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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K*
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE PERIOD FROM DECEMBER 10, 2003 TO DECEMBER 31, 2003 COMMISSION FILE NUMBER 333-71091*
IBF FUND LIQUIDATING LLC
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(Exact name of Registrant as specified in its Charter)
DELAWARE 06-1708882
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
C/O ARTHUR STEINBERG, AS ICA TRUSTEE
KAYE SCHOLER LLP
425 PARK AVENUE
NEW YORK, NEW YORK 10022
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(212) 836-8564
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Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) 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 [ ]
Not applicable.
- --------------------------------------------------------------------------------
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
Not applicable.
- --------------------------------------------------------------------------------
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2).
YES [ ] NO [X]
- --------------------------------------------------------------------------------
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates.
Not applicable.
- --------------------------------------------------------------------------------
DOCUMENTS INCORPORATED BY REFERENCE
None
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*IBF Fund Liquidating LLC (the "Company") is the transferee of the assets and
certain liabilities of IBF Collateralized Finance Corporation ("CFC"), IBF VI -
Secured Lending Corporation ("SLC") and IBF Premier Hotel Group, Inc. ("IBF
Hotel" pursuant to the First Amended Joint Liquidating Plan of Reorganization
(the "Plan") with Respect To InterBank Funding Corp. ("IBF"), SLC, CFC, and IBF
Hotel (collectively, the "Debtor") that was confirmed by order of the United
States Bankruptcy Court for the Southern District of New York dated August 14,
2003 and approved in all respects by order dated September 5, 2003 of the United
States District Court for the Southern District of New York. On December 10,
2003, the Plan went effective with respect to CFC, SLC and IBF Hotel. Pursuant
to oral no action relief provided by the Office of Chief Counsel, Division of
Corporate Finance of the Commission on August 12, 2003 (the "No Action Relief"),
the Company is submitting this report under cover of Form 10-K under SLC's
former Commission file number. Pursuant to the No Action Relief, this report
need not and does not comply with all of the requirements of Form 10-K and is
not deemed filed pursuant to Section 13 of the Securities Exchange Act of 1934.
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2
PART I
ITEM 1. BUSINESS.
As reported to the ICA Trustee (as herein defined), InterBank Funding Corp.
("IBF") was formed in and around 1995 to make investments in operating
businesses, operating hotels, real estate development and properties,
securitization assets and other investments by raising investment capital
through offerings of debt and equity securities - typically, unsecured
high-yield notes sold in private placements through registered broker-dealers.
By January 31, 2002, the various funds established by IBF had raised
approximately $187 million in investment capital. IBF Collateralized Finance
Corporation ("CFC") and IBF VI - Secured Lending Corporation ("SLC") were two
such funds that survived a series of merger transactions in 2001 CFC and SLC
were owned by IBF. All of the issued and outstanding equity capital of IBF was
owned by Simon A. Hershon.
On June 7, 2002, IBF, CFC and SLC each filed a voluntary petition for relief
under Chapter 11 of the Bankruptcy Code in the Southern District of New York.
IBF Premier Hotel Group ("IBF Hotel") filed its voluntary petition for relief
under Chapter 11 of the Bankruptcy Code in the Southern District of New York on
November 4, 2002. The Debtors' chapter 11 cases were consolidated and were
jointly administered.
On July 23, 2002, the United States Securities and Exchange Commission (the
"Commission") filed a complaint against IBF, CFC, SLC and Mr. Hershon (the
"Parties"), in the United States District Court for the Southern District of New
York, (the "District Court") commencing a proceeding Securities and Exchange
Commission v. IBF Collateralized Finance Corp., et al., No. 02-CV-5713 (JSM)
(the "SEC Litigation"). Generally, the Commission alleged that CFC and SLC were
operated as unregistered investment companies in violation of the Investment
Company Act of 1940, and that certain disclosures made by IBF, CFC and SLC to
investors in various debt financings were misleading. On motion of the
Commission in the SEC Litigation, the District Court on December 5, 2002 granted
summary judgment and appointed Arthur J. Steinberg as trustee ("Mr. Steinberg,"
"ICA Trustee" or the "Manager") under the Investment Company Act for CFC, SLC
and their subsidiaries.
