Woodbridge Liquidation Trust SEC 10-K Report

Woodbridge Liquidation Trust has released its annual Form 10-K report, providing a comprehensive overview of its financial performance, business operations, strategic initiatives, and the challenges it faces. The Trust, which is in the process of liquidating its assets, has made significant progress in its wind-down activities, despite facing substantial challenges related to a major construction defect claim.

Financial Highlights

• Net Assets in Liquidation: $37.334 million, reflecting a decrease from the previous year due to distributions and changes in asset values.
• Change in Net Assets in Liquidation for All Interestholders: $1.575 million, driven by an increase in the net carrying value of assets and liabilities.
• Change in Net Assets in Liquidation for Restricted for Qualifying Victims: -$4.110 million, primarily due to distributions of proceeds from Forfeited Assets.
• Total Assets: $64.154 million as of June 30, 2025, showing a slight increase from the previous year.
• Total Liabilities: $26.820 million as of June 30, 2025, indicating an increase due to accrued liquidation costs.
• Accrued Liquidation Costs: $26.143 million, reflecting increased costs related to the construction defect claim and extended liquidation timeline.
• Cash, Cash Equivalents, and Short-Term Investments: $60.230 million, providing liquidity for ongoing liquidation activities.
• Restricted Cash: $0.644 million, designated for specific distributions and unresolved claims.

Business Highlights

• Real Estate Asset Liquidation: Since the Plan Effective Date, the Wind-Down Subsidiaries have disposed of approximately 150 properties for aggregate net sales proceeds of approximately $576.80 million. As of June 30, 2025, the Company owned one real estate asset with a net carrying value of approximately $0.24 million.
• Construction Defect Claim: The Development Entity is addressing a construction defect claim related to a single-family home sold for approximately $60 million. The claim involves soils-related damage and other issues. The initial phase of repair is expected to be completed by the first quarter of 2026, with further repairs and monitoring to follow.
• Insurance and Litigation: The Development Entity is pursuing claims against its insurance carriers and other potentially responsible parties related to the construction defect claim. The Company has recognized a loss recovery of approximately $4.10 million from its insurance carriers for initial repair costs.
• Future Outlook: The Company projects a revised estimated completion date for its liquidation activities of approximately February 15, 2027, due to the pending construction defect claim and related litigation. The Trust is unable to make its final distribution to Interestholders until these issues are resolved.
• Operational Focus: The primary focus of the Wind-Down Group is resolving the construction defect claim and related litigation. The Trust's activities include closing out unresolved Causes of Action and collecting settlement receivables.
• Management Structure: The Trust is administered by the Liquidation Trustee under the supervision of its Supervisory Board. The Wind-Down Entity is managed by its Board of Managers, with the Chief Executive Officer overseeing operations.
• Termination and Dissolution: The Trust is required to be terminated once all distributions are made and the pursuit of additional Causes of Action is deemed unlikely to yield sufficient proceeds. The Company has filed a motion to extend the Trust's termination date to February 15, 2027.

Strategic Initiatives

• Strategic Focus: The company is focused on completing its liquidation activities, which include resolving a significant construction defect claim and related litigation. The Trust is prosecuting remaining Causes of Action and pursuing the collection of settlement receivables and judgments. The company has liquidated nearly all of its real estate assets, with only one asset remaining, and is working towards resolving disputed claims and distributing available cash to beneficiaries.
• Capital Management: The company's primary sources of capital include cash, cash equivalents, short-term investments, and interest income. The company has distributed net sales proceeds of forfeited assets to qualifying victims and has suspended additional distributions to interest holders pending the resolution of the construction defect claim. The company has accrued significant costs related to the construction defect claim and anticipates further legal and professional fees. The company has also received insurance reimbursements related to the construction defect claim.
• Future Outlook: The company expects to complete its liquidation activities by February 15, 2027, although this may be extended if necessary to resolve the construction defect claim and related litigation. The company has filed a request to extend the Trust termination date to February 15, 2027, and anticipates that the Bankruptcy Court will grant this extension. The company is also exploring potential recoveries from insurance claims and other third parties related to the construction defect claim.

Challenges and Risks

• Timing and Amount of Distributions: The Trust cannot predict future distributions due to the pending construction defect claim and related litigation. This uncertainty affects the financial outlook for Interestholders.
• Extension of Liquidation Timeline: The liquidation activities are projected to extend to February 15, 2027, beyond the original termination date, due to unresolved litigation. The Trust has filed a motion to extend the termination date, which is pending approval by the Bankruptcy Court.
• Market Risks: The Class A Interests are thinly traded on the OTC market, leading to potential volatility and challenges in liquidity for investors.
• Regulatory and Legal Risks: The Trust is subject to securities litigation risks due to market volatility and unresolved legal proceedings, which could result in substantial costs and resource diversion.
• Environmental and Construction Defect Liabilities: The Wind-Down Group may face liabilities for construction defects and environmental issues, which could result in significant costs and affect the Trust's financial position.
• Management and Control Risks: The Trust is controlled by the Liquidation Trustee, with no voting rights for Interestholders, which may limit their influence over Trust decisions.
• Tax Risks: If the Trust is not treated as a liquidating trust for federal tax purposes, there could be adverse tax consequences, including potential taxation at the entity level.

SEC Filing: Woodbridge Liquidation Trust [ WBQNL ] - 10-K - Sep. 25, 2025