Woodbridge Liquidation Trust (WBQNL)

The Company operates as a liquidating trust formed pursuant to the First Amended Joint Chapter 11 Plan of Liquidation of Woodbridge Group of Companies, LLC and its affiliated debtors, which was confirmed by the United States Bankruptcy Court for the District of Delaware on October 26, 2018 and became effective on February 15, 2019. The Trust's sole purpose is to prosecute causes of action, litigate and resolve claims against the Debtors, pay allowed administrative and priority claims, receive cash from certain sources, and make distributions to Interestholders. The Company has substantially completed its liquidation activities, having liquidated all but one real estate asset with a net carrying value of approximately $0.24 million ¹. The primary remaining focus is resolving a construction defect claim asserted against the Development Entity by the buyer of a single-family home sold for approximately $60 million ², along with related litigation against insurers and other third parties.

The Company's competitive positioning is not applicable in a traditional sense, as it is a liquidating trust with no ongoing trade or business. The Trust's Class A Interests are publicly traded on the OTC Markets under the symbol WBQNL ³, while Class B Interests have no trading market and are subject to transfer restrictions. The Trust has resolved all of its Causes of Action and liquidated substantially all of its real estate assets, with the remaining activities centered on collecting settlement receivables, pursuing judgment collections, and resolving the construction defect claim. The Trust's distributions have primarily come from net proceeds of real estate sales, except for the ninth distribution which included net proceeds from the settlement of litigation against Comerica Bank.

The core business model is the liquidation of assets and distribution of proceeds to Interestholders in accordance with the Plan and Trust Agreement. The Trust generates cash from sources including net proceeds from settlements of Causes of Action, remittances from the Wind-Down Entity, Fair Fund recoveries from the SEC, and assets forfeited to the DOJ. The Wind-Down Entity was formed to develop, market, and sell real estate assets owned by its subsidiaries, remitting net cash to the Trust after paying expenses and retaining reserves. Distributions to Interestholders are made after paying Trust expenses and retaining reserves, with no distribution required unless an Interestholder is to receive at least $10.00 ⁴. The Trust has authorized eleven cash distributions to Class A Interestholders since the Plan Effective Date, with the most recent declared on May 10, 2023 at $2.18 per Class A Interest ⁵.

The Company's primary asset is the Wind-Down Group, which holds the remaining real estate asset and manages the construction defect claim. As of the Plan Effective Date, the Wind-Down Group received approximately $31.34 million in cash and approximately $585.00 million of real estate and other assets ⁶. Since the Plan Effective Date through June 30, 2026, the Wind-Down Subsidiaries disposed of approximately 150 properties for aggregate net sales proceeds of approximately $576.80 million ⁷. The Trust also holds settlement receivables and judgments from resolved Causes of Action, including approximately $22.89 million in aggregate settlements from avoidance actions ⁸ and approximately $11.28 million in reductions of claims ⁹.

The Trust's Causes of Action included over 500 avoidance actions, all of which have been resolved. As of September 25, 2026, the Trust entered into settlements in approximately 254 legal actions ¹⁰ and settled approximately 245 potential avoidance claims for which litigation was not filed ¹¹. The Trust has collected approximately $0.07 million from judgments ¹² and is pursuing collection of approximately $15.26 million of additional judgments ¹³, with approximately $158.84 million of judgments considered uncollectable ¹⁴. The Trust also received approximately $269,000 of Fair Fund recoveries from the SEC during the period from July 1, 2026 through September 25, 2026 ¹⁵.

Significant operational developments during the period include the suspension of distributions on August 3, 2023 pending the investigation of the construction defect claim ¹⁶. The Development Entity filed a lawsuit on May 28, 2024 against 13 parties for contribution related to the construction defect claim ¹⁷, and on August 9, 2024 filed suit against its insurers ¹⁸. The lawsuit against the primary and first excess layer insurer was dismissed on April 8, 2026 after the insurer satisfied its obligations ¹⁹. The Trust received a private letter ruling from the IRS providing that an extension of the Trust to February 15, 2030 would not jeopardize its status as a liquidating trust ²⁰, and on August 3, 2026 filed a motion to extend the Outside Termination Date to February 15, 2028, which was granted on August 19, 2026 ²¹.

