On September 19, 2024, the Supervisory Board of Woodbridge Liquidation Trust (the “Trust”) approved a final distribution totaling approximately $4.1 million from the net sales proceeds of the Trust’s remaining forfeited assets. This distribution, amounting to about $4.65 for every $1,000 in qualifying victim claims, will be made exclusively to eligible victims in line with the Trust’s agreement with the Department of Justice. Payments to these victims are expected to begin around December 20, 2024.
Suspension of Interestholder Distributions and Ongoing Construction Defect Claim
In August 2023, the Trust suspended distributions to its interestholders due to a construction defect claim filed against one of its subsidiaries (the “Development Entity”). The claim, which was brought by the buyer of a single-family home sold by the Development Entity, alleges damage to a retaining wall, cracking, soil movement-related damage, and other issues.
While the extent of the potential damages related to the construction defects is still unknown, the Development Entity has sought recourse from third parties. It believes the defects stem from design and construction work completed by others before it acquired the property. On May 28, 2024, the Development Entity filed a lawsuit against 13 parties involved in the property’s development, seeking contribution for investigation and repair costs. However, it has since dismissed three defendants from the case.
Insurance Coverage and Legal Actions
The Development Entity holds both primary and excess coverage insurance policies for risks arising from the development of the single-family home in question. Despite submitting the claim to its primary insurer in June 2023, the insurer has agreed only to defend the entity but has not agreed to indemnify it or cover all the incurred costs. As a result, the Development Entity filed a lawsuit against both the primary and excess insurers in August 2024, demanding defense and indemnification for the construction defect claim.
The litigation has been temporarily stayed until January 29, 2025, to allow for informal resolution. In the meantime, the Development Entity has dismissed its claims against the excess insurer, pending further clarity on whether the excess policy will be activated.
Remediation and Repair Activities
Engineering consultants have been working on a phased repair plan for the property, starting with the repair of the retaining wall. The Development Entity submitted a building permit application to the Los Angeles Department of Building and Safety (LADBS) on August 7, 2024. Once the permit is granted, the repair work will begin, though additional phases of remediation and monitoring will be needed for other issues. The full scope, timeline, and costs for these repairs are yet to be determined.
The Trust cannot currently estimate the total costs of the repairs, but anticipates that some of these costs may be covered by third parties, including the Development Entity’s insurers. The ultimate financial exposure for the Trust remains uncertain and could exceed current financial estimates.
Future Updates and Filings
Interestholders are encouraged to monitor the Trust’s future filings with the Securities and Exchange Commission for updates on distribution schedules, the construction defect claim status, and the Trust’s ongoing legal actions.
About Woodbridge Liquidation Trust
Woodbridge Liquidation Trust was established on February 15, 2019, to implement the First Amended Joint Chapter 11 Plan of Liquidation of Woodbridge Group of Companies, LLC and its affiliates. The Trust is responsible for prosecuting various causes of action, resolving claims against the debtors, paying administrative and priority claims, and distributing available cash to the Trust’s stakeholders, subject to necessary reserves and expenses.