Since his appointment on December 5, 2002, Mr. Steinberg assumed all management
responsibilities for CFC and SLC and formulated the First Amended Joint
Liquidating Plan of Reorganization (the "Plan") of IBF, CFC, SLC and IBF Hotel
(the "Debtors").
On May 28, 2003, Mr. Steinberg, as ICA Trustee filed the Plan, which was the
culmination of discussions and negotiations, and reflects the settlements and
compromises reached by Mr. Steinberg, the Debtors, the committee of unsecured
creditors appointed under the Bankruptcy Code (the "Committee") and the staff of
the Commission.
The Plan provided for, among other things; the substantive consolidation of CFC,
SLC and, IBF Hotel. The Bankruptcy Court confirmed the Plan on August 14, 2003
and the Plan went effective with respect to CFC, SLC and IBF Hotel on December
10, 2003 (the "Effective Date"). On the Effective Date, Mr. Steinberg, as ICA
Trustee made the initial distributions required by the Plan. Assets of the
Debtors remaining after this distribution were assigned, depending on the
Debtor, to either the IBF Fund Liquidating LLC (the "Company") or IBF
Liquidating LLC, along with certain liabilities and pending claims against the
Debtors. Both of these entities are managed by Mr. Steinberg in his separate
capacity as the Manager, and are monitored by the Committee, the Bankruptcy
Court and the District Court pursuant to the Plan. On or about the Effective
Date, membership interests in the Company ("Membership Interests") were
distributed to holders of allowed general unsecured claims pro rata in
accordance with the amount of their claims such holders, (the "Members").
On the Effective Date, after the Debtors' assets were transferred to the
Company, all outstanding shares of the Debtors were automatically deemed
canceled and the Debtors dissolved by operation of the Plan.
The Manager maintains a registry of Membership Interests in the Company and IBF
Liquidating LLC; no certificates representing ownership of the Membership
Interests have been or will be issued. The terms of the
Company's operating agreement provide that the Membership Interests of a Member
may not be transferred; provided that the Membership Interests may be assignable
or transferable by will, intestate succession, or operation of law or by order
of a court of competent jurisdiction, upon written notice to, and written
approval of, the Manager, which approval may be withheld or conditioned as the
Manager deems necessary or advisable in its sole discretion.
The Company was organized for the purposes of liquidating, collecting and
maximizing the cash value of its assets, making distributions in accordance with
the terms of the Plan, and taking actions as are necessary or appropriate to
accomplish those purposes, including holding cash in the form of cash, money
market funds, treasury bills or other cash equivalents, holding assets for the
benefit of the Members, making limited additional investments in assets in
certain instances to preserve and maximize the value of the assets and permit
the orderly liquidation of those assets, enforcing the rights of the Members,
and defending claims against such assets. With limited exceptions for
pre-approved investments specified in the Plan and also reflected in the
Company's operating agreement, and for additional investments in an asset of an
aggregate of $250,000 or less, which investments the Manager may make in the
exercise of his business judgment, all additional investments in assets held by
the Company made by the Manager are subject to oversight of the District Court
or the Committee:
- If the aggregate additional investment would be for an amount
between $250,001 and $1,000,000, the Manager must obtain the
prior consent of the Committee or, in the absence of such
consent, the Manager must receive the approval of the District
Court and provide notice to the Committee and an opportunity
for hearing before the District Court.
- If the aggregate additional investment would equal or exceed
$1,000,000, the Manager must receive the approval of the
District Court and provide notice to all of the Members of the
Company and an opportunity for hearing before the District
Court.
The Manager expects to terminate the Company and make final distributions with
respect to the Company pursuant to the Plan upon the earlier of (i) the fifth
anniversary of the Effective Date and (ii) the date on which the Manager
determines, in his business judgment, that (a) all assets of the Company have
been liquidated, all causes of action have been resolved and there are no
potential sources of additional cash for distribution; (b) there remain no
claims against the applicable Debtor(s); (c) all debts and other obligations of
the Company have been paid or otherwise provided for; and (d) he is in a
position to make a final distribution in accordance with applicable law. The
existence of the Company may, however, be extended to more than five years if
the Manager applies for and obtains approval of the District Court and, prior to
such extension, the Manager has made a request for and has received additional
no-action assurances from the Commission.
