities, net
|
$
|
(2
|
)
|
$
|
288
|
$
|
284
|
|||||
Settlement recoveries recognized, net (1)
|
-
|
154
|
154
|
|||||||||
Other
|
-
|
443
|
445
|
|||||||||
Change in carrying value of assets and liabilities, net
|
$
|
(2
|
)
|
$
|
885
|
$
|
883
|
(1) |
Net of 5% payable to the Liquidation Trustee of approximately $8 and an allowance for uncollectible settlement installment receivables of approximately $28.
|
• |
Reversed distributions of approximately $2.64 million primarily from claims being disallowed or Class A Interests being cancelled.
|
• |
Received net proceeds from the sale of Forfeited Assets of approximately $0.58 million.
|
• |
Completed construction of two single-family homes (10733 Stradella and 1520 Carla Ridge).
|
• |
Recorded approximately $0.18 million from the settlement of Causes of Action, net of 5% payable to the Liquidation Trustee and an allowance for uncollectible installment receivables.
|
• |
Paid construction costs of approximately $1.28 million relating to single-family homes under development.
|
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
|
• |
Paid holding costs of approximately $0.27 million.
|
• |
Paid general and administrative costs of approximately $4.96 million, including approximately $0.16 million of board member fees and expenses, approximately $3.02 million of payroll and other general and
administrative costs and approximately $1.78 million of professional fees.
|
Restricted for
|
All
|
|||||||||||
Qualifying Victims
|
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
|
-
|
-
|
-
|
|||||||||
All Interestholders-
|
||||||||||||
Change in carrying value of assets and liabilities, net
|
-
|
4,904
|
4,904
|
|||||||||
Distributions (declared) reversed, net
|
-
|
99
|
99
|
|||||||||
Net change in assets and liabilities
|
-
|
5,003
|
5,003
|
|||||||||
Net assets in liquidation, as of September 30, 2021
|
$
|
3,167
|
$
|
131,376
|
134,543
|
Restricted for
|
All
|
|||||||||||
Qualifying Victims
|
Interestholders
|
Total
|
||||||||||
Sales proceeds in excess of carrying value
|
$
|
-
|
$
|
3,071
|
$
|
3,071
|
||||||
Settlement recoveries recognized, net (1)
|
-
|
926
|
926
|
|||||||||
Remeasurement of assets and liabilities, net
|
-
|
812
|
812
|
|||||||||
Other
|
-
|
95
|
95
|
|||||||||
Change in carrying value of assets and liabilities, net
|
$
|
-
|
$
|
4,904
|
$
|
4,904
|
(1) |
Net of 5% payable to the Liquidation Trustee of approximately $49 during the three months ended September 30, 2021.
|
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
|
• |
Reversed distributions of approximately $0.10 primarily from claims being disallowed or Class A Interests being cancelled.
|
• |
Completed construction of two single-family homes (2600 Hutton and 1484 Carla Ridge).
|
• |
Sold two single-family homes for net proceeds of approximately $42.45 million. One of the single-family homes was under construction.
|
• |
Recorded approximately $0.93 million for the settlement of Causes of Action, net of 5% payable to the Liquidation Trustee..
|
• |
Paid construction costs of approximately $4.23 million relating to single-family homes under development.
|
• |
Paid holding costs of approximately $0.40 million.
|
• |
Paid general and administrative costs of approximately $4.12 million, including approximately $0.20 million of board member fees and expenses, approximately $1.14 million of payroll and other general and
administrative costs and approximately $2.78 million of professional fees.
|
• |
Sales of Real Estate: The Wind-Down Group is in the process of marketing and selling its real estate assets, all of which are held for sale. One single-family home and one other real estate asset was
listed for sale as of September 30, 2022. As of September 30, 2022, the Company owned a total of five real estate assets with a gross carrying value of approximately $30.96 million. The majority of the gross carrying value is concentrated
in one single-family home. Based on the remaining assets of the Company, future net proceeds will be significantly less than the Company has realized in prior periods.
|
• |
Escrow Receivables: As of September 30, 2022, the Wind-Down Group had escrow receivables relating to two single-family homes that had been sold and for which it was completing punch list items and/or
awaiting the issuance of a certificate of occupancy.
|
• |
Causes of Action Recoveries: During the three months ended September 30, 2022, the Company recognized approximately $0.19 million 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.
