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
September 30, 2025
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
(Exact name of registrant as specified in its charter)
|
|
|
|
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employment Identification No.)
|
|
|
|
|
|
(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, a smaller reporting company, or an emerging growth company. See definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer,’’ ‘‘smaller reporting company’’ and “emerging growth company” in Rule 12b-2 of the Exchange Act.
|
Large accelerated filer ☐
|
Accelerated filer ☐
|
|
|
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
☒
Woodbridge Liquidation Trust
Form 10-Q
September 30, 2025
| Table of Contents | ||
|
PART I. FINANCIAL INFORMATION
|
||
|
Item 1.
|
||
| 1 | ||
| 2 | ||
| 3 | ||
|
Item 2.
|
19 | |
|
Item 3.
|
28 | |
|
Item 4.
|
28 | |
|
PART II. OTHER INFORMATION
|
||
|
Item 1.
|
29 | |
|
Item 1A.
|
31 | |
|
Item 2.
|
31 | |
|
Item 3.
|
31 | |
|
Item 4.
|
31 | |
|
Item 5.
|
31 | |
|
Item 6.
|
32 | |
PART I.
FINANCIAL
INFORMATION
|
Woodbridge Liquidation Trust and Subsidiaries
Consolidated Statements of Net Assets in Liquidation
As of September 30, 2025 and June 30, 2025
|
|
($ In Thousands)
|
|
9/30/2025
(Unaudited)
|
6/30/2025
|
|||||||
|
Assets
|
||||||||
|
Cash, cash equivalents and short-term investments
|
|
|
||||||
|
Restricted cash (Note 3)
|
|
|
||||||
|
Other assets (Note 4)
|
|
|
||||||
|
Total assets
|
$ |
|
$ |
|
||||
|
Liabilities
|
||||||||
|
Accounts payable and accrued liabilities
|
$ |
|
$ |
|
||||
|
Distributions payable
|
|
|
||||||
|
Accrued liquidation costs (Note 5)
|
|
|
||||||
|
Total liabilities
|
$ |
|
$ |
|
||||
|
Commitments and Contingencies (Note 13)
|
||||||||
|
Net Assets in Liquidation
|
||||||||
|
Restricted for Qualifying Victims (Note 6)
|
$ |
|
$ |
|
||||
|
All Interestholders
|
|
|
||||||
|
Total net assets in liquidation
|
$ |
|
$ |
|
See accompanying notes to unaudited consolidated financial statements.
PART I.
FINANCIAL
INFORMATION (CONTINUED)
Item 1.
Financial Statements (Continued)
|
Woodbridge Liquidation Trust and Subsidiaries
Consolidated Statements of Changes in Net Assets in Liquidation
For the Three Months Ended September 30, 2025 and 2024
|
|
(Unaudited, $ in Thousands)
|
| Three Months Ended September 30, 2025 |
|
Three Months Ended September 30, 2024 | ||||||||||||||||||||||
|
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 7):
|
||||||||||||||||||||||||
|
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
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||
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 Months Ended September 30, 2025 and 2024 (Unaudited)
1)
Formation, Organization and Description of Business
Formation
Woodbridge Liquidation Trust (the “Trust”) was established (i) for the purpose of collecting, administering, distributing and liquidating the Trust assets for the benefit of the Trust beneficiaries in accordance with the Liquidation Trust Agreement and the First Amended Joint Chapter 11 Plan of Liquidation of Woodbridge Group of Companies, LLC and its chapter 11 affiliated debtors each a “Debtor” (and collectively, the “Debtors”) dated August 22, 2018 (as amended, modified, supplemented or restated from time to time, the “Plan”); (ii) to resolve disputed claims asserted against the Debtors; (iii) to litigate and/or settle causes of action (“Causes of Action”); and (iv) to pay certain allowed claims and statutory fees, as required by the Plan. The Trust was formed on February 15, 2019 (the “Plan Effective Date”) as a statutory trust under Delaware law.
On the Plan Effective Date, in accordance with the Plan, (a) the following assets automatically vested in the Trust: (i) an aggregate $
5,000,000
in cash from the Debtors for the purpose of funding the Trust’s initial expenses of operation; (ii) certain claims and Causes of Action; (iii) all of the outstanding equity interests of the Wind-Down Entity (as defined below); and (iv) certain other non-real estate related assets, (b) the equity interests of Woodbridge Group of Companies, LLC and Woodbridge Mortgage Investment Fund 1, LLC (together, the “Remaining Debtors”) were cancelled and new equity interests representing all of the newly issued and outstanding equity interests in the Remaining Debtors were issued to the Trust, (c) all of the other Debtors other than the Remaining Debtors were dissolved and (d) the real estate-related assets of the Debtors were automatically vested in the Trust’s wholly-owned subsidiary, Woodbridge Wind-Down Entity LLC (the “Wind-Down Entity”) or one of the Wind-Down Entity’s
43
wholly-owned single member LLCs (the “Wind-Down Subsidiaries”) formed to own the respective real estate assets. The Trust, the Remaining Debtors, the Wind-Down Entity and the Wind-Down Subsidiaries are collectively referred to herein as the “Company.”
The Wind-Down Entity and the Wind-Down Subsidiaries are collectively referred to herein as the “Wind-Down Group.”
As further discussed in Note 8, the Trust has
two
classes of liquidation trust interests: Class A Liquidation Trust Interests (the “Class A Interests”) and Class B Liquidation Trust Interests (the “Class B Interests”). The holders of Class A Interests and Class B Interests are collectively referred to as “All Interestholders” or “Interestholders”. Class A Interests and Class B Interests are collectively referred to as “Liquidation Trust Interests”.
On December 24, 2019, the Trust’s Registration Statement on Form 10 became effective under the Securities Exchange Act of 1934 (the “Exchange Act”). The trading symbol for the Trust’s Class A Interests is WBQNL. Bid and asked prices for the Trust’s Class A Interests are quoted on the OTC Link® ATS, the Securities and Exchange Commission ( the “SEC”) registered alternative trading system. The Class A Interests are eligible for the Depository Trust Company’s Direct Registration System services. The Class B Interests are not registered with the SEC.
Organization
The Trust does not have directors, executive officers, or employees. All of the management and executive authority of the Trust resides with the Liquidation Trustee, subject to the supervision of a
supervisory board (the “Supervisory Board”). The Wind-Down Entity is separately managed by its board of managers.
The Liquidation Trust Interests are non-voting. The holders of the Class A Interests and the Class B Interests have the same rights, except with respect to certification, transferability and payment of distributions. See Note 9 regarding the priority and manner of distribution of available cash to Interestholders.
The Wind-Down Entity, from time to time, makes distributions to the Trust, as available. The Trust in turn makes distributions, from time to time, to the Trust beneficiaries, as available.
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, 2025 and 2024 (Unaudited)
As of September 30, 2025, the Trust was to be terminated upon the first to occur of (i) the making of all distributions required to be made and a determination by the Liquidation Trustee that the pursuit of additional Causes of Action held by the Trust is not justified or (ii) March 31, 2026, subject to the extension of such date by the Bankruptcy Court. The Bankruptcy Court may approve an extension of the term if deemed necessary to facilitate or complete the recovery on, and liquidation of the, Trust assets.
During the year ended June 30, 2025, the Company concluded that its liquidation activities would not be completed by March 31, 2026 due to the pending construction defect claim against one of the Wind-Down Subsidiaries (the “Development Entity”) and related litigation. This litigation includes the Development Entity’s claims against its primary and excess insurers, and the prior owner, contractors, and other professionals involved in the development of the site and the construction of the home. See Notes 5, 13 and 14 for additional information. The Company currently projects a revised estimated completion date for the Company’s liquidation activities of approximately February 15, 2027.
On September 22, 2025, the Trust filed a motion with the Bankruptcy Court to extend the Trust termination date from March 31, 2026 to February 15, 2027. The Company expects that the Bankruptcy Court will grant the motion, as the extension is needed to resolve the construction defect claim and the related litigation. See Note 14 for additional information.
If it deems it necessary, or appropriate, the Company may seek one or more additional extensions of the termination date. If the Trust is extended beyond February 15, 2027, the Company will incur costs in addition to those that have been accrued to date.
Pursuant to the Wind-Down Entity’s Limited Liability Company Agreement, the Wind-Down Entity shall dissolve upon the first to occur of the following: (i) the written consent of the Trust, (ii) the entry of a decree of judicial dissolution under Section 18-802 of the Delaware LLC Act and (iii) the sale or other disposition of all of the Wind-Down Entity’s assets.
Description of Business
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. With the exception of the activities described below, the Company’s operations are substantially complete.
As of September 30, 2025, the Trust is prosecuting
four
remaining Causes of Action acquired by the Trust pursuant to the Plan (see Notes 11 and 14 for additional information) and pursuing the collection of settlement receivables and judgments. As of September 30, 2025, the Trust owns
one
single-family home subject to a life estate (see Note 4 for additional information).
As of September 30, 2025, the Wind-Down Entity’s primary activity is addressing the resolution of a construction defect claim and the related litigation (see Note 5, 13 and 14 for additional information). The Wind-Down Entity has sold all of its real estate assets.
As more fully discussed in Note 2, the Company uses the Liquidation Basis of Accounting. Net assets in liquidation represent the remaining estimated aggregate value available to Interestholders upon liquidation, with no discount for the timing of proceeds (undiscounted). Actual net liquidation proceeds, other recoveries and liquidation costs may differ materially from the estimated amounts due to the uncertainty in the timing and cost of completing the liquidation activities.
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.
Furthermore,
it is not possible to predict the timing of any additional distributions to Interestholders, if any. See Note 9 for additional information relating to the suspension of distributions to Interestholders.