Pursuant to oral no action relief provided by the Office of Chief Counsel,
Division of Corporate Finance of the Commission (the "No Action Relief"), the
Company is exempt from the reporting requirements of the Securities Exchange Act
of 1934, as amended. However, pursuant to the No Action Relief, the Manager is
required to issue reports to the Members annually and upon termination of the
Company showing the assets and liabilities of the Company at the end of each
year and upon termination and the receipts and disbursements of the Manager for
each such period and event. The annual reports also will describe the changes in
the Company's assets and liabilities during the reporting period, and any action
taken by the Manager during the period in the performance of the Manager's
duties that have not been previously reported. The financial statements
contained in such reports will be prepared in accordance with generally accepted
accounting principles; however, the financial statements will not be audited by
independent public accountants. The annual reports furnished to the holders of
Membership Interests are filed with the Commission under cover of Form 10-K
using SLC's Commission file number. Pursuant to the No Action Relief, these
annual reports will not be deemed filed pursuant to Section 13 of the Exchange
Act.
Pursuant to the No Action Relief, the Manager will cause the Company to file
with the Commission a current report under cover of Form 8-K using SLC's
Commission file number whenever an event with respect to the Company occurs that
would require the filing of Form 8-K by a company registered under the Exchange
Act or whenever a material event relating to the Company's assets or liabilities
has occurred, such as an interim distribution. The Plan contemplates that the
Company will make interim distributions approximately every 180 days, so long as
there are funds available for such purpose. Twenty days before each proposed
interim distribution, the ICA Trustee must file with the District Court, and
serve on each Member of the Company, a report detailing (i) all actions taken
during the
4
prior six month period, (ii) the financial condition of the Company and (iii)
the amount and source of the proposed distribution. All interested parties will
have an opportunity to object to the proposed distribution, with any objection
to be resolved by the District Court. A current report under cover of Form 8-K
will be filed in connection with each interim distribution, disclosing the
information required by the Plan. Pursuant to the No Action Relief, these
current reports will not be deemed filed pursuant to Section 13 of the Exchange
Act. Copies of each current report filed under cover of Form 8-K also will be
sent to holders of Membership Interests.
TAX TREATMENT
The Company will issue an annual information statement to the Members with tax
information for their tax returns. Members are urged to consult with their own
tax advisors as to their own filing requirements and the appropriate tax
reporting of this information on their returns.
MEETINGS
Generally, there will be no meetings of the Members. However, the Manager may at
any time call a meeting of the Members to be held at such time and at such place
as the Manager shall determine.
DISTRIBUTIONS
During the period from December 10, 2003 through December 31, 2003, the Manager
made a liquidating distribution pursuant to the Plan to the Members of
approximately $19 million.
PROPERTY SALES
No property was sold during the period from December 10, 2003 through December
31, 2003.
EMPLOYEES
The Company has two (2) full-time employees and that will be reduced to one (1)
employee as of April 15, 2004.
ITEM 2. ASSETS.
The following is a description of the Company's assets. The Company's assets can
be categorized as investments in Operating Businesses, Operating Hotels, Real
Estate Development Properties and Securitization Assets. Note that the dollar
amounts of certain investments set forth do not reflect the realizable value of
such assets upon disposition, but rather constitute the net investment in such
assets made by the Debtors. Many of these assets are subject to risks and many
of the loans are in default with the amount of recovery by the Company
uncertain. The financial data set forth in Items 6 and 8 are based on asset
valuations performed as of December 10, 2003, assuming each of the assets were
put up for sale immediately and disposed of to a third party in an orderly
process, as adjusted for operating activities from December 10, 2003 through
December 31, 2003. The market for such assets is difficult to determine and is
subject to significant changes over time. There can be no assurance that the
Company will be successful in disposing of the assets for values approximating
those currently estimated by us.
