United Development Funding IV fka UDFI

[REITInvestor58]

https://nam11.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.prnewswire.com%2Fnews-releases%2Ffollowing-years-of-governance-failures-court-orders-udf-iv-to-hold-trustees-election-in-2024-302123008.html%3Ftc%3Deml_cleartime&data=05%7C02%7Cjgood%40nexpoint.com%7C5bc8ad69c79744b49d5e08dc62dbf608%7C16153bae9a0c43d99983f4fb30ad2161%7C0%7C0%7C638493944087356712%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C0%7C%7C%7C&sdata=Rb7VnJvprykCi0QPCs0ccdfuN6IiP13JyXWIwyEdNyc%3D&reserved=0

[Phaedrus77]

It’s currently under appeal to the TX Supreme Court. I wonder when we’ll get financials. How long can it take to audit ~30 loans?

[Davlund]

As we continue the slow pace of our return of capital from UDF IV, is anyone aware of any progress by Nexpoint's actions towards the Board? I'm of the belief they are our best chance of moving away from the status quo, but I have no idea as to what is happening along those lines.

[Phantom Phlyer]

I got it a few days ago.

[Runaway27]

Has anybody received the Ha Ha windfall of a dividend from IV or V yet? Or did all that go to Hollis's commisary account in PRison?

[Phaedrus77]

That’s odd, as the Form 8937 is posted on UDF’s website. Maybe they didn’t send it to whatever place (brokerage, transfer agent, custodian, etc?) they were supposed to.

All of the distributions in 2023 were return of capital.

[scinsb]

Yes, not with Fidelity but they are the clearing house. I did get a prelim 1099 today

[freddie me]

Distribution https://udfonline.com/united-development-funding-iv-and-udf-income-fund-v-announce-distributions-for-q1-2024/

[curious analyst]

My 1099 from Fidelity has been delayed. They say the delay is due to waiting for information from UDF. Is this true for anyone eLse? Any ideas about what information is needed?

[REITInvestor58]

https://nam11.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.prnewswire.com%2Fnews-releases%2Fnexpoint-comments-on-united-development-funding-udf-iv-bylaw-change-and-litigation-302057155.html%3Ftc%3Deml_cleartime&data=05%7C02%7Cjgood%40nexpoint.com%7C4e6060e5f6be4a4df39c08dc28aa7fd6%7C16153bae9a0c43d99983f4fb30ad2161%7C0%7C0%7C638429959964805848%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C0%7C%7C%7C&sdata=TqFPtWEKok5zDeTh1GRJqLy%2BNLZwFC6Oy9lGE7JUObg%3D&reserved=0

[Davlund]

I understand that, I bought a number of shares in the $3-$4 range as well, outside of the window for the claim. I'm just wondering what the distribution was per share of those that were in the window. I had 125 shares that they approved and another roughly 650 shares in an IRA that were purchased during the fair fund window. I recieved two checks, one for roughly $200 another for $300. Numbers don't quite seem to add up. Thus wondering if those that keep better track of this mess have an accurate distribution per share.

[Phantom Phlyer]

In my case, it had to do with the shares owned during the period specified by the Fair Fund. I ended up buying more when the price of IV went to around $2, and that was after the holding period. Therefore, those shares were not included in the payment.

[Davlund]

A few questions about the fair fund check that many of us received. After sending in the claimant information, did any of you get an acceptance notice of your claim? On our joint account I received a partial acceptance, stating some of the shares were rejected. On shares held in my IRA, I did not receive any notice. The letter stated that IRA payment would be sent to the Adim. of the IRA, but I did get two checks from the fair fund and for the life of me I can't figure out the per share payment. I noticed that two posts on this site had different per share payments. A fellow investor friend of mine has the same question, what is the final per share payment.. The interest might differ a bit, thanks.

[Phaedrus77]

Bylaws were amended to get rid of (some? all?) of the restrictions that were put in place to keep NexPoint from nominating or serving as trustees.

Baby steps.

[TruthSheperd]

That explains the loss for the year at least some of it. So by that logic, do all lawsuits against the company basically result in a two for one hit to the net asset value of IV? First all the legal fees defending and second the actual damages paid? All the while collecting fat management fees...

[Phaedrus77]

Good point. Forget sending Hollis and the felons a thank you note.

Please send me one!