As of June 30, 2026, the Company's consolidated net assets in liquidation were approximately $35.86 million ²², compared to $383.49 million as of the Plan Effective Date ²³. Total distributed cash and distributions payable as of June 30, 2026 were approximately $426.20 million ²⁴. Net assets in liquidation – All Interestholders decreased by approximately $1.48 million during the year ended June 30, 2026 ²⁵, due to a decrease in the net carrying value of assets and liabilities of approximately $1.83 million ²⁶ and distributions reversed, net of approximately $0.35 million ²⁷. The Company accrued interest earnings through February 15, 2028 of approximately $2.11 million ²⁸ and accrued additional costs relating to the construction defect claim of approximately $1.45 million ²⁹.

The Company currently projects a revised estimated completion date for its liquidation activities of approximately February 15, 2028 ³⁰. The Trust's Outside Termination Date was extended to February 15, 2028, granted on August 19, 2026 ³¹. The Company expects to complete the initial phase of repair for the retaining wall during the fourth quarter of calendar year 2026 ³², though timing is uncertain due to numerous delays. The Development Entity expects to resolve the construction defect claim by February 15, 2028 ³³, but it may take longer based on the results of the initial phase, subsequent monitoring, and the scope of additional repairs.

The primary growth vector is the resolution of the construction defect claim and related litigation. The Development Entity has commenced the initial phase of repair relating to the retaining wall, with the recommended scope including repair and remediation of the retaining wall ³⁴. The initial repair phase and monitoring began during the quarter ended March 31, 2026 ³⁵. The Development Entity is assembling a team of professionals, performing engineering studies and site analyses, and monitoring the results of the initial phase to evaluate repairs needed for the second phase ³⁶. The Company is also pursuing claims against its second excess layer insurer with a $5,000,000 policy limit ³⁷, which has agreed to defend subject to a reservation of rights.

The Company's margin and cost outlook is focused on managing liquidation costs. As of June 30, 2026, there was approximately $7,262,000 accrued for estimated costs related to the construction defect claim ³⁸. During the year ended June 30, 2026, the Company accrued approximately $3.84 million relating to changing the estimated completion date from February 15, 2027 to February 15, 2028 ³⁹, primarily for legal and other professional fees and payroll costs. The Company also accrued additional costs of approximately $1.45 million for the construction defect claim ⁴⁰, reflecting increased estimates for the initial phase and subsequent phases of repair.

The operational outlook involves the Wind-Down Group's primary activity of resolving the construction defect claim and related litigation. The Company has a lease for office space through May 31, 2027 ⁴¹ and expects to continue leasing until the liquidation process is completed. The Wind-Down Entity has part-time employment agreements with its two executive officers that renew automatically on an annual basis ⁴². As of September 25, 2026, the Wind-Down Entity had three employees ⁴³ in addition to the Chief Executive Officer.

The Company's capital allocation is centered on funding liquidation activities and potential distributions. As of June 30, 2026, the Company had consolidated cash, cash equivalents and short-term investments of approximately $56.71 million, of which approximately $0.70 million is restricted ⁴⁴. The Company expects to receive approximately $1.84 million of accrued interest during the year ending June 30, 2027 ⁴⁵. The Company does not expect a deficiency in liquidity in the next twelve months ⁴⁶. Distributions remain suspended pending resolution of the construction defect claim, and the Company is unable to estimate the timing and amount of future distributions, if any ⁴⁷.

The Company faces headwinds related to the construction defect claim, including the inability to determine the amount of liability exposure, which may be in excess of the estimated liquidation costs accrued as of June 30, 2026 ⁴⁸. The Wind-Down Group's working capital may not be sufficient to cover construction defect claims, and it has no ability to access third-party capital, with no line of credit available ⁴⁹. As of August 31, 2026, the Wind-Down Group had existing unrestricted cash and cash equivalents of approximately $6.69 million ⁵⁰.