|
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
|
• |
Forfeited Assets: Forfeited Assets consist of cash and other assets (jewelry, art, clothing, handbags and shoes). During the three months ended September 30, 2022, the Trust sold some of its Forfeited
Assets and received net proceeds of approximately $0.58 million. As noted earlier, net sale proceeds from liquidating the Forfeited Assets are to be distributed only to Qualifying Victims.
|
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
|
During the Period from
February 15, 2019 (inception) through
September 30, 2022 ($ in Millions)
|
During the Period from
February 15, 2019 (inception) through
November 10, 2022 ($ 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
|
40.02
|
39.14
|
0.88
|
40.02
|
39.14
|
0.88
|
|||||||||||||||||||||
Ninth
|
2/4/2021
|
3.44
|
39.98
|
39.15
|
0.83
|
39.98
|
39.15
|
0.83
|
|||||||||||||||||||||
Tenth
|
6/15/2022
|
5.63
|
65.02
|
64.19
|
0.83
|
65.02
|
64.19
|
0.83
|
|||||||||||||||||||||
Subtotal
|
$
|
34.86
|
$
|
408.10
|
$
|
396.62
|
$
|
11.48
|
$
|
408.10
|
$
|
396.62
|
$
|
11.48
|
|||||||||||||||
|
|||||||||||||||||||||||||||||
Distributions Returned / (Reversed)
|
|||||||||||||||||||||||||||||
Disallowed/cancelled (b)
|
(6.27
|
)
|
(6.27
|
)
|
|||||||||||||||||||||||||
Returned (c)
|
0.74
|
0.74
|
|||||||||||||||||||||||||||
Forfeited (d)
|
(1.15
|
)
|
(1.15
|
)
|
|||||||||||||||||||||||||
Subtotal
|
(6.68
|
)
|
(6.68
|
)
|
|||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||
Distributions Paid from Reserve Account (e)
|
(3.57
|
)
|
(3.58
|
)
|
|||||||||||||||||||||||||
Distributions Payable, Net
|
as of 9/30/2022:
|
$
|
1.23
|
as of 11/10/2022:
|
$
|
1.22
|
(a) |
The seventh distribution included the cash the Trust received from Fair Funds.
|
(b) |
As a result of claims being disallowed or Class A Interests cancelled.
|
(c) |
Distribution checks returned or not cashed.
|
(d) |
Distributions forfeited as Interestholders did not cash checks that were over 180 days old.
|
(e) |
Paid as claims are allowed or resolved.
|
PART I. FINANCIAL INFORMATION (CONTINUED)
|
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
|
Item 3. |
Quantitative and Qualitative Disclosures about Market Risk
|
Item 4. |
Controls and Procedures
|
o |
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.
|
o |
Fraudulent transfers (Interest to Noteholders and Unitholders). Certain of the actions include claims arising under chapter 5 of the Bankruptcy Code and seek to avoid 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.
|
o |
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.
|
o |
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.
|
o |
Actions regarding the Shapiro’s personal assets. On December 4, 2019, the Trust filed an action in the Bankruptcy Court, Adv. Pro. No. 10-51076 (BLS), Woodbridge Liquidation Trust v. Robert Shapiro, Jeri Shapiro, 3X a Charm, LLC, Carbondale Basalt Owners, LLC, Davana Sherman Oaks Owners, LLC, In Trend Staging, LLC, Midland Loop Enterprises, LLC, Schwartz
Media Buying Company, LLC and Stover Real Estate Partners LLC. In this action, the Trust asserts claims under chapter 5 of the Bankruptcy Code and applicable state law for avoidance of preferential and fraudulent transfers
together with claims for fraud, aiding and abetting fraud, the unlicensed sale of securities, breach of fiduciary duty and unjust enrichment. The Trust seeks to recover damages and assets held in the names of Robert Shapiro, Jeri Shapiro
and their family members and entities owned or controlled by them, which assets the Trust contends are beneficially owned by the Debtors or for which the Debtors are entitled to recover based on the Shapiros’ defalcations, including over
$20 million in avoidable transfers. On February 4, 2022, the Trust entered into a Settlement Agreement with Ms. Jeri Shapiro resolving the Trust’s adversary proceeding against Ms. Shapiro. In connection with the Settlement Agreement, Ms.