Operating Businesses. The Company owns approximately $951,618 in loans
(principal only) in BancCap Funding, LLC; a $4,909,568 promissory note
(principal only) with respect to Capstone Capital, LLC; a $9,395,540
one year demand note (principal only) and approximately $800,000 in
equity investments in American Benefit Resources, Inc.; two notes
totaling approximately $11,359,044 (principal only) and approximately
$1,732,600 in equity investments in Tuned in Sports; and a $5,400,000
promissory note (principal only) and approximately $14,176,373 in
equity investments in U.S. Mills, Inc.
Operating Hotels. The Company owns a $1,183,303 subordinated note
(principal only) and an equity interest in Ganesh Hospitality, Inc.
("Ganesh") with respect to Best Western (loan made to Ganesh for the
purchase of a Best Western hotel in Orlando, FL); a $2,504,962
subordinated note (principal only) and an
5
equity interest in Sita Resorts, Inc. ("Sita") with respect to Comfort
Inn (loan to Sita for the purchase of a Comfort Inn hotel in Orlando
FL); approximately $1,956,525 in loans (principal only) with respect to
the Fairfield Inn (loan to IBF Hotel to buy a 90% limited partnership
interest in Vinings Partners LP for the purchase of a Fairfield Inn in
Vinings, GA); and a $2,087,080 first mortgage loan (principal only)
with respect to Hilton Garden Inn (loan to IBF Hotel to buy a 75%
limited partnership interest in Chisholm Partners, Ltd., for the
purchase of a Hilton Garden Inn in Round Rock, TX).
Real Estate Development Properties. The Company owns a $5,200,850
subordinated note (principal only) with respect to its Anguilla Beach
property (loan to Cat Island Ventures, Ltd. for the development of a
resort on Cat Island in the Bahamas); a $11,445,304 mortgage loan
(principal only) with respect to its Plymouth Ventures - The Pinehills
property (loan to Plymouth Ventures, LLC for the purpose of acquiring
land et al. for the development of a resort hotel in a community known
as The Pinehills in Plymouth, MA); approximately $2,598,965 in loans
(principal only) with respect to its San Antonio property (loan to
SAHR, LLC for the development of a Marriott Resort in San Antonio, TX;
Company also has a 24% limited partnership interest in the equity of
SAHR Joint Venture); and a $2,317,143 note (principal only) with
respect to its Tribeca property (loan to initiate development of a
hotel site located in the Tribeca section of New York City). The
ability to realize on the SAHR Joint Venture and the Tribeca property
is extremely dubious.
Securitization Assets. The Company owns an equity investment interest
of approximately $3,147,034 in a residential mortgage loan
securitization transaction with Lehman Brothers dated March 1, 2001
(ARC 2001-BC-1 (Lehman)); and equity investment interests of
approximately $4,021,341 (through CFC) and approximately $440,938
(through SLC) in a residential mortgage loan securitization transaction
with DLJ Mortgage Corp. and Credit Suisse First Boston dated November
2001 (CSFB ABS 2001-HE-25).
Other Assets. The Company holds cash and other short term investments,
collection assets, various litigation and similar claims against third
parties, claims with respect to certain insurance policies and a
receivable from IBF Liquidating LLC.
ITEM 3. LEGAL PROCEEDINGS.
GENERAL
The Company is subject to legal claims and proceedings that arise in the
ordinary course of business. The Manager believes that the outcome of these
other claims and proceedings will not have a material adverse effect on the
estimated amount of future cash distributions, however there can be no assurance
in this regard.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF MEMBERS.
No matters were submitted to a vote of the Members during the period from
December 10, 2003 through December 31, 2003.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED MEMBER MATTERS.
MARKET INFORMATION
There is no public market for the Membership Interests.
HOLDERS
The Membership Interests are not transferable except by will, intestate
succession, court order or operation of law. As of December 31, 2003, the
Company had 3,132 Members of record.
6
DISTRIBUTIONS
During the period from December 10, 2003 through December 31, 2003, the Company
made a liquidating distribution to the Members of approximately $19 million.
ITEM 6. SELECTED FINANCIAL DATA.