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, 2025 and 2024 (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 accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”), including the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, the consolidated financial statements for the unaudited interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair and consistent presentation of the results for such periods. These consolidated financial statements have been presented in accordance with Accounting Standards Codification (“ASC”) Subtopic 205-30, “Liquidation Basis of Accounting,” as amended by Accounting Standards Update (“ASU”) No. 2013-07, “Presentation of Financial Statements (Topic 205), Liquidation Basis of Accounting.” The June 30, 2025 consolidated statement of net assets in liquidation included herein was derived from the audited consolidated financial statements as of and for the year ended June 30, 2025 but does not include all disclosures or notes required by U.S. GAAP for complete financial statements.
All material intercompany accounts and transactions have been eliminated.
Use of Estimates
U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and for the period then ended. Actual results could differ from these estimates. Estimates and assumptions are reviewed periodically, and the carrying amounts of assets and liabilities are revised in the period that available information supports a change in the carrying amount.
Liquidation Basis of Accounting
Under the liquidation basis of accounting, all assets are recorded at their estimated net realizable value or liquidation value, which represents the estimated amount of net cash that will be received upon the disposition of the assets (on an undiscounted basis).
Liabilities, including estimated costs associated with implementing and completing the Plan, are measured in accordance with U.S. GAAP that otherwise apply to those liabilities. The Company has recorded estimated development costs, estimated reserves for contingent liabilities including potential construction defect claims, 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 estimates of costs to complete repairs and to address potential construction defect claims and other costs. Projected general and administrative cost estimates take into account operating costs through the completion of the liquidation of the Company, currently estimated to be approximately February 15, 2027.
These estimated amounts are presented in the accompanying consolidated statements of net assets in liquidation. As additional information becomes available, the estimated amounts may change. All changes in the estimated liquidation value of the Company’s 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 liquidation costs, the estimated date of the completion of the liquidation of the Company and records any significant changes.
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, 2025 and 2024 (Unaudited)
Other Assets
The Company recognizes recoveries from the settlement of unresolved Causes of Action when an agreement is executed, final court approval is received (if required), and collectability is reasonably assured. An allowance for uncollectible settlement installment receivables is recorded when there is doubt about the collectability of the receivable.
The Company accrues expected interest earnings when it can reasonably estimate the amount to be received. The Company uses a forward yield curve to estimate the interest rates to be earned and its expected future cash balances to estimate the dollar amount that will earn interest through the currently estimated Trust termination date of February 15, 2027.
The measurement of real estate assets is based on current contracts if contingencies (if any) have been removed, estimates and other indications of sales value, net of estimated costs.
The Company maintains liability insurance coverage for construction defects. An insurance recovery is accrued when it is deemed probable and reasonably estimable under the loss recovery model in accordance with ASC 450 “Contingencies” (“ASC 450”). The portion of an insurance claim in excess of costs accrued is recognized upon approval of the claim and receipt of the related payment, under the gain contingency model in accordance with ASC 450.
In addition, the Company recognizes other amounts to be received based on contractual terms or when the amounts to be received are probable and estimable.
Accrued Liquidation Costs
The Company accrues estimated liquidation costs to the extent they are known and are reasonably estimable. These costs consist of (a) estimated development costs, primarily costs to address the Development Entity’s construction defect claim and estimated reserves for contingent liabilities including potential construction defect claims and the administration of such potential construction defect claims after the Company’s liquidation activities are completed (see Notes 5, 13 and 14 for additional information) and (b) estimated general and administrative costs, including payroll, legal and other professional fees, trustee and board fees, rent and other office related expenses, and other general and administrative costs to operate the Company until the completion of the Company's liquidation activities, currently estimated to be approximately February 15, 2027. Accrued liquidation costs for general and administrative costs consider the estimated recurring historical amounts as well as expected costs to terminate the trust. If the Trust is extended beyond February 15, 2027, the Company will incur costs in addition to those that have been accrued to date.
Upon the recognition of a loss contingency, the associated costs that are probable and estimable are recognized in accrued liquidation costs. Accrued liquidation costs include estimated costs for the initial repair phase, and certain preliminary estimated costs for the evaluation and engineering and costs of subsequent phases of repair. The Company has included preliminary estimates of costs to complete subsequent phases of repair to address the construction defect claim asserted against the Development Entity, but it is unknown whether all or a portion of such costs will be ultimately borne by third parties (including the Company’s insurers). In addition, such estimates are based on a preliminary scope of work, and actual costs may vary significantly from such estimates. As stated above, the Company reviews the accrued costs every quarter and records any significant changes based on available information.
Cash Equivalents and Short-Term Investments
The Company considers money market accounts and certificates of deposit that have a maturity date of 90 days or less at the time of investment to be cash equivalents. The Company considers certificates of deposit that have a maturity date of more than 90 days to be short-term investments.
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, 2025 and 2024 (Unaudited)
Restricted Cash
Restricted cash includes cash that can only be used for certain specified purposes as described in Note 3.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, short-term investments and restricted cash, which are held as deposits in multiple financial institutions. The deposit balances in any one financial institution may exceed the Federal Deposit Insurance Corporation (the “FDIC”) insurance limit of $250,000. The Company mitigates this risk by using sweep accounts, when available, to reduce deposit balances at any one financial institution consistent with FDIC insurance limits.
Income Taxes
The Trust is intended to be treated as a grantor trust for income tax purposes and, accordingly, is not subject to federal or state income tax on any income earned or gain recognized by the Trust. The Trust’s beneficiaries are treated as the owner of a pro rata portion of each asset, including cash and each liability received by and held by the Trust. Each beneficiary will be required to report on his or her federal and state income tax return his or her pro rata share of taxable income, including gains and losses recognized by the Trust. Accordingly, there is no provision for federal or state income taxes recorded in the accompanying consolidated financial statements.
The Company regularly analyzes its various federal and state filing positions and only recognizes the income tax effect in the consolidated financial statements when certain criteria regarding uncertain income tax positions have been met. The Company believes that its income tax positions would more likely than not be sustained upon examination by all relevant taxing authorities. Therefore, no provision for uncertain income tax positions has been recorded in the consolidated financial statements.
Net Assets in Liquidation - Restricted for Qualifying Victims
The Company separately presents the portion of net assets in liquidation that are restricted for Qualifying Victims from the net assets in liquidation that are available to All Interestholders (see Note 6 for additional information).
Segment Reporting
The Company has
one
reportable segment as described in Note 12.
3)
Restricted Cash
The Company’s restricted cash as of September 30, 2025 (unaudited), with comparative information as of June 30, 2025, is as follows ($ in thousands):
| September 30, 2025 (unaudited) | June 30, 2025 | |||||||
|
Distributions restricted by the Company (a)
|
$ |
|
$ |
|
||||
|
Forfeited Assets (Note 6)(b)
|
|
|
||||||
|
Total restricted cash
|
$ |
|
$ |
|
(a)
(b)
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, 2025 and 2024 (Unaudited)
4)
Other Assets
The Company’s other assets as of September 30, 2025 (unaudited), with comparative information as of June 30, 2025, are as follows ($ in thousands):
| September 30, 2025 | ||||||||
| (unaudited) | June 30, 2025 | |||||||
|
Accrued interest (a)
|
$ |
|
$ |
|
||||
|
Insurance receivable (b)
|
|
|
||||||
|
Real estate assets, net (c)
|
|
|
||||||
|
Settlement receivables, net (d)
|
|
|
||||||
|
Other
|
|
|
||||||
|
Total other assets
|
$ |
|
$ |
|
(a)
(b)
Receivable from primary and first excess insurer for construction defect claim (see Note 14 for additional information).
(c)
(d)
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, 2025 and 2024 (Unaudited)
5)
Accrued Liquidation Costs
The following is a summary of the items included in accrued liquidation costs as of September 30, 2025 (unaudited), with comparative information as of June 30, 2025 ($ in thousands):
| September 30, 2025 (unaudited) | June 30, 2025 | |||||||
|
Development costs
|
$ |
|
$ |
|
||||
|
General and administrative costs:
|
||||||||
|
Legal and other professional fees
|
|
|
||||||
|
Directors and officers insurance
|
|
|
||||||
|
Payroll and payroll-related
|
|
|
||||||
|
Board fees and expenses
|
|
|
||||||
|
Other
|
|
|
||||||
|
Total general and administrative costs
|
|
|
||||||
|
Total accrued liquidation costs
|
$ |
|
$ |
|
At September 30, 2025, the Company’s accrued development costs consist of costs incurred but not yet paid, and costs to be incurred, in connection with the construction defect claim asserted against the Development Entity. These costs include the estimated costs for the initial repair phase of the subject property, as well as estimated costs for the evaluation and engineering and preliminary estimated costs of subsequent phases of repair based on an initial scope of work. Accrued development costs also include estimated legal and professional fees for coordinating the pursuit of litigation related to the construction defect and related insurance claims based on information available to date.
Additional repairs beyond the initial phase will be necessary. The scope of work for the subsequent repairs, timing and cost are based on preliminary estimates, and actual costs may vary significantly from such estimates. The costs for the subsequent phases of repair, as well as related legal and professional fees, will be reviewed quarterly, and the Company will record any significant changes. A portion of the accrued development costs relate to estimated reserves for contingent liabilities, including other potential construction defect claims, and the administration of such claims after the Company’s liquidation activities are completed. See Notes 13 and 14 for additional information.
The Company is currently unable to estimate whether all or a portion of the total costs will ultimately be borne by third parties (including the Company’s insurers). Any future insurance recoveries will be recorded when they are deemed probable and estimable. See Notes 4 and 14 for additional information. Insurance reimbursements received to date are included in cash, cash equivalents and short-term investments and have not been netted against accrued development costs in the Company's consolidated financial statements.
During the year ended June 30, 2025, the Company concluded that its liquidation activities would not be completed by March 31, 2026 due to the pending construction defect claim against the Development Entity and related litigation. This litigation includes the Development Entity’s claims against its primary and excess insurers, and the prior owner, contractors, and other professionals involved in the development of the site and the construction of the home. The Company currently projects a revised estimated completion date for the Company’s liquidation activities of approximately February 15, 2027.