Shapiro responded to interrogatories from the Trust and submitted a declaration under penalty of perjury detailing her lack of assets. Upon execution of the Settlement Agreement, Ms. Shapiro executed and delivered a Stipulated Judgment
for approximately $20.6 million that will be held by the Trust in escrow for three years that can be entered without notice if the Trust learns Ms. Shapiro’s representations in her declaration were false or materially inaccurate.
Additionally, Ms. Shapiro authorized the Trust to expunge the filed claims of certain co-defendants she was listed as an officer and turned over payments to the Trust that were received by certain co-defendants in the adversary
proceeding. A stipulation of dismissal (as to Ms. Shapiro only) was entered on April 1, 2022.
|
o |
Criminal proceeding and forfeiture. In connection with the United States’ criminal case against Robert Shapiro (Case No. No. 19-20178-CR-ALTONAGA (S.D. Fla. 2019)),
Shapiro agreed to the forfeiture of certain assets. The Trust filed a petition in the Florida court to claim the Forfeited Assets as property of the Debtors’ estates, and therefore as property that had vested in the Trust pursuant to the
Plan. The Trust has entered into an agreement with the United States Department of Justice to resolve its claim. The agreement was approved by the Bankruptcy Court on September 17, 2020 and was approved by the United States District
Court on October 1, 2020. Among other things, the agreement provides for the release of specified Forfeited Assets by the United States to the Trust, and for the Trust to liquidate those assets and distribute the net sale proceeds to
Qualifying Victims, which include the vast majority of Trust beneficiaries—specifically, all former holders of Class 3 and 5 claims under the Plan and their permitted assigns—but do not include former holders of Class 4 claims under the
Plan. The Trust has taken possession of the Forfeited Assets and has sold the wine and gold assets as well as an automobile. Some of the jewelry, art, clothing, handbags and shoes have also been sold.
|
Item 1A. |
Risk Factors
|
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds
|
Number of
|
Number of
|
|||||||||
Class A
|
Class B
|
Nature of the
|
Consideration
|
|||||||
Date of Sale
|
Interests Sold
|
Interests Sold
|
Transaction
|
Received
|
||||||
August 1, 2022
|
847.60
|
-
|
Allowance of
|
Allowance of
|
||||||
claims
|
claims
|
|||||||||
August 29, 2022
|
557.18
|
-
|
Allowance of
|
Allowance of
|
||||||
claims
|
claims
|
|||||||||
September 1, 2022
|
10.20
|
-
|
Allowance of
|
Allowance of
|
||||||
claims
|
claims
|
|||||||||
Total
|
1,414.98
|
-
|
Item 3. |
Defaults upon Senior Securities
|
Item 4. |
Mine Safety Disclosures
|
Item 5. |
Other Information
|
Item 6. |
Exhibits
|
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.
|
|
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.
|
|
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.
|
|
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.
|
|
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.
|
|
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.
|
|
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.
|
|
Amended and Restated Employment Agreement dated July 31, 2019 between Woodbridge Wind-Down Entity LLC and Frederick Chin, incorporated herein by reference to the Registration Statement on
Form 10 filed by the Trust on October 25, 2019.
|
|
First Amendment to Amended and Restated Employment Agreement dated September 24, 2020 between Woodbridge Wind-Down Entity LLC and Frederick Chin, incorporated herein by reference to the Form
10-K filed by the Trust on September 28, 2020.
|
|
Indemnification Agreement dated February 27, 2019 between Woodbridge Wind-Down Entity LLC and Frederick Chin, incorporated herein by reference to the Registration Statement on Form 10 filed
by the Trust on October 25, 2019.
|
|
Part-Time Employment Agreement dated September 1, 2022 between Woodbridge Wind-Down Entity LLC and Frederick Chin, incorporated herein by reference to the Form 8-K filed by the Trust on September 1, 2022.
|
|
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.
|
|
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.
|
|
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.
|
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.
|
|
101
|
The following financial statements from the Woodbridge Liquidation Trust Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, formatted in eXtensible Business Reporting
Language (XBRL): (i) consolidated statements of net assets in liquidation as of September 30, 2022 and June 30, 2022, (ii) consolidated statements of changes in net assets in liquidation for the three months ended September 30, 2022 and
2021, (iii) 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.
|
104
|
Cover Page Interactive Data File (Formatted as Inline XBRL and contained in Exhibit 101)
|
Woodbridge Liquidation Trust
|
||
Date: November 10, 2022
|
By:
|
/s/ Michael I. Goldberg
|
Michael I. Goldberg,
|
||
Liquidation Trustee
|