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This seems to be an attempt by the government to answer the question of
"if this is a crime, where and who are the victims?".
So:
1. lenders got paid in full, so they are not victims.
2. builders - some had to look for refinancing of loans due to UDF IV
liquidity - question remains about Bass's fault in that (on its
looks very substantial, but trial was not conducted yet).
3. investors - the bottom line point has always been - were the loans
the funds made legitimate and was the cash flow projected to
happen likely to happen? I never heard a hard no from the
government.
4. brokers who misrepresented the loans (actually the collateral
profile and cash flow schedule in reality) should be punished
severly. they charge 6% for their services. they get paid by the
issuer, but that cost gets rolled into the investment. I hope
this makes some kind of fiduciary duty responsibility on these
middle men.
5. I wish someone could compile a schedule of projects, expectations
of cash flow timing and present it as a type of liquidation
analysis of IV. that would make it clear once and for all if the
loans are money good and if investors were taken for a larger
ride than cash flow timing. I suspect the government and Bass
would NOT want to know those answers, but I would want to lnow
officially. I think I know them unofficially already.
You can not submit information like that without verification. there are
rules as to what you can claim and based on what. at least that is
what I know about courts.
I am sorry, but you do have an unaudited balance sheet. since the
balance sheet was submitted to a court of law, verification of cash
and balances had to have been done. same thing for ownership of
assets of joint ventures.
If you look at the repayments over 5 years (over 80% of loans at 2015
repaid), one would have to assume that most of the then loans were
realized. some of it was natural and some due to Bass (having to
realize > $170M in loans to pay back loans). looking at where the
market is, one would have to conclude that remaining reserves would
need to be reversed and that whatever was in joint ventures is
probably more valuable now. also, keep in mind that book value
usually gives very little value to options on extra payments due to
certain conditions being met.
The rate of realizations of land and the valuations in which those
happen have to have improved the fund condition by a lot.
I think you got some answers and some new questions with the unaudited
results.
1. one has to assume that the balance sheet was verified by customers
and bank statements.
2. one has to wonder where in the balance sheet are the legal proceeding
expenses. we know that would be a big number as I think they are
paying for most or all UDF funds. only other option is that UDF
itself is paying for the other entities, but from where? which leads
us to
3. how much are the management fees IV is being charged? based on what
asset value?
4. since the fund is recycled mostly to existing customers, what are the
expenses of management now?
5. balance sheet numbers were net of reserves. how much are the gross
numbers and how much are the reserves?
6. if IV paid the $8.2M fine to the sec (for their managers' lapses
vs the investors), how was that accounted for? was it a straight
expense?
7. going back to 2: are legal fees not books as they are at risk?
(no assurance of recouping).
8. to your question: realized losses - a schedule. how much was created
by forced selling in order to close out loans? how much was later
organically.
9. what is in the joint ventures and what lands at what valuations plus
who are the partners and how much or how did they pay for it?
joint ventures could be where a lot of value resides. did they
bring foreclosed lands of bad loans into it?
I feel by the end of this year much of the legal Bass deal would be
eased and the data will be going out. until then, I am optimistic
based on what the collateral is, but everything is in the air.
The issue is that the trust agreement (just like partnership agreements)
have certain things built in. keeping your investors in the loop
regarding THEIR money is one of things. other things are annual
meetings/reports and the larger thing is the tax issue. people could
be looking at filling wrong information without knowledge of doing so.
The partnership / trust agreement is a matter of state law, not sec.
Beyond that, the sec can not wash their hands off because they decided
to deregister them. the trust paid fees for sec protections of their
investors. you can not cancel the past.
When they were e-mailing with Bass they stated they will buy at no more
than 10% - 20% of real nav. you do the math as to their estimates
here. keep in mind that there could be a lawsuit against former
managers as to charging fees while not doing their part of the
management agreement (annual meeting, reports etc.). that could factor
in as well under certain scenarios.
if Nexpoint were serious - they would have showed a plan to:
1. pending independent analysis -
a. get cancellation of the existing udfi management agreement and
b. combine the assets with one of their public funds at an equal
discount to nav as the public fund trades at.