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, 2025 and 2024 (Unaudited)
On September 22, 2025, the Trust filed a motion with the Bankruptcy Court to extend the termination date of the Trust from March 31, 2026 to February 15, 2027. The Company expects that the Bankruptcy Court will grant the motion, as the extension is needed to resolve the construction defect claim and the related litigation. See Note 14 for additional information. If the Trust is extended beyond February 15, 2027, the Company will incur costs in addition to those that have been accrued to date.
6)
Forfeited Assets - Restricted for Qualifying Victims
The Trust entered into a resolution agreement with the DOJ which provided that the Trust would receive the assets forfeited (the “Forfeited Assets”) by Robert and Jeri Shapiro. The agreement provided for the release of specified Forfeited Assets by the DOJ to the Trust and for the Trust to liquidate those assets and distribute the net sale proceeds to Qualifying Victims. Qualifying Victims consist of the former holders of allowed Class 3 and 5 claims as of the Plan Effective Date and their permitted assigns but does not include former holders of Class 4 claims.
In March 2021, the Trust received certain Forfeited Assets from the DOJ, including cash and other assets, and the Company recorded the total estimated net realizable value of the Forfeited Assets of approximately $
3,459,000
. On February 23, 2024, the Trust received and recorded approximately $
560,000
in cash from the DOJ that was forfeited by a co-defendant of Robert Shapiro. As of September 30, 2025, the Trust has completed its activities related to the liquidation of the Forfeited Assets.
On December 17, 2024, a distribution of net sales proceeds of Forfeited Assets of approximately $
4,153,000
was paid to Qualifying Victims, which represented a distribution of approximately $
4.71
per $1,000 of Total Net Qualifying Victim Claims. Distributions to Qualifying Victims were allocated pro-rata based on their net allowed Class 3 and Class 5 claims (the “Net Allowed Class 3 and Class 5 Claims”) plus unresolved Class 3 and Class 5 claims without considering the (i)
5
% enhancement for contributing their Causes of Action and (ii)
72.5
% Class 5 coefficient. As of December 17, 2024, the Net Allowed Class 3 and Class 5 Claims were approximately $
881,540,000
and net unresolved Class 3 and Class 5 claims were approximately $
50,000
(together referred to as the “Total Net Qualifying Victim Claims”).
On December 17, 2024, approximately $
20,000
was withheld by the Company pending receipt of further beneficiary information. As of September 30, 2025 and June 30, 2025, approximately $
12,000
is payable to Qualifying Victims. See Note 14 for additional information.
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, 2025 and 2024 (Unaudited)
The Forfeited Assets included in the Company’s September 30, 2025 (unaudited) and June 30, 2025 consolidated financial statements are as follows ($ in thousands):
|
September 30, 2025
(unaudited)
|
June 30, 2025
|
|||||||
|
Restricted cash (Note 3)
|
$ |
|
$ |
|
||||
|
Distributions payable
|
(
|
) |
(
|
) | ||||
|
Net assets in liquidation - restricted for Qualifying Victims
|
$ |
|
$ |
|
7)
Net Change in Assets and Liabilities
Restricted for Qualifying Victims:
During the three months ended September 30, 2025:
●
There were
no
changes in assets and liabilities (Restricted for Qualifying Victims);
●
There were
no
distributions (declared) reversed (Restricted for Qualifying Victims); and
●
There was
no
change in distributions payable (Restricted for Qualifying Victims).
The following provides details of the change in the carrying value of assets and liabilities, net during the three months ended September 30, 2024 (unaudited) ($ in thousands):
|
Cash
Activities
|
Remeasure-
ment
|
Total
|
||||||||||
|
Cash, cash equivalents and short-term investments
|
$ |
|
$ |
|
$ |
|
||||||
|
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
|
$ |
|
$ |
|
$ |
|
There were
no
distributions (declared) (Restricted for Qualifying Victims) reversed during the three months ended September 30, 2024.
There were
no
changes in distribution payable (Restricted for Qualifying Victims) during the three months ended September 30, 2024.
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, 2025 and 2024 (Unaudited)
All Interestholders
The following provides details of the change in the carrying value of assets and liabilities, net during the three months ended September 30, 2025 (unaudited) ($ in thousands):
| Cash Activities | Remeasure- ment | Total | ||||||||||
| Cash, cash equivalents and short-term investments | $ |
(
|
) | $ |
|
$ |
(
|
) | ||||
|
Restricted cash
|
|
|
|
|||||||||
|
Other assets
|
(
|
) |
|
(
|
) | |||||||
|
Total assets
|
$ |
(
|
) | $ |
|
$ |
(
|
) | ||||
|
Accounts payable and accrued liabilities
|
$ |
|
$ |
(
|
) | $ |
(
|
) | ||||
|
Accrued liquidation costs
|
(
|
) |
|
(
|
) | |||||||
|
Total liabilities
|
$ |
(
|
) | $ |
(
|
) | $ |
(
|
) | |||
|
Change in carrying value of assets and liabilities, net
|
$ |
|
$ |
|
$ |
|
The following provides details of the distributions (declared) reversed, net during the three months ended September 30, 2025 (unaudited) ($ in thousands):
|
Distributions (declared)
|
$ |
(
|
) | |
|
Distributions reversed
|
|
|||
|
Distributions (declared) reversed, net
|
$ |
(
|
) |
Distributions payable increased by approximately $
529,000
during the three months ended September 30, 2025. See Note 9 for additional information.
The following provides details of the change in the carrying value of assets and liabilities, net during the three months ended September 30, 2024 (unaudited) ($ in thousands):
|
Cash
Activities
|
Remeasure-
ment
|
Total
|
||||||||||
|
Cash, cash equivalents and short-term investments
|
$ |
|
$ |
|
$ |
|
||||||
|
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
|
$ |
|
$ |
|
$ |
|
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, 2025 and 2024 (Unaudited)
The following provides details of the distributions (declared) reversed, net during the three months ended September 30, 2024 (unaudited) ($ in thousands):
|
Distributions (declared)
|
$ |
|
||
|
Distributions reversed
|
|
|||
|
Distributions (declared) reversed, net
|
$ |
|
Distributions payable decreased by approximately $
89,000
during the three months ended September 30, 2024.
8)
Liquidation Trust Interests
| For the Three Months Ended September 30, | ||||||||||||||||
|
|
2025 |
|
2024 | |||||||||||||
|
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
|
|
|
|
|
||||||||||||
At the Plan Effective Date, certain claims were disputed. As those disputed claims are resolved, additional Class A Interests and (if applicable) Class B Interests are issued on account of allowed claims and no Class A Interests or Class B Interests are issued on account of disallowed claims.
The following table summarizes the unresolved claims against the Debtors as they relate to Liquidation Trust Interests (rounded) for the three months ended September 30, 2025 and 2024 (unaudited):
| For the Three Months Ended September 30, | ||||||||||||||||
|
|
2025 |
|
2024 | |||||||||||||
|
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
|
|
|
|
|
||||||||||||
As shown in the above table, as of September 30, 2025, all disputed claims have been resolved.
9)
Distributions
The Plan provides for a distribution waterfall that specifies the priority and manner of distribution of available cash to Interestholders, excluding distributions to Qualifying Victims of net sales proceeds from Forfeited Assets (see Note 6 for additional information). Distributions are to be made (a) to the Class A Interests until they have received distributions of $
75.00
per Class A Interest; thereafter (b) to the Class B Interests until they have received distributions of $
75.00
per Class B Interest; thereafter (c) to each Liquidation Trust Interest (whether a Class A Interest or Class B Interest) until the aggregate of all distributions made pursuant to this clause equals an amount equivalent to interest, at a per annum fixed rate of
10
%, compounded annually, accrued on the aggregate principal amount of all Net Note Claims, Allowed General Unsecured Claims and Net Unit Claims, all as defined in the Plan, treating each distribution pursuant to (a) and (b) above as reductions of such principal amount; and thereafter (d) to the holders of Allowed Subordinated Claims, as defined in the Plan, until such claims are paid in full, including interest, at a per annum fixed rate of
10
% or such higher rate as may be agreed to, as provided for in the Plan, compounded annually, accrued on the principal amount of each Allowed Subordinated Claim.
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, 2025 and 2024 (Unaudited)
On August 3, 2023, the Supervisory Board, at the recommendation of the Liquidation Trustee, suspended the making of additional Trust distributions to Interestholders, pending the result of the investigation of a construction defect claim asserted against the Development Entity by the buyer of a single-family home sold by the Development Entity for approximately $
60
million.
At this time, it is unlikely that there will be another distribution, if any, to Interestholders until the construction defect claim and related litigation are resolved.
Holders of Liquidation Trust Interests are advised that the Trust has
one
real estate asset and has resolved nearly all of its Causes of Action, and given the pending construction defect claim, the Trust is unable to estimate the timing and amount of future distributions.
There were
no
distributions to Interestholders declared or paid during the three months ended September 30, 2025 or 2024.
Distributions may change if Interestholders that were previously deemed to have forfeited their rights to receive Class A Interest distributions subsequently respond and if overpaid distributions are returned.
For every distribution, a deposit is made into a restricted cash account for amounts (a) payable for Class A Interests that may be issued in the future upon the allowance of unresolved claims, (b) in respect of Class A Interests issued on account of recently allowed claims, (c) for holders of Class A Interests who failed to cash distribution checks mailed in respect of prior distributions, (d) for distributions that were withheld due to pending avoidance actions and (e) for holders of Class A Interests for which the Trust is waiting for further beneficiary information.
During the three months ended September 30, 2025 and 2024, as (a) claims were resolved, (b) claims were recently allowed, (c) addresses for holders of uncashed distribution checks were obtained, (d) pending avoidance actions were resolved and (e) further beneficiary information was received, distributions of approximately $
13,000
and $
70,000
, respectively, were paid to holders of Class A Interests from the restricted cash account and distributions payable were reduced by the same amount.
