Woodbridge Emerges from Bankruptcy; Targets Initial Cash Distribution By End of March

LOS ANGELES, Feb. 19, 2019 /PRNewswire/ -- Woodbridge Group of Companies, LLC (together with its affiliated debtors, "Woodbridge") announced today that, effective as of February 15, 2019, it has emerged from chapter 11 bankruptcy following confirmation of its plan of liquidation (the "Plan") by the United States Bankruptcy Court for the District of Delaware on October 26, 2018.

Woodbridge also announced that it is targeting an initial cash distribution to take place on or before March 31, 2019.  Claims that are not Allowed Claims as of that time will not participate in that initial distribution, but reserves for such Claims will be maintained.

Today's announcement effectuates a global settlement negotiated between the Woodbridge debtors (managed by a Bankruptcy Court-approved independent Board of Managers), the Official Committee of Unsecured Creditors, the Ad Hoc Group of Noteholders, and the Ad Hoc Group of Unitholders, which settlement is embodied in the Plan.  The Plan, which enjoyed overwhelming support from creditors, provides for the creation of two entities: (i) a Wind-Down Entity, which will own many of Woodbridge's assets (including all real property) and will sell those assets to generate cash, and (ii) a Liquidation Trust, which will own the Wind-Down Entity and receive cash generated by the Wind-Down Entity, and will own estate claims and causes of action.  Woodbridge's unsecured creditors (including investors holding notes and units) will receive interests in the Liquidation Trust ("Liquidation Trust Interests") which will entitle them to cash distributions over time from the Liquidation Trust.  Liquidation Trust Interests will be maintained as book entries by the Liquidation Trust; holders of Liquidation Trust Interests will not receive paper certificates in respect of such Liquidation Trust Interests.  Woodbridge expects that the process of liquidating all of the assets to be held by the Wind-Down Entity will take approximately two-to-three years.

Woodbridge filed bankruptcy in December 2017 as a result of a massive, multi-year Ponzi scheme perpetrated by Robert Shapiro between (at least) 2012 and 2017.  As part of this fraud, Shapiro, through the Woodbridge entities, raised over one billion dollars from approximately 10,000 investors—as either noteholders or unitholders.  Woodbridge and the three fiduciary committees appointed in the bankruptcy cases worked in concert to reach the global settlement represented by the Plan to ensure that creditors can recover as much money as possible, and believe that the Plan provides the best possible outcome under the circumstances.

Under the Plan, the Liquidation Trust Interests to be distributed to creditors shall initially be subject to transfer restrictions that prohibit assignment or transfer by any holder thereof other than by will or intestate succession or otherwise by operation of law.  Two classes of Liquidation Trust Interests will be distributed—(i) Class A Liquidation Trust Interests, which will be distributed to holders of Allowed Class 3 Standard Note Claims, Allowed Class 4 General Unsecured Claims, and Allowed Class 5 Unit Claims, and (ii) Class B Liquidation Trust Interests, which will be distributed only to holders of Allowed Class 5 Unit Claims, and which will receive distributions only after all claims represented by Class A Liquidation Trust Interests have been paid in full.  

The Liquidation Trust will use its commercially reasonable best efforts to cause registration of the Class A Liquidation Trust Interests under the Securities Exchange Act of 1934 (the "Exchange Act") to become effective, and for the Class A Liquidation Trust Interests to be quoted with an OTC ticker symbol, as soon as reasonably practicable after the Effective Date, but in no event will the Liquidation Trust file such registration statement any later than may be required under section 12(g) of the Exchange Act or the rules and regulations promulgated thereunder.  Upon the effectiveness of such Exchange Act registration, (i) the transfer restrictions on Class A Liquidation Trust Interests shall terminate and cease to be of any force or effect and (ii) the Class A Liquidation Trust Interests may be transferred by the holders thereof to the extent otherwise permissible under applicable law.  The Liquidation Trust does not expect that Class B Liquidation Trust Interests will be registered under the Exchange Act.

The Liquidation Trustee will be Mr. Michael Goldberg, who was a member of the Bankruptcy Court-approved independent Board of Managers of the Woodbridge debtors in their chapter 11 cases (and was designated to such Board by the United States Securities and Exchange Commission), and who was unanimously selected as the Liquidation Trustee by the Official Committee of Unsecured Creditors, the Ad Hoc Group of Noteholders, and the Ad Hoc Group of Unitholders.  In addition, the Liquidation Trust Supervisory Board will consist of five members—three selected by the Official Committee of Unsecured Creditors, and one each selected by the Ad Hoc Group of Noteholders and the Ad Hoc Group of Unitholders.

The CEO of the Wind-Down Entity will be Mr. Frederick Chin, who was the Bankruptcy Court-approved CEO of the Woodbridge debtors in their chapter 11 cases.  The Wind-Down Board will consist of three members: (i) Mr. Chin (the Wind-Down CEO), (ii) Mr. M. Freddie Reiss, and (iii) Mr. Richard Nevins.  Messrs. Reiss and Nevins were both members of the Bankruptcy Court-approved independent Board of Managers of the Woodbridge debtors in their chapter 11 cases.

Copies of the Plan and all other Court documents may be examined free of charge on the website of the Debtors' claims agent at http://cases.gardencitygroup.com/wgc.  Additional information, including answers to frequently asked questions, may be found at the Liquidation Trust's website, available at http://www.pszjlaw.com/woodbridge.html.

Forward-Looking Statements

In this press release, all statements that are not purely historical facts are forward-looking statements.  These statements, including (but not limited to) the statements relating to the future financial and operating results of the Liquidation Trust and Wind-Down Entity, are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995.  Forward-looking statements may be identified by the words "believe," "expect," "anticipate," "project," "plan," "estimate," "intend," "potential" and other similar expressions.  Forward-looking statements are based on currently available business, economic, financial and other information and reflect management's current beliefs, expectations and views with respect to future developments and their potential effects on the Liquidation Trust and Wind-Down Entity.  Actual results could vary materially depending on risks and uncertainties that may affect the Liquidation Trust and Wind-Down Entity, including, but not limited to, local, national, and international economic conditions; the supply and demand for properties; the financial conditions for tenants, buyers, and sellers of properties; changes in interest rates; changes in environmental laws or regulations, planning laws and other governmental roles and fiscal and monetary policies; changes in real property tax rates and related tax deductions; negative developments in the economy that depress travel and retail activity; uninsured casualties; force majeure acts, terrorist events, under-insured or uninsurable losses; and other factors that are beyond the reasonable control of the Liquidation Trust and the Wind-Down Entity. In addition, real estate assets are subject to long-term cyclical trends that can give rise to significant volatility in values.  The Liquidation Trust assumes no obligation to update any forward-looking statement made in this press release to reflect subsequent events or circumstances or actual outcomes, except as may be required by law.

SOURCE Woodbridge Group of Companies, LLC