2. keep sufficient monies for Bass legal action on the side while
reserving 100% of the resulting funds to be distributed to legacy
unit holders. if they have an issue with the Bass legal action -
please disclose full conflict of interests.
3. someone (Nexpoint?) needs to provide for legal fees schedule as it
is pretty clear that IV was funding legal fees of all entities,
which puts it in a position to gain the most even if some of the
action is fruitfull. without that data - it should be clear that
Nexpoint has different motives than they stated.
My belief is that IV has tens of millions in legal fees here that are
not on the books (as they are sunk cost with unknown results at this
time) and that it could result in a lot more than mere damages to the
trust by Bass if won in court.
Why would unitholders not just invite other (more successfull over time
than Nexpoint) to bid for the potential contract? they are just a
large unitholder and no more after all.
based on what nexpoint has in its history or what they tried to do
at HFRO, I think they really have a great case here...
I would not leave anything to DOJ or SEC. there is a clear case against
Bass for his actions with regards to the fund. if he went to the
Authorities reported and moved away from it - he would have been doing
the right thing. he did something completely different and the
question is still - were the loans the fund made money good or not.
based on currently available information, the answer is money good.
he claimed they were not and got people to sell it based on deceptive
presentations under a phony alias.
People are frustrated about the very long time it takes to get the value
in the fund, but they forget that (based on current info.) the value
is there. part of the value is the damages Bass created for HIS OWN
BENEFIT. those damages are to the people who actually sold based on his
induced hysteria and part as damage to the trust itself.
There is a process to open people's eyes and mr Bass followed none of it.
He did not do anything for the purpose of justice and his emails show it.
Sorry for being blunt, but the legal process is nearing end and lets get
it through the finish line.
I have said it before and will say it again: this is a fight between
two predators on a prey. I think its easy to figure out what unitholders
are.
Greenlaw etc. recruited money based on a promise there will be a stable
cash flow that will allow a constant income. the reality was that the
value is there, but the cash flow is not a consistant stream but a
multiple future liquidity events. does that makes them a ponzi like?
no. does it make them worthy of punishment? yes.
Mr Bass is not vindicated by this and there is still a question about
the sec settling and then another arm of the government suing for the
same actions.
For me, I think unitholders should think about starting something to
separate the fund from its current manager. knowing that this never
ending saga just moved a phase makes me think that while there is a
claim for separating from the manager, we should think about using it
or get a new deal with the manager.
I think ego size was a problem throughout this saga (from all sides).
Ironically, a criminal verdict of guilty would set a trust free from
its managers (if unitholders sue) which would decrease discount vs
nav. such clause is a usual one in partnership agreements, so it
should be in a trust as well.
watching over time how the process works, there will be a lengthy
appeal process and I think the will to go after Bass will get
stronger. where it relates to IV, they have a good case. even if
he now claims that the $65M loaned to another fund was an excuse,
his actions tell a different story - and as far as I know, the
government never said that money was not repaid in full.
what do you base your statement on?
You are correct that the former unit holders of the TRUST will receive
the bulk of the damages (they were the ones injured from Bass).
The legal fees the TRUST paid for them will have to be paid back (as the
trust does not have the responsibility to sue in their name). surely
part of a verdict (assuming Bass is found guilty - logical conclusion)
would be paying for the legal representation.
My point all along was that IV's claim is for the damages to their
business and ability to conduct and grow it. I estimated (and still
believe) that to be > $3 per unit before legal costs and damages.
One of the key things over here is that Bass blew up financing deals of
banks that have conducted their own due diligance to begin with and
where the money was designated for specific things.
please stop it. the Bass case is regarding his accusations against
fund IV and there are very few excuses for what he did. the damage
he created is in > $100M for the then unit holders and worse than
that, he did not just manipulate information, but also went further
and on purpose tried to destroy the assets of the trust itself.