During the three months ended September 30, 2024, as a result of claims being disallowed or Class A Interests being cancelled, approximately $
19,000
was released from the restricted cash account and distributions payable were reduced by the same amount. There were no claims disallowed or Class A Interests cancelled during the three months ended September 30, 2025.
During the three months ended September 30, 2025, approximately $
541,000
was received from the Company’s transfer agent relating to Class A Interest distribution checks that were returned or not cashed. The amount was deposited into the restricted cash account and distributions payable was increased by the same amount.
No
amounts were received from the transfer agent during the three months ended September 30, 2024.
During the three months ended September 30, 2025, approximately $
800
of distributions were paid in excess of the amount in the restricted cash account, therefore distributions declared were increased by that amount. There were
no
such payments during the three months ended September 30, 2024.
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, 2025 and 2024 (Unaudited)
10)
Related Party Transactions
The Liquidation Trustee of the Trust is entitled to receive
5
% of the total gross amount recovered by the Trust from the pursuit of the Causes of Action. During the three months ended September 30, 2025 and 2024, approximately $
60
and $
256,000
, respectively, were accrued as amounts due to the Liquidation Trustee. As of September 30, 2025 and June 30, 2025, approximately $
31,000
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.
No
amounts were paid to the Liquidation Trustee during the three months ended September 30, 2025 and 2024.
Akerman LLP, a law firm based in Miami, Florida, of which the Liquidation Trustee is a partner, provides legal services to the Trust. The Liquidation Trustee of the Trust is entitled to base compensation at an hourly rate of $
598.95
for calendar years 2025 and 2024 (these rates are net of a discount from his customary rates). In addition, Akerman LLP is paid for the time other professionals at the firm spend working on matters for the Company and is reimbursed for out-of-pocket expenses incurred. During the three months ended September 30, 2025 and 2024, the amounts paid to Akerman LLP for these services were approximately $
48,000
and $
44,000
, respectively. The amounts payable to Akerman LLP as of September 30, 2025 was approximately $
15,000
. This amount is included in accrued liquidation costs. There were
no
amounts payable to Akerman LLP as of June 30, 2025.
On May 12, 2025, the Company entered into an arrangement with Akerman LLP for the provision of legal services related to the Trust requesting a private letter ruling from the U.S. Internal Revenue Service concerning the Trust’s status as a liquidating trust under §301.7701.4(d) of the U.S. Treasury Regulations, which could be needed if the Trust requests an extension of the termination date beyond February 15, 2027. During the three months ended September 30, 2025, the amounts paid to Akerman LLP for these services were approximately $
60,000
. There are
no
outstanding payables to Akerman LLP as of September 30, 2025 relating to these services.
11)
Causes of Action
One of the Trust’s liquidation activities is to litigate and/or settle Causes of Action. The main areas of litigation have involved actions against Comerica Bank,
nine
law firms and
10
individual attorneys. As of September 30, 2025, the case against Comerica Bank had been settled and the cases against the law firms and the individual attorneys had been settled or dismissed. During the three months ended September 30, 2024, the case against the remaining law firm and
one
individual attorney was settled. During the three months ended September 30, 2025,
cases against laws firms and individual attorneys were settled. The Company recognizes recoveries from settlements when an agreement is executed, final court approval is received (if required), and collectability is reasonably assured.
The Trust has also filed numerous avoidance actions, most of which have been resolved, resulting in settlement recoveries by or judgments in favor of the Trust. As of September 30, 2025,
four
legal actions remain pending (see Note 14 for additional information).
Additionally, since February 15, 2019 and as of September 30, 2025, the Trust has obtained default, stipulated and summary judgments related to certain avoidance actions. It is unknown at this time how much, if any, will ultimately be collected on the judgments. Therefore, the Company has not recognized any recoveries from these judgments.
During the three months ended September 30, 2025 and 2024, the Company recorded approximately $
400
and $
3,447,000
, respectively, from the settlement of Causes of Action. The Company also recorded liabilities of
5
% of the settlements as amounts payable to the Liquidation Trustee and an adjustment to the allowance for uncollectible settlement installment receivables. See Note 4 for additional information about the settlement receivables, net as of September 30, 2025 and June 30, 2025.
12) Segment Reporting
ASC 280, Segment Reporting (“Topic 280”), establishes standards for reporting information about operating segments on a basis consistent with the Company's internal organizational structure as well as information about geographical areas and business segments. The Company’s only business activity is to liquidate the Company’s assets, settle Causes of Action and distribute the available cash to the Interestholders. As discussed in Note 2, the Company uses the Liquidation Basis of Accounting and therefore doesn’t report revenues in its consolidated financial statements. The Company is managed on a consolidated basis.
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, 2025 and 2024 (Unaudited)
The chief operating decision maker (“CODM”) has been identified as the Liquidation Trustee, who reviews results when making decisions about allocating resources and assessing performance and the management of the Company’s business activities. The CODM reviews consolidated financial performance on a quarterly basis including accrued liquidation costs as presented in Note 5. Based on management’s assessment, the Company determined that it has only
one
operating segment and, therefore,
one
reportable segment, as defined by Topic 280.
The accounting policies for the Company’s single reportable segment are the same as those described in Note 2. The measure of segment assets is reported on the consolidated statement of net assets in Liquidation, and the CODM assesses performance and decides how to allocate resources based on the consolidated changes in net assets in liquidation as reported in the consolidated financial statements
.
13) Commitments and Contingencies
Since the Company uses the liquidation basis of accounting, the Company has accrued estimated liquidation costs to the extent they are reasonably determinable, which includes the items discussed in this footnote.
Office Lease
The Company has a month-to-month lease for office space which may be terminated with no less than one month’s notice from the first day of any calendar month. The monthly rent is approximately $
2,000
.
Employment Agreements
The Wind-Down Entity has part-time employment agreements with its
two
executive officers which renew automatically on an annual basis, subject to the right of either party to terminate the agreement at any time and for any reason on
thirty days
’ advance written notice.
Construction Defect Claim
In June 2023, the owner of a single-family home sold by the Development Entity for approximately $
60
million asserted a construction defect claim against the Development Entity. The claim currently alleges soils-related damage to retaining walls, the pool, indoor and outdoor flooring, among other things, and other damage resulting from water leaks. The Development Entity’s engineering consultants have been evaluating a multi-phase repair plan to address the situation.
The recommended scope of work for the initial phase includes the repair and remediation of a retaining wall. On August 7, 2024, the Development Entity submitted a building permit application to the Los Angeles Department of Building and Safety (“LADBS”) for the retaining wall repair. As of September 30, 2025, the building permit for the initial repair had not been issued but is expected to be issued in the fourth calendar quarter of 2025. See Note 14 for additional information. Based on current information, the initial phase is expected to take three to six months to complete. Once the initial retaining wall repair is completed, the retaining wall and site will need to be monitored for a period of time.
The Development Entity’s consultants and engineers are evaluating the scope of repairs that will be needed after the retaining wall is repaired. Engineering studies, site soils analyses and site monitoring are in process, the results of which are expected to help define the required additional scope of work. Thus far, certain repairs have been identified to repair the pool, pool deck and cracks in the interior ceilings and floors. Additional repairs may be identified based on the results of additional testing and site evaluation and after the retaining wall is repaired.
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, 2025 and 2024 (Unaudited)
In addition, there have been other construction defect claims that have required immediate repair. In October 2024, the Development Entity was notified about a potential leak in the pool that was causing water levels to decrease more rapidly than usual. A leak specialist was retained to test and identify the leak location and underground pipes were replaced. In February 2025, the Development Entity was made aware of potential damage resulting from water leaks and seepage in the garage and other areas of the home. In response, the Development Entity retained consultants to assist with the evaluation of the causes of the situation and to determine appropriate remediation measures. In March 2025, the Development Entity was informed that another glass pane had broken at the property due to ongoing movement on the site. See Note 14 for additional information. The Development Entity has completed some repairs in response to these claims, but until the initial repair of the retaining wall and monitoring activities are completed, the Development Entity is unable to complete all necessary repairs. In addition, the Development Entity is unable to determine whether these damages resulted from the same underlying issues currently being addressed.
As of September 30, 2025, there was approximately $
8,759,000
accrued for estimated costs related to the construction defect claim asserted against the Development Entity. The estimated costs are the Development Entity’s best estimate at this time and are subject to change as additional information becomes available. As the results of the initial phase of repair and information from the related monitoring become available and the planning for the subsequent phases is finalized, additional costs may need to be accrued. The amount of the Development Entity’s ultimate exposure for the construction defect claim is currently unknown and may be materially different from the amount that has been accrued as of September 30, 2025 in the Company’s consolidated financial statements (see Note 5 for additional information). The Development Entity reviews these estimates on a quarterly basis and accrues updated cost estimates as appropriate.
Based on current information available to it, the Development Entity believes that the repairs to address the construction defect claims can be completed by February 15, 2027; however, it may take longer based on the results of the initial phase of repair and subsequent monitoring and repair scope.
Construction Defect Insurance
The Company believes that all or a portion of the costs related to the construction defect claim may ultimately be borne by third parties, including the Development Entity’s insurers, as described below.
The Development Entity purchased primary and
two
excess coverage insurance policies covering certain risks arising out of the Development Entity’s development of the single-family home which is the subject of the construction defect claim. The Development Entity tendered the claim to its primary and excess layer insurers on June 28, 2023. The insurer that issued the primary and first excess layer coverage has agreed to defend the Development Entity subject to a reservation of rights. To date, this insurer has advanced the Development Entity approximately $
4.1
million for the estimated cost of the initial repair phase and reimbursed the Development Entity approximately $
1.0
million relating to some, but not all of the out-of-pocket costs incurred by the Development Entity which it asserts are covered by the primary and first excess layer policies. See Note 14 for additional information. The funds advanced by this insurer are included in cash, cash equivalents and short-term investments and have not been netted against accrued development costs in the Company’s consolidated financial statements.