[ictjay]

IV

[Davlund]

Is this a settlement from Udf III and UDF IV or just IV?

[REITInvestor58]

Not true - significantly north of $1, but I do feel your pain (as I feel the pain for all shareholders). Just pointing out that the return is not Ill-gotten gains recovered from criminals but rather a return of your own capital - the criminals still have your dough (or at least your portion of $7.2 million)!

[ictjay]

I'm sure you owned it less than $1 as opposed to $20.

[REITInvestor58]

The Fair Fund was ordered by a federal judge in the 2018 SEC settlement to have been funded with the $7.2 million of disgorgement proceeds that Hollis, Cara, Ben and Todd were to pay pursuant to the SEC settlement in July 2018. However, UDF IV actually paid the $7.2 million, as testimony in the retention hearing after the criminal conviction showed. Therefore, those of you who received a Fair Fund payment just received an additional return of capital that has further depleted the net assets of UDF IV. Those of us who bought shares after the holding deadline have just seen the consummation of another egregious act of shareholder abuse - corporate funds being unlawfully used to fund a settlement with people who sold shares to us and left us holding the bag!

[Runaway27]

I also got a Fair Fund distribution but it was only about 0.30 a share, I'm not sure why there is a difference in the amounts? Would be nice if it was monthly, That would be around the amount that I would receive if the thief broker, Hollis and company were legit!

[Phaedrus77]

Looks like you had to hold between 2011 & 2015. Congrats on getting something!

Be sure to send Hollis and the other felons a thank you note

[Phaedrus77]

Did you have to hold shares at a certain point in time to receive that?

[ictjay]

Roughly $.90 a share.

[bsmenz]

No way, what did you receive? my parents have been waiting patiently for a UDF fair fund distribution.

[ictjay]

Just recieved a check from UDF Fair Fund! No clue this was happening.

[Phaedrus77]

Unfortunately, I agree.

[TruthSheperd]

At this point I think it's more about keeping the scam going and collecting as much fees as possible until they can't.

[Phaedrus77]

Another year of no income. All of the distributions in 2023 were ROC.

8+ years after Bass’s post and they’re still entangled in lawsuits and making no money. I wonder how much the Advisor has made in that time period.

They filed yet another appeal on the Nexpoint suit…this one with the TX Supreme Court. Far as I can tell, the lawsuit was filed almost 18 months ago and discovery still hasn’t started. Makes you wonder what they are they hiding this time.

[Enterprising Investor]

Certificate and Report of Inspector of Election (12/15/23)

https://udfonline.com/wp-content/uploads/2023/12/Certificate-and-Report-of-Inspector-of-election-United-Dev.-Funding-IV.pdf

[Phaedrus77]

Two questions were answered.

What are the trust's future plans - it'll continue to originate loans.

What is it doing about shareholder liquidity - likely will never list on NASDAQ again and they are exploring other liquidity options.

First annual meeting in 8 years, and those are the only questions they answered. Meeting literally lasted ~10 minutes, and 2 of those minutes were dead silence to give shareholders time to vote.

[curious analyst]

Did the meeting last only 10 minutes?

[Enterprising Investor]

Please enlighten us.

[Phaedrus77]

Gotta tell ya, I've been to two companies' annual meetings in my life. Berkshire and UDF.

I can't imagine one better than BRK or worse than UDF.

Anyone else submit a question that wasn't answered?

[Enterprising Investor]

Order Denying Preliminary Injunction (12/11/23)

https://udfonline.com/wp-content/uploads/2023/12/NexPoint-Real-Estate-Opportunities-LLC-v.-United-Development-Funding-IV.-Order-Denying-Preliminary-Injunction.pdf

[Phaedrus77]

Thanks. I was able to find the control number. When you go to vote, it's in the upper right hand corner of the screen in the blue bar.

[TeamUp]

Here is what I found on the Schwab website in the UDFI Shareholder communication. "To participate in the Annual Meeting, including to vote at the Annual Meeting, shareholders of record should go to the meeting website at www.virtualshareholdermeeting.com/UDFI2023, enter the control
number found on your proxy card or Notice of Internet Availability of Proxy Materials (“Notice of Internet Availability”), and follow the instructions on the website. "

[Phaedrus77]

Does anyone know how to get the proxy control number if you hold shares at Schwab?

I was able to submit a question through Schwab’s site, but am not sure if I’ll be able to login to the meeting.