I calculate that part to be ~$100M. the reason the damage to former
unit holders is not higher is due to many not selling. those who
did not realized their losses, in theory, should be compensated by
damages to the trust itself (as they still hold the uniits in the
trust).
I do not acknowledge anything that has to do with the udf people etc.
all I am looking at are the actions of Bass. he said one thing
publically and did the opposite in private. he was trying to destroy
the value of the assets of the trust.
Bass's claims about ponzi etc. are ignoring the fact that while
asset sales and loans were made between funds (hardly disclosed -
udf major problem) there was an offsetting entry in the form of
payment for these monies. atleast when it comes to IV.
The whole story here should focus on Bsss vs UDF IV fund. Bass did
not short any other fund, trust or entity.
If Bass would have wanted to be a good semaritan, he could have done
things differently: the results would have been a reduction of IV
valuation, but the costs of the short position would have killed
him - so he took shortcuts - which undercuts his defense.
Time will tell, but that is my take.
I have very little sympathy for both sides in this fight between UDF
people and Bass. both sides wanted to take away the investors' money
and the irony of the story is that the investors' money might become
free from both as a result...
I am sorry, but lets put some relevance into things:
1. the vast majority of Bass's damage was to the former unit holders
due to:
1. misrepresenting the status of projects they highlighted as
basically dormant.
2. claiming the FUND is operated as a ponzi scheme.
3. making claims that Bass knew were false - we know it due to
discovery. Bass was raising a fund to take over the assets.
this claim is funded by the fund, but does not belong to the fund.
thats a huge point. once a verdict comes and damages are
established, the fund should get refunded that money.
2. the trust itself has a claim regarding Bass trying to destroy its
commercial relationships (and succeeding as well) and trying to take
over the assets.
3. I have no idea if the udf people have a valid claim (I think they do,
but that is the debate now).
A Notes:loss of value for those who did not sell their units is not
established. what is a loss of liquidity? how much is it worth?
does the trust getting damages cure damage to unit holders who did not
sell their units?
We do not know the real damage here, but I would venture to put a
range of $100M - $200M in actual loss of value pre damages.
I would put also a number of $100M of actual damage to the trust based
on loss of margin, whatever losses from unscheduled realization of
loand in order to pay down debt quickly. that might be another debate
as to loan value, but the range of dispute will not be high. trust
damages could be high as well.
disclosures not being there have been addressed by SEC. this could be
a duplication unless something new is presented. loss reserves are something that goes between an auditor and its client. the severity of
loan loss will be interesting as by now we know the right numbers most loans were resolved at. we now have the wisdom of experience on our side. we can not judge an opinion based on knowledge at the time, but
it will not get ignored when you hear an expert opinion and you have the eventual resolution value.
He did go to the FBI, but only after he built the short position and
got the mechanics in place to exploit the assets in the fund - which
he knew were valuable. he got the FBI to do the dirty work for him.
We also need to remember that Bass's employee was an ex worker in that
FBI office, so he used that contact as well.
I am not depending UDF, but the actions of Mr Bass speak for themselves
in volumes. and not in a good way.
Here is another prediction - when this is all over, UDF would relist.
Please advise of how to get to read the federal case.
Next issue is that you are talking about UDF - not the UDF IV fund.
Buffington had a much bigger effect on a different fund than IV. I
do not remember exact numbers, but for IV it was not life altering.
Kyle Bass shorted a specific issue which is IV. he did not short
UDF itself. please explain how the specific allegations of Kyle
Bass against IV reconcile with reality so far.
If Mr Bass had issue with UDF - go to the SEC and give them the
information. lets call it civic duty. he did none of it.
we actually know what he did thru discovery and we know from UDF
what information categories Bass is refusing to disclose (to the
point the funds might be considered guilty due to no response on
certain discovery issues).
Your points seem like a deflection strategy from very specific
actions here. I am not a fan of UDF, but Bass did not short UDF.