The Development Entity has exhausted its primary coverage and as of September 30, 2025 has approximately $
700,000
of remaining coverage with its first excess layer insurer (see Note 14 for additional information) and has tendered its claim to the second excess layer insurer. At this time, the second excess layer insurer has not accepted coverage and has not agreed to defend the Development Entity.
Litigation
Prior to the receipt of any reimbursements and advance payments, on August 9, 2024, the Development Entity filed a lawsuit against its primary and
two
excess layer insurers demanding that they defend and indemnify it against the construction defect claim. The lawsuit seeks, among other relief, damages from the primary and
two
excess layer insurers for amounts the Development Entity has incurred, and may incur, in connection with the investigation and repair of the construction defect claim, as well as declaratory relief against the primary and excess layer insurers. On August 20, 2024, the lawsuit against the insurers was stayed until October 21, 2024. On October 15, 2024, the Development Entity agreed to extend the stay by an additional three months, until January 29, 2025, during which time the parties agreed to seek informal resolution of the dispute. On October 24, 2024, the Development Entity dismissed its claim against the second excess layer insurance carrier without prejudice and subject to a tolling agreement. On January 27, 2025, the primary and first excess layer insurer approved coverage for the initial repair phase. The case against the primary and first excess layer insurer is currently stayed until the initial case management conference, which was scheduled to occur on October 30, 2025. See Note 14 for additional information. The Trust may add the second excess layer insurer to the litigation if the second excess layer insurer refuses to provide coverage after the primary and first excess layer policy is exhausted.
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, 2025 and 2024 (Unaudited)
Additionally, on May 28, 2024, the Development Entity filed a lawsuit against
13
different parties, including the prior owner, contractors, G3, and other professionals involved in the development of the site and the construction of the home. G3 is a construction firm specializing in the development of high-end luxury residences. G3 is owned by Terry Goebel, who was a member of the Supervisory Board until his resignation on March 5, 2024, and his son Terry Goebel. The lawsuit seeks, among other relief, contribution from these parties for the costs that the Development Entity has incurred, and may incur, in connection with the investigation and repair of the construction defect claim. Based on further investigation after filing of the complaint, the Development Entity dismissed three defendants without prejudice. A mediation was held on February 20, 2025, which did not result in a settlement. The parties agreed to allow each other time to gather and exchange information, as needed. A subsequent mediation date has not been scheduled. This litigation is in its preliminary stages, and the Company cannot predict whether the Development Entity will be successful in recovering the costs incurred to date and further costs incurred to address the construction defect claim from these parties.
The Company has accrued legal and professional costs related to pursuing the aforementioned litigation. Actual costs incurred may exceed the amount accrued as of September 30, 2025. The Development Entity reviews these estimates on a quarterly basis and accrues updated cost estimates as appropriate.
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 other than as described herein.
14)
Subsequent Events
The Company evaluates subsequent events up until the date the unaudited consolidated financial statements are issued or are available to be issued.
Extension of the Trust Termination Date
On October 8, 2025, the Bankruptcy Court granted the Trust’s motion to extend the Trust termination date through February 15, 2027.
Construction Defect Claim
On October 16, 2025, the Development Entity was reimbursed approximately $
439,000
from the primary and first excess insurer for out-of-pocket expenses related to the construction defect claim.
The building permit for the initial repair was issued on October 30, 2025 and the construction contract was signed.
On October 30, 2025, the Development Entity agreed to extend the stay in the case against the primary and first excess layer insurer by an additional three months, until January 26, 2026.
Causes of Action
During the period from
October 1, 2025 through November 12, 2025,
two
legal actions were resolved
resulting in summary judgments in favor of the Company.
Distributions
During the period from
October 1, 2025 through November 12, 2025, as a result of receiving additional
information from Interestholders, distributions of approximately $
28,200
were
paid. Approximately $
25,400
related to distributions to Class A Interestholders,
approximately $
2,200
related to payments to non-contributing claimants in the
Comerica settlement and approximately $
600
related to distributions to
Qualifying Victims.
Income Tax Status
On October 22, 2025, the Trust submitted a request to the Internal Revenue Service (the "IRS") for a private letter ruling that the Trust is a liquidating trust under § 301.7701- 4(d) of the U.S. Treasury Regulations and that a further extension of the term of the Trust by the Bankruptcy Court will not jeopardize the status of the Trust as a liquidating trust. As of November 12, 2025, the IRS has not provided a ruling.
PART I.
FINANCIAL
INFORMATION (CONTINUED)
The following discussion and analysis of changes in net assets and net assets in liquidation should be read in conjunction with the accompanying unaudited consolidated financial statements of Woodbridge Liquidation Trust and the related notes thereto. The Trust, the Remaining Debtors, the Wind-Down Entity and the Wind-Down Subsidiaries, as used herein, are defined in Note 1 to the consolidated financial statements and are collectively referred to herein as the Company.
Forward-Looking Statements
Certain statements included in this Quarterly Report on Form 10-Q are forward-looking statements. Those statements include, without limitation, financial guidance, projections and statements with respect to expectations of future financial condition, changes in net assets in liquidation, cash flows, plans, targets, goals, objectives, performance, and termination and dissolution of the Trust. Such forward-looking statements include, without limitation, statements (other than historical facts) that address future plans, goals, expectations, activities, events or developments. The Trust has tried, where possible, to use words such as “anticipates”, “if”, “believes,” “estimates,” “plans,” “expects,” “intends,” “forecasts”, “initiative, “objective”, “goal, “projects”, “outlook”, “priorities”, “target”, “evaluate”, “pursue”, “seek”, “potential”, “continue”, “designed”, “impact”, “may”, “could”, “would”, “should”, “will” and similar expressions to identify forward-looking statements. Forward-looking statements are based on current expectations and are subject to substantial risks, uncertainties and other factors, many of which are beyond our control and not all of which can be predicted by the Trust. Such risks and uncertainties include the amount of funds needed for construction defect and other claims, the estimated completion date for the Company’s operations, the amount of general and administrative costs, the number and amount of successful Causes of Action and/or settlements and the ability to recover thereon, the amount of funding required to continue litigations, changes in tax and other governmental rules and regulations applicable to the Trust and its subsidiaries, and other risks identified and described in “Part I. Financial Information, Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K, or contained in any of the Trust’s subsequent filings with the SEC including “Part II. Other Information, Item 1A. Risk Factors” of this Form 10-Q. Accordingly, the Trust cannot guarantee that any forward-looking statements will be realized, as actual results may differ materially from those identified or implied in any forward-looking statement. These risks and uncertainties are beyond the ability of the Trust to control, and in many cases, the Trust cannot predict the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements.
In connection with the “safe harbor” provisions of the Securities Act of 1933 and the Exchange Act, the Trust has identified and is disclosing important factors, risks and uncertainties that could cause its actual results to differ materially from those projected in forward-looking statements made by the Trust, or on the Trust’s behalf. (See “Part II. Other Information, Item 1A. Risk Factors” of this Form 10-Q.) These cautionary statements are to be used as a reference in connection with any forward-looking statements. The factors, risks and uncertainties identified in these cautionary statements are in addition to those contained in any other cautionary statements, written or oral, which may be made or otherwise addressed in connection with a forward-looking statement or contained in any of the Trust’s subsequent filings with the SEC. Because of these factors, risks and uncertainties, the Trust cautions against placing undue reliance on forward-looking statements. Although the Trust believes that the assumptions underlying forward-looking statements are currently reasonable, any of the assumptions could be incorrect or incomplete, and there can be no assurance that forward-looking statements will prove to be accurate. Forward-looking statements speak only as of the date on which they are made. Except as may be required by law, the Trust does not undertake any obligations to modify, update or revise any forward-looking statement to take into account or otherwise reflect subsequent events, corrections in or revisions of underlying assumptions, or changes in circumstances arising after the date that the forward-looking statement was made.
Overview
Pursuant to the Plan, the Trust was formed on February 15, 2019 to hold, either directly or indirectly through the Wind-Down Entity and the Wind-Down Subsidiaries, the assets and equity interests formerly owned by the Debtors. Each of the real properties formerly owned by the Debtors was transferred, on the effective date of the Plan to one of the Wind-Down Subsidiaries. The purpose of the Wind-Down Group is to develop (as applicable), market, and sell those properties to generate cash. Assets formerly owned by the Debtors other than real estate assets and certain cash were transferred to the Trust on the Plan Effective Date. The purpose of the Trust is to receive remittances of cash from the Wind-Down Entity, to resolve disputed claims, to prosecute the Causes of Action, to pay Allowed Administrative Claims and Priority 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.
PART I.
FINANCIAL
INFORMATION (CONTINUED)
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Continued)
The Trust operates pursuant to the Plan and the Trust Agreement. The Trust was formed as a Delaware statutory trust and is administered by the Liquidation Trustee under the supervision of its Supervisory Board. The Wind-Down Entity, a wholly-owned subsidiary of the Trust, operates pursuant to the Plan and the Wind-Down Entity LLC Agreement, as amended. The Wind-Down Entity was formed as a Delaware limited liability company and is administered by its Board of Managers. The current sole member of the Board of Managers is also a member of the Supervisory Board of the Trust.
The Bankruptcy Court has retained certain jurisdictions regarding the Trust, the Liquidation Trustee, the Supervisory Board, the Wind-Down Entity, the Board of Managers, and assets of the Trust and the Wind-Down Entity, including the determination of all disputes arising out of or related to administration of the Trust and the Wind-Down Entity and its subsidiaries.
As of September 30, 2025, the number of Liquidation Trust Interests outstanding in each class is as follows:
|
Class of Interest
|
|||||
|
Class A Liquidation Trust Interests
|
11,516,157 | ||||
|
Class B Liquidation Trust Interests
|
675,951 | ||||
For each of the classes of Liquidation Trust Interests, the number of Liquidation Trust Interests outstanding will increase to the extent that disputed claims become allowed claims. In addition, the number of Liquidation Trust Interests outstanding will decrease to the extent that disputed claims are settled by cancelling previously issued Liquidation Trust Interests.