Please note that the results for the period from December 10, 2003 through
December 31, 2003 are not comparable to any prior period because the Company
began operations as of December 10, 2003.
CHANGES IN NET ASSET DATA
DECEMBER 10, 2003
THROUGH
DECEMBER 31, 2003
-----------------
Total Income $ 48,284
==========
Total Expenses $311,176
==========
Net Loss $262,892
DECEMBER 31, 2003
-----------------
Total Assets $51,156,714
===========
Total Liabilities $5,301,951
==========
Net Assets in Liquidation $45,854,763
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
FORWARD-LOOKING STATEMENTS AND RISK FACTORS
Certain statements contained in this annual report that are not historical
constitute "forward-looking statements." You can identify forward-looking
statements by our use of the words "anticipate," "assume," "believe,"
"estimate," "expect," "plan," "intend," "project," "may," "will" and other
similar expressions. These statements are based upon our current expectations,
estimates and projections, and they are not guarantees of future results. The
forward-looking statements involve known and unknown risks, uncertainties and
other factors which are, in some cases, beyond the control of the Company and
could materially affect the Company's actual results. Factors that could cause
actual results to differ materially from those expressed or implied by
forward-looking statements include, but are not limited to, the following risk
factors.
RISK-FACTORS
WE CANNOT ASSURE THE AMOUNTS OR TIMING OF DISTRIBUTIONS.
If the values of our assets decline, or if the costs and expenses related to
selling our remaining assets exceed our current estimates, then the amounts of
any future distributions to the Members may be materially adversely affected. In
addition, the ability to sell or dispose certain assets depends, in some cases,
on the availability of financing to buyers on favorable terms. If favorable
financing is not available, it may take longer than expected to sell our
remaining assets at desirable prices, and this may delay our ability to make
distributions. There can be no assurance that we will be successful in disposing
of our remaining assets for values approximating those currently estimated by us
or as to the timing of any related distributions.
7
THE AMOUNTS AND TIMING OF DISTRIBUTIONS MAY BE ADVERSELY AFFECTED BY LIABILITIES
AND INDEMNIFICATION OBLIGATIONS FOLLOWING ASSET SALES.
In selling our assets, we may be unable to negotiate agreements that provide for
the buyers to assume all of the known and unknown liabilities relating to the
assets, including, without limitation, environmental and structural liabilities.
In addition, if we agree to indemnify the buyers for such liabilities, we may be
unable to limit the scope or duration of such indemnification obligations to
desirable levels or time periods. As a result, we have from time to time
determined, and we may in the future determine, that it is necessary or
appropriate to reserve cash amounts or obtain insurance in order to attempt to
cover the liabilities not assumed by the buyers and to cover potential
indemnifiable losses. There can be no assurance that the reserves and insurance
will be sufficient to satisfy all liabilities and indemnification obligations
arising from assets previously sold by the Company or arising after the sale of
our remaining assets, and any insufficiencies may have a material adverse effect
on the amounts and timing of any distributions.
WE MAY BE UNABLE TO OBTAIN ALL OF THE CONSENTS AND APPROVALS NECESSARY TO
TRANSFER OUR REMAINING ASSETS.
In general, an agreement relating to the purchase and sale of assets and
properties often provides that the completion of the sale is subject to the
satisfaction of conditions, including consents and approvals of specified third
parties. The failure of the Company to obtain all consents and approvals that
are necessary to transfer its assets may have a material adverse effect on the
amounts and timing of distributions to the Members, in certain instances, the
Manager will be required to get Court approval prior to making such investments.
TERMS OF SALES OF ASSETS ARE NOT SUBJECT TO APPROVAL BY THE MEMBERS AND MAY NOT
BE SATISFACTORY TO ALL MEMBERS.