The problem with everything Bass is claiming is that he can not explain his own
behavior as far as short and distort. if he was coming as an activist and presenting
a case against UDF management in order to take over management (a very
lucrative gig - fyi), he could have been believed. instead he went for forcing the
fund to go under so he could buy the assets on the cheap. you can see why
anything he claims now should be taken with a grain or two of salt. 90% of the
damage he created was to unitholders and to the IV trust. UDF itself is not much
of the damage that is sued by him. UDF doing any purchasing of older loans for
newer funds is being claimed to be a ponzi like behavior. that is a very tangible
claim. please show how the loan is not worth the amount paid for by the new fund.
its a very simple test. show that and you have a chance of proving something that
is not even related to your direct actions that caused most of the damage.
funny thing is that one of the allegations of UDF vs Bass in regards
to the discovery is that the topic of Nexpoint communications with
Bass still is not disclosed. there were a couple of emails, but nothing
else has been disclosed. UDF claim is that Nexpoint is basically an
agent over here trying to capture Bass's liability.
The price of $1.1 is a joke by the way.
https://courtsportal.dallascounty.org/DALLASPROD/DocumentViewer/Embedded/TsU3VxDM2rX_kRfCnHneHtuEwqTLE2_Bi9AcUDC7AS4Tl6K63WS6SFFa6WoYanxUrD7COHEi5uF0hveYFm4F8g2?p=0
starting page 7, the frp description and discovery intent makes a very
interesting reading as UDF is basically trying to broaden the cicrle
of defendants to employees of Hayman.
Starting page 11, RFP 64-66 are looking for investment information on
a basket of stocks that Hayman traded at in anticipation of the UDF
actions that later happened. interesting to see how much gains did
Hayman made out of UDF RELATED trading and not just UDF shorting.
gains are going to be a factor in determination of any damages or
panelties.
This is deeply personal and effective. I would not want to be Bass.
I think Bass is a brilliant person without recognition of its own
limitations. his ego is getting the better of him.
https://courtsportal.dallascounty.org/DALLASPROD/DocumentViewer/Embedded/fqUStbQgN-hhCGdlwm-OpbqeMgWDiU-xHmolZpffdoovroV7q95UFl9VpgScEZn9WATaTL7A7FZ3L96PoCFFCg2?p=0
look at the bottom of page 7. the problem that Hayman has is that third
parties are giving out e-mails between them and Hayman while those
e-mails should have been disclosed and given by the defandants
themselves. this also goes to the core of the proceedings against the
government employees, because some or much of the communication would
be between Hayman and those employees.
I guess Bass is not disclosing things that could make it really bad for
the defandants (worse than what was discovered so far).
It seems the means to committ the deed were far worse than the deed
itself.
you are right. I confused the facts. so used to Bass saying half
truths...
I thought Eisner chose to stop auditing UDF IV and stated it was not due
to disagreements and they were under a Bass compaign to stop auditing
the fund, so that the fund could not present audited financials on
time? since Eisner was the accounting firm for a long time, how did
they not found out the loans were impaired before? one would have to
ignore some facts in order to buy into Bass's argument. am I wrong?
The management of UDF could be good at actual management of investing
opportunities (can not really make a case either in absence of data),
but they did not explain their business model to the investors. that
was seized upon by Hayman (who I believe had a combination of analyst
who did not understand what he/she were reading and a boss with too
much ego and no self doubt).
What I am looking for at this point (beyond a legal resolution) is an
explaination for the fact that when I roll forward the numbers from
q3 2015 until q4 2020, there are > $100M that should have been created
from interest and are just not in the balance sheet right now. I
assumed quite high management fees (regardless of the fact that most
of the time activity should have been quite low) and reasonable legal
fees. the balance sheet numbers did not include what was the value of
lands in their joint ventures / partnerships. it had equity there, but
how much was the original land value and how much was it depreciated
by. I also do not know if there were any write offs during the five
years. I know about one. is the trust paying legal fees for all
entities and what is the pay back formula? I would assume that such
an expense would entitle the trust to more than 100% of the expense
from the other entities (for example, for value lost by unitholders
who sold as a result of misinformation by Hayman).