Since the Plan Effective Date through September 30, 2025, the Wind-Down Subsidiaries have disposed of approximately 150 properties for aggregate net sales proceeds of approximately $576.80 million. As of September 30, 2025, the Company owned one real estate asset with a net carrying value of approximately $0.24 million. Going forward, the Company’s most significant activity will be overseeing the resolution of the construction defect claim asserted against the Development Entity and its related litigation. The Company’s most significant sources of cash are expected to be from interest income and potentially from litigation proceeds from insurance carriers and other responsible parties. The Company currently expects to complete its liquidation activities by February 15, 2027, although the Company may require additional time to facilitate the orderly liquidation of the Trust’s assets, the resolution of the construction defect claim against the Development Entity, the resolution of the Company’s claims against its insurers and other third parties in connection with the construction defect claim, or for other reasons.
Discussion of the Company’s Operations
For the three months ended September 30, 2025
PART I.
FINANCIAL
INFORMATION (CONTINUED)
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Continued)
The following is a summary of the Consolidated Statement of Changes in Net Assets in Liquidation for the three months ended September 30, 2025 ($ in thousands):
|
Restricted for
Qualifying Victims |
All
Interestholders |
Total | ||||||||||
|
Net assets in liquidation as of beginning of period
|
$ | - | $ | 37,334 | $ | 37,334 | ||||||
|
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
|
- | 703 | 703 | |||||||||
|
Distributions (declared) reversed, net
|
- | (1 | ) | (1 | ) | |||||||
|
Net change in assets and liabilities
|
- | 702 | 702 | |||||||||
|
Net assets in liquidation, as of end of period
|
$ | - | $ | 38,036 | $ | 38,036 |
Net assets in liquidation – Restricted for Qualifying Victims: As of September 30, 2025, the Trust has completed its activities related to the liquidation of Trust Assets.
Net assets in liquidation – All Interestholders increased by approximately $0.70 million during the three-month period ended September 30, 2025. This increase was due to an increase in the net carrying value of assets and liabilities of approximately $0.70 million and distributions recorded of approximately $800.
The components of the changes in the carrying value of assets and liabilities, net are as follows ($ in thousands):
|
Restricted for
Qualifying Victims |
All
Interestholders |
Total | ||||||||||
|
Remeasurement of assets and liabilities, net
|
$ | - | $ | 393 | $ | 393 | ||||||
|
Settelement recoveries (1)
|
- | 1 | 1 | |||||||||
|
Other (2)
|
- | 309 | 309 | |||||||||
|
Change in carrying value of assets and liabilities, net
|
$ | - | $ | 703 | $ | 703 |
(1) Net of 5% payable to the Liquidation Trustee of approximately $60 and a decrease in the allowance for uncollectible
settlement receivables of approximately $800.
(2) The components of Other are as follows:
|
|
||||
| Forfeited payments to non-contributing claimants in the Comerica settlement because their checks were not cashed | $ | 271 | ||
|
Miscellaneous
|
38 | |||
|
Total
|
$ | 309 |
PART I. FINANCIALINFORMATION (CONTINUED)
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Continued)
During the three months ended September 30, 2025, the Company:
●
Recorded a distribution of approximately $800.
●
Recorded a receivable from the primary and excess insurer for approximately $0.44 million for out-of-pocket expenses related to the construction defect claim.
●
Recorded approximately $0.27 million from forfeited payments to non-contributing claimants in the Comerica settlement because their checks were not cashed.
●
Paid development costs of approximately $0.33 million.
●
Paid general and administrative costs of approximately $1.23 million, including approximately $0.08 million of board member fees and expenses, approximately $0.28 million of payroll and other general and administrative costs and approximately $0.87 million of professional fees.
For the three months ended September 30, 2024
The following is a summary of the Consolidated Statement of Changes in Net Assets in Liquidation for the three months ended September 30, 2024 ($ in thousands):
|
Restricted for
Qualifying Victims |
All
Interestholders |
Total | ||||||||||
|
Net assets in liquidation as of beginning of period
|
$ | 4,110 | $ | 35,759 | $ | 39,869 | ||||||
|
Change in assets and liabilities:
|
||||||||||||
|
Restricted for Qualifying Victims -
|
||||||||||||
|
Change in carrying value of assets and liabilities, net
|
15 | - | 15 | |||||||||
|
All Interestholders:
|
||||||||||||
|
Change in carrying value of assets and liabilities, net
|
- | 3,644 | 3,644 | |||||||||
|
Distributions (declared) reversed, net
|
- | 19 | 19 | |||||||||
|
Net change in assets and liabilities
|
- | 3,663 | 3,663 | |||||||||
|
Net assets in liquidation, as of end of period
|
$ | 4,125 | $ | 39,422 | $ | 43,547 |
Net assets in liquidation – Restricted for Qualifying Victims increased by approximately $0.015 million during the three months ended September 30, 2024.
Net assets in liquidation – All Interestholders increased approximately $3.66 million during the three months ended September 30, 2024. This increase was due to an increase in the net carrying value of assets and liabilities of approximately $3.64 million and distributions reversed of approximately $0.02 million from Class A Interests being cancelled.
The components of the change in the carrying value of assets and liabilities, net are as follows ($ in thousands):
PART I.
FINANCIAL
INFORMATION (CONTINUED)
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Continued)
|
Restricted for
Qualifying Victims |
All
Interestholders |
Total | ||||||||||
|
Settlement recoveries (1)
|
$ | - | $ | 3,191 | $ | 3,191 | ||||||
|
Remeasurement of assets and liabilities, net
|
15 | 434 | 449 | |||||||||
|
Other
|
- | 19 | 19 | |||||||||
|
Change in carrying value of assets and liabilities, net
|
$ | 15 | $ | 3,644 | $ | 3,659 |
(1)
Net of 5% payable to the Liquidation Trustee of approximately $256,000.
During the three months ended September 30, 2024, the Company:
•
Reversed distributions of approximately $0.02 million from Class A Interests being cancelled.
•
Received net proceeds from the sale of Forfeited Assets of approximately $0.02 million.
•
Recorded approximately $3.19 million for the settlement of Causes of Action, net of 5% payable to the Liquidation Trustee.
•
Paid development costs of approximately $0.20 million.
•
Paid general and administrative costs of approximately $1.35 million, including approximately $0.08 million of board member fees and expenses, approximately $0.37 million of payroll and other general and administrative costs, approximately $0.90 million of professional fees.
Liquidity and Capital Resources
Liquidity
The Company’s primary sources for meeting its capital requirements are its cash, cash equivalents and short-term investments, receipt of interest earned, and proceeds from liquidating its other remaining assets. The Company’s primary uses of funds are and will continue to be for costs relating to the resolution of the construction defect claim and its related litigation and other costs and distributions, if any. The Company expects to be able to adequately fund its liquidation activities over the next twelve months from its primary sources of capital; however, no assurance can be made in that regard. At this time, the amount of the liability exposure for the construction defect claim cannot be determined and may be in excess of the estimated liquidation costs accrued as of September 30, 2025.
Capital Resources
In addition to cash, cash equivalents and short-term investments as of September 30, 2025 of approximately $60.67 million (of which approximately $1.17 million is restricted), the capital resources available to the Company are as follows:
•
Interest Earnings
: During the three months ended September 30, 2025, the Company reversed interest earnings of approximately $.01 million. At September 30, 2025, the Company had approximately $2.42 million of accrued interest recorded. The Company expects to receive approximately $1.41 million of this accrued interest during the remainder of the year ending June 30, 2026.
•
Proceeds from Real Estate Transactions
: As of September 30, 2025, the Company owned one real estate asset with an estimated carrying value of approximately $0.24 million. Based on the remaining real estate asset of the Company, future net proceeds will be negligible as compared to the proceeds the Company has realized in prior periods.
PART I
FINANCIAL
INFORMATION (CONTINUED)
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Continued)
•
Causes of Action Recoveries
: During the three months ended September 30, 2025, the Company recognized approximately $400 from the settlement of Causes of Action. Based on the limited remaining Causes of Action, future recoveries will be negligible as compared to the proceeds the Company has realized in prior periods.
Uses of Liquidity
The primary uses of the Company’s liquidity are to pay distributions payable, operating costs and costs related to construction defect claim(s). As of September 30, 2025, the Company’s total liabilities were approximately $25.79 million. The total liabilities recorded as of September 30, 2025 may not be indicative of the Company’s future cash needs, which may vary materially from the current estimate.
Given current cash, cash equivalents, short-term investments and restricted cash balances, distributions payable, and expected cash needs, the Company does not expect a deficiency in liquidity in the next twelve months. However, due to the uncertain nature of potential recoveries from insurance claims and costs to be incurred, including costs relating to the construction defect claim and other costs, it is not possible to be certain that the current liquidity will be adequate to cover all future financial needs of the Company.
Distributions
Distributions will be made at the sole discretion of the Liquidation Trustee in accordance with the provisions of the Plan and the Trust Agreement. On August 3, 2023, the Supervisory Board, at the recommendation of the Liquidation Trustee, suspended the making of additional Trust distributions to Interestholders, pending the result of the investigation of a construction defect claim asserted against the Development Entity by the buyer of a single-family home sold by the Development Entity for approximately $60 million.
At this time, it is unlikely that there will be another distribution, if any, to Interestholders until the construction defect claim and its related litigation are resolved.
Holders of Liquidation Trust Interests are advised that the Trust has liquidated substantially all of its real estate assets and resolved nearly all of its Causes of Action, and given the pending construction defect claim, the Trust is unable to estimate the timing and amount of future distributions.