The Manager has the authority to sell any or all of the Company's assets on
terms that he determines are appropriate, subject in certain circumstances to
Court approval. The Members will have no opportunity to vote on these matters
and will, therefore, have no right to approve or disapprove the terms of the
sales except, in certain circumstances, to file objections in court prior to a
contemplated disposition. As a result, the terms of sales of assets may not be
satisfactory to allMembers. Pursuant to the Company's operating agreement and
the Plan, the Manager has discretion to cause the Company to invest certain
amounts in assets and companies owned or effectively controlled by the Company
and may request and receive authorization from the Committee or the District
Court to exceed such limits. These investments and the terms on which the
investments may be made are not subject to the approval or disapproval of the
Members and may not be satisfactory to all Members, in certain instances, the
Manager will be required to get Court approval prior to making such
investments.
OTHER RISK FACTORS
The Company holds investments in a broad range of businesses in a variety of
markets. By virtue of this investment diversity, the Company faces risks which
may be unique to a particular business or market or to a particular investment.
Any such risk in such business or market may materially affect the value that
the Company receives with respect to a particular asset upon disposition of such
asset and may materially and adversely affect the aggregate proceeds received by
the Company upon the disposition of the Company's assets in the aggregate.
OVERVIEW
The following discussion should be read in conjunction with the consolidated
financial statements appearing elsewhere in this Annual Report on Form 10-K.
Actual values realized for assets and settlement of liabilities may differ
materially from the amounts estimated. Factors that may cause such variations
include, among other factors, the possibility that assets may not be sold on the
terms currently provided, and the other risk factors discussed in this Annual
Report on Form 10-K.
Pursuant to the Plan, on December 10, 2003, the Company transferred the assets
described in Item 2 and certain liabilities to the Company.
8
RESULTS OF OPERATIONS
The following describes the results of operations for the period from December
10, 2003 through December 31, 2003 (the "Company Period"). The Company recorded
a net loss of $262,892 for the Company Period. The net loss primarily resulted
from general and administrative expenses exceeding the Company's income. General
and administrative expenses include consultants, legal fees, Member
communication and other general office expenses. The results for the Company
Period are not comparable to any prior period as the Company began operations
December 10, 2003.
NET ASSETS IN LIQUIDATION
Net Assets in Liquidation at December 31, 2003 were $45,854,763. The valuation
of Net Assets in Liquidation is based on estimates as of December 10, 2003 as
adjusted for changes between December 10, 2003 and December 31, 2003, and the
actual values realized for assets and settlement of liabilities may differ
materially from the amounts estimated.
DISTRIBUTIONS
During the period from December 10, 2003 through December 31, 2003, the Company
made a liquidating distribution pursuant to the Plan to the Members of
approximately $19 million.
DISPOSITIONS
No assets were sold during the period from December 10, 2003 through December
31, 2003.
LIQUIDITY AND CAPITAL RESOURCES
The Manager anticipates that the combination of cash from asset sales, cash
flows from operating activities and current cash reserves will provide adequate
capital for all operating expenses of the Company.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company's non-cash assets consist primarily of debt and equity investments
in operating companies, hotels and real estate development projects and
investments in certain securitization assets. Most of the debt investments are
in default and there is uncertainty as to how much the Company will recover from
these assets. Most of the equity investments have little or no value due to the
high levels of debt of the issuers. Much of that debt is in default. While
changes in interest rates may have an effect on the realizable value of many of
the Company's assets, most of these assets consist of distressed investments in
which factors other than interests rates (such as the creditworthiness of the
debtor) are more material to the ultimate realizable value of the assets. As a
result, the Company does not believe that it is possible to quantify or
otherwise meaningfully describe the effect on the net realizable value of such
assets of changes in interest rates or other market risk factors.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
IBF FUND LIQUIDATING LLC
CONSOLIDATED STATEMENT OF NET ASSETS
DECEMBER 31, 2003