I know its a dumb question, but why would the trust not put a counter
bid to nexpoint? if nexpoint can offer $1.1, let the trust put a bid
offer of $2. the balance sheet is now out there and it should be
allowed for the trust to do so. they have $41M of cash as of q4 2020
and cash should continue to grow. buy as much as you can your own
units and when you go public again, sell it at a secondary. if
someone insists on selling low, buy it and remove it from the market.
Anyway, only my two cents.
bleeding hearts trying to do good in the world... or, maybe someone is
doing the bidding of a certain mr Bass and claim a contract of
management of a trust that could be paying 3%+ per year for who knows
what. people should look at HFRO and how nexpoint is trying to
convert it so they can trap money in and charge fees on it.
Hopefully UDF is looking at HFRO.
first thing is that finally there is a fully agreed on date and Bass
can not run away from it. as far as being rich and white - this guy is
a very well connected guy through giving money to establishment
people (mostly republican and much Bush). he gets the best lawyers, but
this time the other side is not scared or pressured.
zoom hearing to determine net worth of the defendants
https://courtsportal.dallascounty.org/DALLASPROD/DocumentViewer/Embedded/s-UPHhm9QbwSAONgz7AVr-CADK5WO8tVSHUKp4vlGob9Okn6mcluqhaI0pTEohwGV9MNM-NGVw0WzuDcWKF0ew2?p=0
They are also suing in Cook county, IL. that would be homecourt
advantage for the very well connected Edelman. based on the email
obtained through discovery, a court would have hard time to just
dismiss, but it will not be easy.
one more thing - I believe that Edelman would push for settlement and
that is mostly an IV claim. I also believe that if known to the media,
the Edelman lawsuit could have sagnificance well beyond this
individual case as highlighting the responsibility of pr company for
their methods of work and the bigger importance will be as to Edelman
itself. these guys started off at grey areas many years ago and it
seem they moved to the dark side quite a while ago.
I personally hope they do not get to neither admit or deny. I also
think this discovery could be used against them and their political
cause.
Since Edelman is so involved usually with anything WTO related, one
would think that a certain aspect of the media would love to highlight
who is behind the scenes of what information us, common people, get
to see about certain topics these days. that part of the media would
also love the highlight the lifelong friendship between Rumsfeld and
Edelman the father. those people were also involved in nerrative
design for certain administrations. these are, sorry to say, facts
and not speculation.
I am going quickly through the discovery emails. I remember what I
read, but did not bookmark those emails.
1. http://www.udfonline.com/wp-content/uploads/2020/07/MACKINAC002105-Dakan-Heyman-Capital-Mackinac-Partners-Joint-Venture-to-acquire-and-manage-UDF-assets-8.2.2015.pdf
meaning its not a ponzi scheme as there is underlying value here (even
at distressed values) of more than the debts at the time.
2. http://www.udfonline.com/wp-content/uploads/2020/07/MACKINAC0000250-Mackinac-Presents-DDO-Strategy-to-Hayman-9.24.2015.pdf
a presentation proposed by a potential asset manager for the future
fund. they outline the opportunity in some of the loans.
3. http://www.udfonline.com/wp-content/uploads/2020/07/MACKINAC0003171-Dakan-wants-to-understand-special-districts-better-10.12.2015.pdf
4. http://www.udfonline.com/wp-content/uploads/2020/07/MACKINAC0002583-Make-a-Poor-Impression-10.12.2015.pdf
while publically they are accusing IV of being a ponzi scheme, they
are discussing the development of one of the lands securing one of
the IV loans.
5. http://www.udfonline.com/wp-content/uploads/2020/06/Burdine-Literally-hundreds-of-millions-of-dollars-out-there-for-MUD-reimbursements.pdf
funny thing is that MUD bonds etc. represent progression of the
projects (which means lots for sale - which means repayment of
loans). fact never mentioned publically and the public statements
attacked UDF for having no prospects of having loans repaid.