As of November 12, 2025, the Liquidation Trustee has declared eleven distributions to the Class A Interestholders. The distributions include a cash distribution on account of the then-allowed claims and a deposit is made into a restricted cash account for amounts that are or may become payable (a) in respect of Class A Interests that may be issued in the future upon the allowance of unresolved bankruptcy claims, (b) in respect of Class A Interests on account of recently allowed claims, (c) for holders of Class A Interests who failed to cash distribution checks mailed in respect of prior distributions, (d) for distributions that were withheld due to pending avoidance actions and (e) for holders of Class A Interests for which the Trust is waiting for further beneficiary information.
The Liquidation Trustee will continue to assess the adequacy of funds held and may make additional cash distributions on account of Class A Interests but does not currently know the timing or amount of any such distribution(s), if any.
Sections 7.6 and 7.18 of the Plan provide that distributions that have not been cashed within 180 calendar days of their issuance shall be null and void and the holder of the associated Liquidation Trust Interests “shall be deemed to have forfeited its rights to any reserved and future Distributions under the Plan,” with such amounts to become “Available Cash” of the Trust for all purposes. On February 1, 2022, the Trust sent letters to the holders of the Class A Interests who had failed to cash distribution checks in respect of prior distributions, for which checks were issued more than 180 days prior to the date of the letter. The letter informed each recipient that, unless the Trust was contacted on or before February 28, 2022, such recipient’s reserved and future distributions would be deemed forfeited in accordance with the Plan. The Trust provided this final notice simply as a one-time courtesy and reserves its rights to strictly enforce the Plan’s forfeiture provisions, and any other provision of the Plan, against any person (including any recipient of the final notice) at any time in the future, without further notice.
PART I.
FINANCIAL
INFORMATION (CONTINUED)
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Continued)
The following tables summarize the distributions declared to Interestholders
1
, distributions paid and the activity in the restricted cash account for the periods from February 15, 2019 (inception) through September 30, 2025 and from February 15, 2019 (inception) through November 12, 2025:
|
Date
Declared |
$ per
Class A Interest |
During the Period from
February 15, 2019 (inception) through September 30, 2025 ($ in Millions) |
During the Period from
February 15, 2019 (inception) through November 12, 2025 ($ in Millions) |
||||||||||||||||||||||||||
|
Total
Declared |
Paid |
Restricted
Cash Account |
Total
Declared |
Paid |
Restricted
Cash Account |
||||||||||||||||||||||||
|
Distributions Declared
|
|||||||||||||||||||||||||||||
|
First
|
3/15/2019 | $ | 3.75 | $ | 44.7 | $ | 42.32 | $ | 2.38 | $ | 44.7 | $ | 42.32 | 2.38 | |||||||||||||||
|
Second
|
1/2/2020 | 4.50 | 53.44 | 51.2 | 2.24 | 53.44 | 51.2 | 2.24 | |||||||||||||||||||||
|
Third
|
3/31/2020 | 2.12 | 25 | 24.19 | 0.81 | 25 | 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 | 29.96 | 29.21 | 0.75 | 29.96 | 29.21 | 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 | 30.04 | 29.35 | 0.69 | 30.04 | 29.35 | 0.69 | |||||||||||||||||||||
|
Eighth
|
10/8/2021 | 3.44 | 40.02 | 39.14 | 0.88 | 40.02 | 39.14 | 0.88 | |||||||||||||||||||||
|
Ninth
|
2/4/2022 | 3.44 | 39.98 | 39.15 | 0.83 | 39.98 | 39.15 | 0.83 | |||||||||||||||||||||
|
Tenth
|
6/15/2022 | 5.63 | 65.02 | 64.19 | 0.83 | 65.02 | 64.19 | 0.83 | |||||||||||||||||||||
|
Eleventh
|
5/10/2023 | 2.18 | 25.02 | 24.9 | 0.12 | 25.02 | 24.90 | 0.12 | |||||||||||||||||||||
|
Subtotal
|
$ | 37.04 | $ | 433.16 | $ | 421.56 | $ | 11.6 | $ | 433.16 | $ | 421.56 | $ | 11.60 | |||||||||||||||
|
Distributions Returned / (Reversed)
|
||||||||||
|
Disallowed/cancelled
(b)
|
(6.74 | ) | (6.74 | ) | ||||||
|
Returned
(c)
|
1.28 | 1.28 | ||||||||
|
Forfeited
(d)
|
(1.15 | ) | (1.13 | ) | ||||||
|
Subtotal
|
(6.61 | ) | (6.59 | ) | ||||||
|
Distributions Paid from Reserve Account
(e)
|
(3.83 | ) | (3.86 | ) | ||||||
|
Distributions Payable, Net
|
as of 9/30/2025: | $ | 1.16 | as of 11/12/2025: | $ | 1.15 | ||||
(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.
Since its inception, the Company has made substantial progress toward completion of its liquidation activities and has liquidated all but one real estate asset with a net carrying value of approximately $0.24 million. Holders of Liquidation Trust Interests are advised that given the pending construction defect claim, in particular, the Trust is unable to estimate the timing and amount of future distributions. At this time, it is unlikely that there will be another distribution, if any, to Interestholders until the construction defect claim and its related litigation are resolved and the Trust is unable to predict when this will occur.
1
This table does not include a distribution of net proceeds of Forfeited Assets of approximately $4.15 million to the Qualifying Victims on December 17, 2024. Qualifying Victims consisted of the former holders of allowed Class 3 and 5 claims as of the Plan Effective Date and their permitted assigns but does not include former holders of Class 4 claims
PART I
FINANCIAL
INFORMATION (CONTINUED)
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Continued)
On December 17, 2024, a distribution of net sales proceeds of forfeited assets of approximately $4.15 million was paid to Qualifying Victims, which represented a distribution of approximately $4.71 per $1,000 of Total Net Qualifying Victim Claims. Approximately $20,000 was withheld by the Company pending receipt of further beneficiary information. As of November 12, 2025, approximately $12,000 is payable to Qualifying Victims.
Contractual Obligations
The Company has a month-to-month lease for office space. The Company expects that it will continue to lease office space until the liquidation process is completed.
The Wind-Down Entity has part-time employment agreements with its two executive officers that are renewed automatically on an annual basis, subject to the right of either party to terminate the agreement at any time and for any reason on thirty days’ advance written notice.
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, general and administrative costs to be incurred until the completion of the liquidation activities of the Company, the cost of potential construction defect claims, estimated reserves for contingent liabilities, the estimated date of the completion of the Company’s liquidation activities and the administration of such claims after the Company’s liquidation activities are completed. In many instances, changes in the accounting estimates are likely to occur from period to period. Actual results may differ from the estimates. The Company believes the current assumptions and other considerations used in preparing the consolidated financial statements are appropriate. However, if actual experience differs from the assumptions and other considerations used in estimating amounts reflected in the Company’s consolidated financial statements, the resulting changes could have a material adverse effect on the Company’s net assets in liquidation.
Liquidation Basis of Accounting
Under the Liquidation Basis of Accounting, all assets are recorded at their estimated net realizable value or liquidation value, which represents the estimated amount of net cash that may be received upon the disposition of the assets (on an undiscounted basis). Liabilities are measured in accordance with U.S. GAAP that otherwise applies to those liabilities.
Other Assets
An allowance for uncollectible settlement installment receivables is recorded when there is doubt about the collectability of the receivable.
The Company accrues expected interest earnings when it can reasonably estimate the amount to be received. The Company uses a forward yield curve to estimate the interest rates to be earned and its expected future cash balances to estimate the dollar amount that will earn interest through the currently estimated Trust termination date of February 15, 2027.
The Company maintains liability insurance coverage for construction defects. An insurance recovery is accrued when it is deemed probable and reasonably estimable under the loss recovery model in accordance with ASC 450. The portion of an insurance claim in excess of costs accrued is recognized upon approval of the claim and receipt of the related payment, under the gain contingency model in accordance with ASC 450.
PART I
FINANCIAL
INFORMATION (CONTINUED)
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Continued)
In addition, the Company recognizes other amounts to be received based on contractual terms or when the amounts to be received are probable and estimable.
Accrued Liquidation Costs
The estimated costs associated with implementing and completing the Company’s plan of liquidation are recorded as accrued liquidation costs to the extent they are known and reasonably estimable. Upon the recognition of a loss contingency, the associated costs that are probable and estimable are recognized in accrued liquidation costs.
Changes in Carrying Value
On a quarterly basis, the Company reviews the estimated net realizable values, liquidation costs and the estimated date of the completion of the liquidation of the Company and records any significant changes. If the Company has a change in its plan for the disposition of an asset, the carrying value will be adjusted to reflect this change in the period that the change is approved. The change in value may also include a change to the accrued liquidation costs related to the asset.
All changes in the estimated liquidation value of the Company’s real estate, or other assets and liabilities are reflected as a change to the Company’s net assets in liquidation.
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.
Disclosure Controls and Procedures
As of the end of the period covered by this report, management and the Liquidation Trustee have evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based upon, and as of the date of, the evaluation, management and the Liquidation Trustee concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report to ensure that information required to be disclosed in the reports we file and submit under the Exchange Act is recorded, processed, summarized and reported as and when required. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file and submit under the Exchange Act is accumulated and communicated to our management, including the Liquidation Trustee, as appropriate to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934.
In connection with the preparation of our Form 10-Q, our management and the Liquidation Trustee assessed the effectiveness of our internal control over financial reporting as of September 30, 2025. In making that assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Internal Control-Integrated Framework
(2013).
Based on its assessment, our management and the Liquidation Trustee believe that, as of September 30, 2025, our internal control over financial reporting was effective based on those criteria. There have been no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II.
OTHER INFORMATION
Below are descriptions of pending litigation. In matters in which the Company is the plaintiff, the Company does not have the ability to estimate the ultimate recovery amount until they are settled, and in accordance with the Company’s accounting policy, no recoveries have been recorded in the Company’s consolidated financial statements for these legal proceedings, other than for settlements for which the Trust has entered into a signed settlement agreement and collectability is reasonably assured. In matters in which the Company is the defendant, the Company records a liability when a loss is probable, and the Company can reasonably estimate the amount of the loss.