[Phaedrus77]

Does anyone know how to get the proxy control number if you hold shares at Schwab?

I was able to submit a question through Schwab’s site, but am not sure if I’ll be able to login to the meeting.

[Phaedrus77]

UDF lost its appeal in Nexpoint’s suit. I wonder what their next delay tactic will be.

[Phaedrus77]

Has anyone submitted questions for the annual meeting?

A few I’d like to see answered:

Why have the trustees punished the shareholders (who had nothing to with Bass) by staggering the Board, not holding a meeting in 9 years, not allowing shareholders to vote on all the trustees this year, not providing any financial information for ~6 years, etc.

Given that UMTH was running a ponzi scheme with the trust’s assets, why haven’t the trustees fired them and hired a new advisor?

Why doesn’t the Trust cease operations and liquidate?

Why did it take so long to get audited financials? Surely it’s just a coincidence that an auditor couldn’t be hired until AFTER the felons’ appeals were turned down.

I assume questions about the payment of the felons’ legal fees and SEC settlement will be ignored since it doesn’t pertain to the business of the annual meeting.

I assume any question about NexPoint and the lawsuits would get a boilerplate response about NexPoint not filling out the questionnaire.

[freddie me]

I concur, will not vote, will inform my custodian not to vote my shares

[REITInvestor58]

You are correct. The broker non-votes count toward a quorum. Then, under plurality voting, theoretically one FOR vote would elect Kenney (although that would certainly fuel more fire). Question is whether brokers will vote given fact company is no longer public and has had such a seedy past. Maybe if they hear from their clients “don’t submit proxies” they won’t submit proxies.

[Phaedrus77]

I think we're conflating two different things. The broker non-votes are only required for a quorum.

Once they have a quorum, the trustee only needs a plurality of votes to be elected.

I don't know how it all works, but assuming brokers are required to submit non-vote proxies for any shares they hold, then if >50% of shares are held in brokerage accounts, UDF will get its quorum.

If that's not the case, then I don't see how UDF would ever get a quorum....which mgmt would probably use as a justification to keep things just the way they've been (as they've done for the last 8+ years).

[REITInvestor58]

We will see what happens. Under NYSE rules (which govern broker proxy voting) brokers can’t vote for trustees without beneficial owner direction. Fact they are also ratifying auditors may result in them submitting proxies voting for that matter, but without actual beneficial owners submitting proxies, they can’t vote for trustees. UDFI may get a quorum due to the auditor proposal but Kenney will likely get very few votes. While that may reelect him for the short run, it would be a huge no-confidence vote increasing pressure to change.

[Phaedrus77]

In the 2015 election, there were zero broker non-votes. As you said, maybe things have changed though.

https://www.sec.gov/Archives/edgar/data/1440292/000114420415039309/v414194_8k.htm

Although, I actually think a no vote would send a stronger message. A lack of voting could just be taken as a sign of indifference.

[REITInvestor58]

Question is whether the brokers submit proxies. Given company is no longer public and doesn’t trade, and with all the controversy surrounding the company, then I don’t know how many brokers will vote. At a minimum, if massive numbers of beneficial owners withhold, it is evidence for the brokers and the courts that things aren’t right.

[Phaedrus77]

Are you sure that's correct?

From the last proxy filed with the SEC (I assume this year's proxy is similar):

"Abstentions and broker non-votes will be counted to determine whether a quorum is present. A broker non-vote occurs when a broker, bank or other nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that matter and has not received voting instructions from the beneficial owner."

I read that to mean that if you hold your shares at a broker, and don't fill out the proxy, the shares will still be counted for quorum purposes.

Given the lack of insider & institutional ownership, I'd be shocked if they could get 50% of shareholders to actually vote.

[REITInvestor58]

Under bylaws and Maryland law, voting in uncontested election is by plurality. That’s why the options are FOR or WITHHOLD. Therefore, as long as a quorum is present at the meeting (50% plus one share), so long as one share votes FOR, then Kenney will be elected. The only way to defeat that is to either contest the election, which under the bylaws you cannot do, as only the Advisor can nominate the Managing Trustee, or defeat the quorum (ie don’t submit proxy and hope no one else does). NexPoint is challenging the bylaw and seeking an order invalidating it, but given the pace that courts move, an injunction before the December 15 meeting date is iffy at best. Therefore, best chance is to beat the quorum.