6. http://www.udfonline.com/wp-content/uploads/2020/08/129_Cielo001183-Buffington-Investor-wants-Starley-to-force-UDF-to-abandon-investment-in-Buffington-Homes-8.26.2015.pdf
using UDF's created problems to make them sell assets at fire sale
prices.
These are a few that jumped, but I am not a lawyer.
on the Edelman issue:
http://www.udfonline.com/discovery/
look at "B. Supplemental Crime-Fraud Motion". there is plenty of
Edelman stuff there.
The emails actually proved that Bass was recruiting potential investors
for a fund to take over those loans which they publically said were
fraudulent and worthless. in fact, they are calling $100M - $200M
over secured. that was 2015.
The problem for all the parties here is that there are multiple
parties suing. the main financial damage was the direct loss of value
for the unitholders and I am not sure how any settlement can address
that part without full compensation. that part was originally > $250M
(if you did not sell, did you get hurt? yes, but compensation to the
trust should address that. not everyone sold).
The second and third issues are the damages to the management (UDF)
and to the actual trust / fund IV. the UDF damage will be tricky due
to what the managers did in the previous fund, but the damages to the
trust itself of IV should be fair game for compromise (in a perfect
world). the one part we can not calculate is the human factor and
the personalities involved here. the amounts spent on the legal battle
here indicate this is very personal.
Edelman is going to be an interesting weak link as they simply can
not afford to be found guilty here. connection to journalists is very
close to everything in their business and they are even now very
close to work politically (read the links in the lawsuit) and this
is going to be dug out against them if they go down here. how
damaging will their flipping be for Bass? probably as close to fetal
as you can. the emails here tie Edelman himself to this, so thats a
problem for him.
You are talking about deflation if gold is the standard again, but its
against logic: if the gold is the standard and based on the gold
amount vs dollars in the system (printed, created via debt etc.) the
ounce of gold should be worth much more than its current price - you
are talking devaluation of the dollar and inflation.
I am a spectator at this message board, but I could hardly breath when
you mentioned yuan being backed by gold. here is my take: every single
fiat currency would have to lose 95% - 99% in order to be backed by
gold (even the swiss franc). will gold standard ever come back? tough
to know as it will initially be catastrophic for a very large portion
of the population (and for politicians whose legacies will not be
admired any more), but if it that standard came back the Chinese
society would implode in a short while.
I took into account $6M per year
For accounting & legal plus I
Have the trust and not the
Manager pay the sec fine and the
Lawsuit settlement 100 percent
Out of pocket. I also expensed
16M per year for management
Services of a trust with lower
Asset amount and no financials.
The only thing to explain could
Extremely high expenses somewhere
And there is a limit to legal
fees with no iou from other udf
Entities offsetting them.
Here is a small mental exercise of trying to start with the 10-Q of q3 15
to q4 20:
links:
q3 2015 - https://www.sec.gov/Archives/edgar/data/1440292/000114420415063906/v423157_10q.htm
page 3 has the balance sheet.
q3 2015 activities in between q4 2020
cash and eqv. $27,741,677 $41,205,071
notes balance $584,458,367 -$496,000,000 $361,328,093
(includes accr. +$154,000,000
interest,
related party
etc.)
liabilities +$170,000,000
$173,901,030 $3,911,698
reducing assets:
dividends 4 x 0.065 x 30,685,915 = -$7,978,338
we know that $496,000,000 were repaid and out of it $182,300,000
were paid against the $170,000,000 of bank loans. that means that
$314,000,000 were net received by the trust. $154,000,000 were
either originated or advanced on existing loans in 2016 - 2020.
I will use $160,000,000 / 5 = $32,000,000 as average reduction in
net balances each year.
more activity:
2016 notes receivables interest and interest expense minus
management expenses
0.11 x $584,458,367 = $64,290,420
interest rates higher due to initial fees not for full loan period.
0.07 x $173,901,030 = -$12,173,000
management expense = -$16,000,000
debts paid back and loans monetized.