Trust Litigation - Avoidance Actions
The Trust has pursued over 500 avoidance actions, many of which have been resolved. As of November 12, 2025, the Trust has entered into settlements in approximately 254 legal actions, with two actions still pending. In addition, as of November 12, 2025, the Trust has settled approximately 245 potential avoidance claims for which litigation was not filed. Since inception and as of November 12, 2025, the resolution of avoidance actions has resulted in aggregate settlements of approximately $22.89 million of cash payments made or due to the Trust and approximately $11.28 million in reductions of claims against the Trust.
Additionally, as of November 12, 2025, the Trust has obtained judgments of approximately $174.65 million, including default judgments of approximately $152.72 million, stipulated judgments of approximately $17.23 million and summary judgments of approximately $4.70 million. The Trust has engaged a third-party firm to pursue the collection of these judgments. As of November 12, 2025, the Trust has collected approximately $0.04 million related to these judgments and approximately $82.53 million of these judgments are considered uncollectable. It is unknown at this time how much of the remaining judgments, if any, will ultimately be collected on these judgments, as stipulated, default and summary judgments are commonly obtained where the defendant has insufficient assets, if any, to satisfy a judgment.
The Trust is currently prosecuting four legal actions to recover fraudulent transfers, and other funds subject to recovery by the bankruptcy estate. These actions were filed in the United States Bankruptcy Court for the District of Delaware (the “
Bankruptcy Court
”) and are pending before the Honorable J. Kate Stickles. These actions for fraudulent transfer and fraud against former agents, which arise under chapter 5 of the Bankruptcy Code and applicable state law governing fraudulent transfers, seek to avoid and recover payments made by the Debtors during the course of the Ponzi scheme (from July 2012 through the December 4, 2017 bankruptcy filing) for commissions to former agents, as well as for fraud, aiding and abetting fraud, and the unlicensed sale of securities asserted by the Trust based on claims contributed to the Trust by defrauded investors. These actions were filed by the Trust in the Bankruptcy Court between November 15, 2019 and December 4, 2019. To the extent actions of this type are also being pursued by the SEC, 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.
Wind-Down Group Litigation
As disclosed above, during the year ended June 30, 2023, a construction defect claim was asserted against the Development Entity by the buyer of a single-family home sold by the Development Entity for approximately $60 million. The Company believes that all or substantially all of the alleged construction defects are attributable to work performed by third parties. The following is a summary of the two legal proceedings commenced by the Development Entity in connection with the construction defect claim:
•
On May 28, 2024, the Development Entity filed a lawsuit in Los Angeles Superior Court against 13 different parties that it alleges are responsible for the alleged construction defects. The lawsuit seeks, among other relief, contribution from these parties for the costs that the Development Entity has incurred, and may incur, in connection with the investigation and repair of the construction defect claim. Based on further investigation after filing of the complaint, the Development Entity dismissed three defendants without prejudice. A mediation was held on February 20, 2025. The parties agreed to allow each other time to gather and exchange information, as needed. A subsequent mediation date has not been scheduled.
PART II.
OTHER INFORMATION (CONTINUED)
Item 1.
Legal Proceedings (Continued)
•
On August 9, 2024, the Development Entity filed suit in Los Angeles Superior Court against its insurers from whom it had purchased primary and excess layer liability insurance to protect against the risks associated with the development of the single-family home. The lawsuit seeks, among other relief, damages from the primary and two excess layer insurers for amounts the Development Entity has incurred, and may incur, in connection with the investigation and repair of the construction defect claim, as well as declaratory relief against the primary and excess layer insurers. On August 20, 2024, the lawsuit against the insurers was stayed until October 21, 2024. On October 15, 2024, the Development Entity agreed to extend the stay by an additional three months, until January 29, 2025, during which time the parties agreed to seek informal resolution of the dispute. On October 24, 2024, the Development Entity dismissed its claim against the second excess layer insurance carrier without prejudice and subject to a tolling agreement. On January 27, 2025, the primary and first excess layer insurer approved coverage for the initial repair phase. The case against the primary and first excess layer insurer is currently stayed until the initial case management conference, which is currently scheduled to occur on October 30, 2025. On October 30, 2025, the Development Entity agreed to extend the stay by an additional three months, until January 26, 2025. The Trust may add the second excess layer insurer to the litigation if the second excess layer insurer refuses to provide coverage after the primary and first excess layer policy is exhausted.
PART II.
OTHER
INFORMATION (CONTINUED)
Please see the applicable risks in Item 1A of our Annual Report on Form 10-K filed with the SEC on September 25, 2025.
In accordance with the Plan, all Liquidation Trust Interests have been issued without registration under the Securities Act. The Liquidation Trust Interests have been issued only to holders of allowed claims in Class 3, Class 4, and Class 5 under the Plan entirely in exchange for such claims. See “Item 1. Business - D. Plan Provisions Regarding the Company
-
2. Treatment under the Plan of holders of claims against and equity interests in the Debtors” of our Annual Report on Form 10-K filed with the SEC on September 25, 2025. During the period from February 15, 2019 (inception) through September 30, 2025, the Trust has issued an aggregate of 11,545,103 Class A Interests and an aggregate of 678,123 Class B Interests. As of September 30, 2025, the Trust had 11,516,157 Class A Interests and 675,951 Class B Interests outstanding. All Liquidation Trust Interests were issued on the Plan Effective Date or from time to time thereafter as soon as practicable as and when claims in Class 3, Class 4 or Class 5 have become allowed.
During the three months ended September 30, 2025, 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 |
||||||||||||
| September 5, 2025 | Allowance of | Allowance of | ||||||||||||||
| 350 | - | claims | claims |
The issuance of Liquidation Trust Interests has occurred in reliance upon the exemption from the registration requirements of the Securities Act afforded by Section 1145(a)(1) of the Bankruptcy Code. Section 1145(a)(1) exempts the offer and sale of securities under a plan of reorganization from registration under the Securities Act and state securities laws and regulation if (i) the securities are offered and sold under a plan of reorganization and are securities of the debtor, of an affiliate of the debtor participating in a joint plan with the debtor, or of a successor to the debtor under the plan; (ii) the recipients of the securities hold a pre-petition or administrative claim against the debtor or an interest in the debtor; and (iii) the securities are issued entirely in exchange for the recipient’s claim against or interest in the debtor, or principally in such exchange and partly for cash or property. The Trust believes that the Liquidation Trust Interests are securities of a “successor” to the Debtors within the meaning of Section 1145(a)(1), and such securities were issued under the Plan entirely in exchange for allowed claims in Class 3, Class 4, and Class 5 under the Plan.
None.
None.
PART II.
OTHER INFORMATION (CONTINUED)
Exhibit Number and Description
| 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. | |
| Amendment No. 5 to Liquidation Trust Agreement dated as of May 9, 2024, incorporated herein by reference to Form 10-Q filed by the Trust on May 13, 2024. | |
| Amendment No. 6 to Liquidation Trust Agreement dated as of October 17, 2025, incorporated herein by reference to the Current Report on Form 8-K filed by the Trust on October 24, 2025. | |
| 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. |
|
First Amendment to Limited Liability Agreement of Woodbridge Wind-Down Entity LLC dated November 30, 2022, incorporated herein by reference to the Current Report on Form 8-K filed by the Trust on December 1, 2022.
|
|
|
|
|
|
Second Amendment to Limited Liability Agreement of Woodbridge Wind-Down Entity LLC dated as of March 27, 2023, incorporated herein by reference to the Current Report on Form 8-K filed by the Trust on March 29, 2023.
|
|
|
|
|
|
Third Amendment to Limited Liability Agreement of Woodbridge Wind-Down Entity LLC dated as of April 28, 2023, incorporated herein by reference to the Current Report on Form 8-K filed by the Trust on May 1, 2023.
|
|
|
|
|
|
Indemnification Agreement dated November 12, 2019 between Woodbridge Wind-Down Entity LLC and Marion W. Fong, incorporated herein by reference to Amendment No. 1 to Registration Statement on Form 10 filed by the Trust on December 13, 2019.
|
|
|
|
|
|
Part-Time Employment Agreement dated November 30, 2022 between Woodbridge Wind-Down Entity and Marion W. Fong, incorporated herein by reference to the Current Report on Form 8-K filed by the Trust on December 1, 2022.
|
PART II.
OTHER INFORMATION (CONTINUED)
Item 6.
Exhibits
| 10.7 | Part-Time Employment Agreement dated November 30, 2022 between Woodbridge Wind-Down Entity and David Mark Kemper, incorporated herein by reference to the Current Report on Form 8-K filed by the Trust on December 1, 2022. |
| 10.8 | 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. | |
| 31.1* |
Certification of Liquidation Trustee pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
| 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.
|
| 99.1 | 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 Annual Report on Form 10-K for the three months ended September 30, 2025, formatted in eXtensible Business Reporting Language (XBRL): (i) consolidated statements of net assets in liquidation as of September 30, 2025 and June 30, 2025, (ii) consolidated statements of changes in net assets in liquidation for the three months ended September 30, 2025 and 2024, (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)
|
* Filed herewith.
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: November 12, 2025
|
By:
|
/s/ Michael I. Goldberg
|
|
|
|
|
|
|
|
Michael I. Goldberg,
|
|
|
|
Liquidation Trustee
|
35
TABLE OF CONTENTS
Part I. Financial Information (continued)Item 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPart II. Other InformationItem 1. Legal ProceedingsPart II. Other Information (continued)Item 1. Legal Proceedings (continued)Item 1A. Risk FactorsItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsItem 3. Defaults Upon Senior SecuritiesItem 4. Mine Safety DisclosuresItem 5. Other InformationItem 6. Exhibits