The Company faces constraints related to its status as a liquidating trust, including restrictions on engaging in a trade or business and limitations on investments to those permitted by Treasury regulations ⁵¹. The Trust's cash is expected to be held in demand and time deposits or other temporary, liquid investments such as Treasury bills, which are likely to bear only low rates of interest ⁵². The Trust may be restricted from retaining cash in excess of a 'reasonable' amount to meet claims and contingent liabilities ⁵³.

The Liquidation Trustee, Michael I. Goldberg, Esq., and the Supervisory Board emphasize the orderly liquidation of the Trust's assets and the resolution of the construction defect claim. The Company currently projects a revised estimated completion date for its liquidation activities of approximately February 15, 2028 ⁶¹. The Trust received a private letter ruling from the IRS providing that any further extension of the Trust to February 15, 2030 would not jeopardize the Trust's status as a liquidating trust ⁶². Management's strategic priorities include resolving the construction defect claim, pursuing claims against insurers and other responsible parties, and collecting settlement receivables and judgments. The Company expects to be able to adequately fund its liquidation activities over the next twelve months from its primary sources of capital ⁶³.

The Company's consolidated net assets in liquidation as of June 30, 2026 were approximately $35.86 million ⁶⁴, compared to $37.33 million as of June 30, 2025 ⁶⁵. Net assets in liquidation – All Interestholders decreased by approximately $1.48 million during the year ended June 30, 2026 ⁶⁶, compared to an increase of approximately $1.57 million during the year ended June 30, 2025 ⁶⁷. The decrease in fiscal 2026 was due to a decrease in the net carrying value of assets and liabilities of approximately $1.83 million ⁶⁸ and distributions reversed, net of approximately $0.35 million ⁶⁹. The increase in fiscal 2025 was due to an increase in the net carrying value of assets and liabilities of approximately $1.49 million ⁷⁰ and distributions reversed of approximately $0.08 million ⁷¹. The Company's total liabilities as of June 30, 2026 were approximately $23.91 million ⁷², compared to $237.85 million as of the Plan Effective Date ⁷³. Cash, cash equivalents and short-term investments as of June 30, 2026 were approximately $56.01 million ⁷⁴, compared to $36.02 million as of the Plan Effective Date ⁷⁵. The Company recorded interest earnings of approximately $2.11 million during the year ended June 30, 2026 ⁷⁶ and approximately $3.47 million during the year ended June 30, 2025 ⁷⁷. The Company accrued approximately $3.84 million relating to changing the estimated completion date from February 15, 2027 to February 15, 2028 ⁷⁸ and approximately $5.47 million in fiscal 2025 relating to changing the estimated completion date from March 31, 2026 to February 15, 2027 ⁷⁹. The Company paid general and administrative costs of approximately $4.66 million in fiscal 2026 ⁸⁰ and approximately $5.90 million in fiscal 2025 ⁸¹. The Company recognized a loss recovery of approximately $4.10 million from its insurance carriers relating to the initial repair of the construction defect in fiscal 2025 ⁸² and received insurance reimbursements of approximately $0.71 million in fiscal 2026 ⁸³.

The Company faces material risks related to the construction defect claim, with the amount of liability exposure unable to be determined and potentially exceeding the estimated liquidation costs accrued as of June 30, 2026 ⁵⁴. The Wind-Down Group has no ability to access third-party capital, with no line of credit available ⁵⁵, and as of August 31, 2026 had unrestricted cash of approximately $6.69 million ⁵⁶, which may not be sufficient to cover construction defect claims. The Trust's cash is held in a small number of financial institutions, and deposits exceeding FDIC insurance limits may be subject to loss ⁵⁷. The Trust may be restricted under IRS rules from retaining cash in excess of a 'reasonable' amount, and if the Trust fails to qualify as a liquidating trust, there may be adverse tax consequences ⁵⁸. The Class A Interests are thinly traded on the OTC Markets, and the market price may be volatile ⁵⁹. Distributions have been suspended since August 3, 2023, and the Trust is unable to estimate the timing and amount of future distributions, if any ⁶⁰.