2016 - 2020 notes receivables interest income
assuming loan repayment paid for debt repayment and relatively
healthy cash position of $40,000,000 is maintained plus
$6,000,000 per year litigation expense is used (more than
relative portion of its share plus fines) -$6,000,000
------------
notes repayments (increase in cash) -$ 32,000,000
bank debt repayment -$182,000,000
2016 ending at: $400,575,787
2017 -
assume interest is lower on newer loans and portion of assets do
not have 13% interest ($65M related party assumed at 7%). jv
begins to happen.
interest income 0.11 x $400,575,787 = $39,473,120
management expense -$16,000,000
litigation and legal -$ 6,000,000
-------------
repayments (increase in cash) -$ 32,000,000
$390,639,123
2018 -
assume interest at 10% again.
interest income 0.11 x $390,639,123 = $42,970,303
management expense -$16,000,000
litigation and legal -$ 6,000,000
sec settlement -$ 8,200,000
class action settlement -$10,000,000
-------------
repayments (increase in cash) -$ 32,000,000
$361,409,426
2019 -
assume interest at 10% again.
interest income 0.11 x $361,409,426 = $39,755,036
management expense -$16,000,000
litigation and legal -$ 6,000,000
-------------
repayments (increase in cash) -$ 32,000,000
$347,164,463
2020 -
same assumptions $325,164,463
minus dividend -$ 8,000,000
-------------
repayments (increase in cash) -$ 32,000,000
final active assets: $323,352,554
According to this calculation (which I believe is on the conservative
side), starting point was $584M of active assts. $496M was repaid
over a 5 years period. $170M of which was done in 2016 and $182M
was repaid to the banks. $154M of new loans and advanced on existing
ones were made. using the assumption of only 11% interest rate (we
do not know anything about the rates for new loans or advances and
we do not know related party loans throughout the five year period),
a very generous $16M management expense each year, $6M litigation
and regulatory expenses each year and $32M net repayments each year
we should have had $160M of increase of cash from $27M. instead we
have only $41M. at the same time active assets are at $361M which
is $38M above my rollup (higher interest rate should explain that).
so: $27M (q3 2015 cash) + $160M (repayments) - $41M (q4 2020 cash) -
($361M - $323M) = $108M I do not know exactly how to account for.
we know there should be on top of that allowances for bad debt. they
used to be 1% of the loan portfolio.
as far as the $108M, are there much higher litigation costs than I
take into account? who knows.
if IV is paying for the litigation expenses of all the UDF family,
should there be somewhere a mechanism to repay the fund? IV has
a rather limited size of a claim (I estimate the trust to have
about $100M while loss of value of then shareholders is the big
one and UDF management itself having much higher than $100M).
mathematically, IV should carry only 10% - 15% of the legal fees.
I believe the shareholders lawsuit for the ones who held when the short
attack happened is included and is actually the bulk of the damages
requested. the other parts of the lawsuit involves UDF itself suing
for damaging their reputation and ability to make money and then you
have the lawsuit for damages to the funds themselves (mostly IV being
the subject matter).
UDF claims that IV was prevented the opportunity to increase its
business (some of it using borrowings and making a profit on the
spread) and there is that little thing of preventing the trust from
getting an auditor, which prevented the trust from filling to the
sec which in turn removed liquidity or ability to recruit money.
His spin has been that those loans were never going to get repaid.
The issue with the argument is pretty clear: there is a clear loan
with documents and conditions for payment plus there is a collateral
that would cause loan repayment if the land reaches the sales phase
of parcells. needless to say that the collateral is quite valuable
these days, as people are migrating to those same types of locations
as the land is.
To be clear: this single number is probably unaudited and there are
caveats to it. those might be about how much legal fees were
allocated to the fund by the very expensive legal team. the fact
that most of the claim is not for the fund might be an issue for
the management. second issue is management fees: if most of the
fund activity was mundane management of existing loans, how much
are you entitled to charge for that.
The book value itself: what allowances are carved out, how does the
market value of the loand stack against the book value?