(unaudited)
ASSETS
CASH $ 10,909,077
INVESTMENTS
9
Investment in Operating Business $16,420,300
Investment in Operating Hotels 1,040,000
Investment in Real Estate Development Properties 9,273,937
Investment in Securitization Assets 8,113,400
Investment in Collection Assets 450,000
-------------- -----------
TOTAL INVESTMENTS 35,297,637
MISCELLANEOUS/OTHER ASSETS
(Includes Directors & Officers Insurance Recovery, Affirmative/Litigation
Claims, Preference Claims and Receivables from IBF Liquidating, LLC)
-----------
TOTAL OTHER ASSETS 4,950,000
-----------
TOTAL ASSETS $51,156,714
===========
LIABILITIES
CURRENT LIABILITIES
Accrual for Chapter 11 Fees $ 291,883
-------------- -----------
TOTAL CURRENT LIABILITIES 291,883
-----------
===========
LONG TERM LIABILITIES
Promissory Note 5,000,000
Accrued Liabilities 10,068
TOTAL LONG TERM LIABILITIES 5,010,068
-----------
TOTAL LIABILITIES 5,301,951
===========
EQUITY
Member Interest in LLC 46,117,655
Net Income (262,892)
-------------- -----------
TOTAL EQUITY 45,854,763
-----------
TOTAL LIABILITIES AND EQUITY $51,156,714
===========
10
IBF FUND LIQUIDATING LLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM DECEMBER 10, 2003 THROUGH DECEMBER 31, 2003
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Profit/(Loss) $ (262,892)
Cash used for payments to Professionals (1,488,871)
-------------
Net Cash Used for Operating Activities (1,751,763)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additional Investments Made 388,939
Interest on Investments 48,284
-------------
Net Cash Provided by Investing Activities (340,655)
CASH FLOWS FROM FINANCING ACTIVITIES:
Interest on Promissory Note 10,068
Liquidating Distribution Paid (19,210,651)
-------------
Net Cash Used for Financing Activities (19,200,583)
Net Decrease in Cash and Cash Equivalents (21,293,001)
Cash and Cash Equivalents at Beginning of Period 32,202,078
-------------
Cash and Cash Equivalents at End of Period $ 10,909,077
=============
11
IBF FUND LIQUIDATING LLC
CONSOLIDATED STATEMENT OF PROFIT AND LOSS
FOR THE PERIOD FROM DECEMBER 10, 2003 THROUGH DECEMBER 31, 2003
(unaudited)
INCOME
Interest Income 48,284
------- ---------
TOTAL INCOME 48,284
EXPENSES
Professional Fees-Operations 300,571
Interest Expense 10,068
Other Expenses 537
-------
TOTAL EXPENSE 311,176
---------
TOTAL PROFIT/(LOSS) $(262,892)
=========
12
IBF FUND LIQUIDATING LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003
1. PURPOSE OF IBF FUND LIQUIDATING LLC
The Company was established for the sole purpose of liquidating, collecting and
maximizing the cash value of its assets, making distributions in accordance with
the terms of the Plan, and taking actions as are necessary or appropriate to
accomplish those purposes, including holding cash in the form of cash, money
market funds, treasury bills or other cash equivalents, holding assets for the
benefit of the Members, making limited additional investments in assets in
certain instances to preserve and maximize the value of the assets and permit
the orderly liquidation of those assets, enforcing the rights of the Members,
and defending claims against such assets. With limited exceptions for
pre-approved investments specified in the Plan and also reflected in the
Company's operating agreement, and for additional investments in an asset of
$250,000 or less, which investments the Manager may make in the exercise of his
business judgment, all additional investments in assets held by the Company are
subject to oversight by the Bankruptcy Court, the District Court and the
liquidation committee of the Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The asset values reflected on the Consolidated Statement of Net Assets are
based on valuations performed as of December 10, 2003, as adjusted by operating
activities from December 19, 2003 through December 31, 2003. The actual values
realized for assets and settlement of liabilities may differ materially from the
amounts estimated.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires the Manager to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ materially from those
estimates.
INCOME TAXES
The Company will be treated as a partnership for tax purposes and accordingly,
will not be subject to federal or state income tax on any income earned or gain
recognized by the Company. The Company will recognize taxable gain or loss when
an asset is disposed of for an amount greater or less than the fair market value
of such asset at the time it was transferred to the Company. Each Member will be
treated as the owner of a pro rata portion of each asset, including cash,
received by and held by the Company and 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 Company. Accordingly, there is no
provision for federal or state income taxes in the accompanying consolidated
financial statements.
3. SALES OF ASSETS
No assets were sold during the period from December 10, 2003 through December
31, 2003.
4. LIQUIDATING DISTRIBUTIONS
In December 2003, the Company made a liquidating distribution to the Members in
the aggregate amount of approximately $19 million.
5. SUBSEQUENT EVENTS
During the period from January 1, 2004 through March 30, 2004, the Company (a)
sold its interest in the Travelodge Hotel in Portland, Maine for aggregate net
proceeds of approximately $300,000; (b) made a loan in the amount of
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$250,000 to American Benefit Resources, Inc. (f/k/a Investment and Benefit
Services, Inc. and referred to herein as "I&BS") on March 5, 2004 and (c) made a
loan in the amount of $1.2 million to I&BS on March 19, 2004.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The Company did not employ independent accountants to perform an audit on the
financial statements contained in this Form 10-K.
PART II
ITEM 10. DIRECTORS AND OFFICERS OF THE REGISTRANT.
Arthur J. Steinberg Mr. Steinberg was appointed ICA Trustee on December
5, 2002 and manages the Company in his separate
capacity as the Manager. Mr. Steinberg is a partner
at Kaye Scholer LLP and has been a member of the
firm's Business Reorganization Group since 1979.
ITEM 11. MANAGER'S COMPENSATION.
Arthur Steinberg Legal expenses paid to Kaye Scholer LLP for the
period from December 10, 2003 through December 31,
2003 were $92,834. Legal expenses previously paid to
Kaye Scholer LLP during the period from December 5,
2002 through December 10, 2003 through the bankruptcy
process were approximately $2.5 million. Mr.
Steinberg, appointed ICA Trustee and the Manager of
the Company, is a partner at Kaye Scholer LLP in New
York.(1)
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED MEMBER MATTERS.
None.
PRINCIPAL MEMBERS
There is no public market for the Membership Interests. The Membership Interests
are not transferable except by will, intestate succession, order of a court or
operation of law.
No Members hold Membership Interests constituting five (5) percent or more of
the aggregate Membership Interests of the Company.
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(1) Mr. Steinberg is serving as ICA Trustee and the Manager of the Company,
and, when appropriate, as a lawyer. Mr. Steinberg is charging $500/hour
for services in his capacity as ICA Trustee, pursuant to discussions
with the staff of the SEC. For all other work, he is charging his
customary rate of $635.00/hour, which rate is subject to periodic
adjustment. Because in many instances it would be difficult to allocate
between the two categories of services, his time has been allocated
using a formula of 40% lawyer-time and 60% ICA Trustee-time. In most
instances he was serving solely as lawyer, which would be at the higher
rate, but this methodology is proposed to avoid the burdensome and time
consuming exercise of providing a more exact allocation.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
RELATIONSHIP WITH KAYE SCHOLER LLP. Legal expenses paid to Kaye Scholer LLP for
the period from December 10, 2003 through December 31, 2003 were $92,834. Legal
expenses previously paid to Kaye Scholer LLP during the period from December 5,
2002 through December 10, 2003 through the bankruptcy process were approximately
$2.5 million. Mr. Steinberg, appointed ICA Trustee and the Manager of the
Company, is a partner at Kaye Scholer LLP in New York.
ITEM 14. CONTROLS AND PROCEDURES.
Not applicable.
PART III
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) FINANCIAL STATEMENT SCHEDULES
None.
(b) REPORTS ON FORM 8-K
None.
(c) EXHIBITS
2.1 First Amended Joint Liquidating Plan of Reorganization with
Respect To InterBank Funding Corp., IBF Collateralized Finance
Corporation, IBF VI-Secured Lending Corporation and IBF
Premier Hotel Group, Inc., declared effective by the United
States Bankruptcy Court for the Southern District of New York
by order dated August 14, 2003 and declared effective on
December 10, 2003
2.2 IBF Fund Liquidating LLC Operating Agreement, dated September
25, 2003, by and among IBF Fund Liquidating LLC and each
person who becomes a Member of the Company pursuant to the
Plan.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
IBF FUND LIQUIDATING LLC
By: /s/ ARTHUR J. STEINBERG
-----------------------
Arthur J. Steinberg
ICA Trustee and Manager
Dated: March 30, 2004
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