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United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

Quarterly Report under Section 13 or 15(d)

of the Securities Exchange Act of 1934

 

For the quarter ended September 30, 2012 Commission file #0-16976

 

 

ALP LIQUIDATING TRUST

(Exact name of registrant as specified in its charter)

 

 

Delaware

(State of organization)

36-6044597

(I.R.S. Employer Identification No.)

   

900 N. Michigan Ave., Chicago, Illinois

(Address of principal executive office)

60611

(Zip Code)

 

Registrant's telephone number, including area code 312-915-1987

 

 

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 (the "Exchange Act") during the preceding 12 months (or for such a shorter period that registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes S     No £

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.

 

  Large accelerated filer £   Accelerated filer £  
  Non-accelerated filer £   Smaller reporting company S  

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes £     No S

 

 

 

1

TABLE OF CONTENTS

 

 

 

Part I   FINANCIAL INFORMATION    
         
Item 1.   Consolidated Condensed Financial Statements (unaudited) 3  
         
Item 2.   Management’s Discussion and Analysis or Plan of Operation 14  
         
Item 4T.   Controls and Procedures 15  
         
Part II  OTHER INFORMATION    
         
Item 1.   Legal Proceedings 16  
         
Item 6.   Exhibits 16  
         
SIGNATURES 17  

 

 

 

 

2

Part I.  Financial Information

     Item 1.  Financial Statements

 

ALP LIQUIDATING TRUST

 

Consolidated Condensed Balance Sheets

 

 

Assets

 

September 30,

2012

(Unaudited)

 

December 31,

2011

           
Cash and cash equivalents $ 18,266,612    $ 19,074,914 
Prepaid expenses and other assets   54,113      53,013 
          Total assets $ 18,320,725    $ 19,127,927 
           
Liabilities and Unit Holders’ Equity
           
Accounts payable and accrued expenses $ 229,626    $ 167,012 
          Total liabilities   229,626      167,012 
           
Commitments and contingencies          
           
Unit Holders’ equity   18,053,960      18,923,795 
           
Non controlling interest   37,139      37,120 
           
          Total equity   18,091,099      18,960,915 
           
          Total liabilities and Unit Holders’ equity $ 18,320,725    $ 19,127,927 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

3

ALP LIQUIDATING TRUST

 

Consolidated Condensed Statements of Operations

 

For the Three and Nine Months Ended September 30, 2012 and 2011

 

(Unaudited)

 

 

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

  2012   2011   2012   2011
Income:                      

  Interest and other income

$ 1,695    $ 317    $ 81,891    $ 5,590 
                       
Expenses:                      
  Professional services   209,539      141,734      620,986      282,168 

  General and administrative

  111,593      101,025      316,843      316,028 
  Other   3,640      1,777      13,878      19,818 
      Total expenses   324,772      244,536      951,707      618,014 
                       
      Net loss   (323,077)     (244,219)     (869,816)     (612,424)
                       

      Less: Net income (loss)

       attributable to

       non-controlling interests

  (8)     (29)     19      (76)
                       

      Net loss attributable to

        Unit Holders

$ (323,069)   $ (244,190)   $ (869,835)   $ (612,348)
                       

      Net loss per beneficial

        interest unit

$ (0.73)   $ (0.55)   $ (1.96)   $ (1.38)
                       

      Cash distributions per

        beneficial interest unit

$   $   $   $

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

4

ALP LIQUIDATING TRUST

 

Consolidated Condensed Statement of Changes in Unitholders’ Equity

 

For the Nine Months Ended September 30, 2012

 

(Unaudited)

 

 

 

  Total  

Unit

Holders

 

Non-

Controlling

Interests

             
Balance, January 1, 2012 $ 18,960,915    18,923,795    37,120 
Net income (loss)   (869,816)   (869,835)   19 
             
Balance, September 30, 2012 $ 18,091,099    18,053,960    37,139 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

5

ALP LIQUIDATING TRUST

 

Consolidated Condensed Statements of Cash Flows

 

For the Nine Months Ended September 30, 2012 and 2011

 

(Unaudited)

 

 

 

  2012   2011
Operating activities:          
  Net loss $ (869,816)   $ (612,424)
  Changes in:          
      Prepaid expenses and other assets   (1,100)    
      Accounts payable and accrued expenses   62,614      (254,245)
          Net cash used in operating activities   (808,302)     (866,669)
           
          Decrease in cash and cash equivalents   (808,302)     (866,669)
           
          Cash and cash equivalents, beginning of period   19,074,914      20,216,787 
           
          Cash and cash equivalents, end of period $ 18,266,612    $ 19,350,118 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

6

ALP LIQUIDATING TRUST

 

Notes to Consolidated Condensed Financial Statements

 

September 30, 2012

(Unaudited)

 

 

Operations

 

On September 30, 2005, Arvida/JMB Partners, L.P. (the "Partnership") completed its liquidation by contributing all of its remaining assets to ALP Liquidating Trust ("ALP"), subject to all of the Partnership's obligations and liabilities. Arvida Company ("Arvida"), an affiliate of the general partner of the Partnership, acts as Administrator (the "Administrator") of ALP.

 

In connection with its formation, ALP issued a total of 448,794 beneficial interest units to the partners of the Partnership ("Unit Holders"). In the liquidation, each partner in the Partnership received a beneficial interest in ALP for each interest the partner held in the Partnership. As a result, a partner's percentage interest in ALP remained the same as that person's percentage interest was in the Partnership immediately prior to its liquidation.

 

Upon completion of the liquidation of the Partnership, pursuant to Rule 12g-3(a) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), ALP elected to become the successor issuer to the Partnership for reporting purposes under the Exchange Act and elect to report under the Exchange Act effective September 30, 2005. ALP has assumed all reports filed by the Partnership prior to liquidation of the Partnership under the Exchange Act. Throughout this quarterly report, references to ALP shall be deemed to include activities of the Partnership prior to September 30, 2005.

 

Summary of Significant Accounting Policies

 

Readers of this quarterly report should refer to the audited financial statements for the fiscal year ended December 31, 2011, which are included in ALP’s 2011 Annual Report on Form 10-K (File No. 0-16976) filed on March 21, 2012, as certain footnote disclosures which would substantially duplicate those contained in such audited financial statements, and which are required by U.S. generally accepted accounting principles for complete financial statements, have been omitted from this report. Capitalized terms used but not defined in this quarterly report have the same meanings as in the 2011 Annual Report.

 

The unaudited consolidated condensed financial statements and notes have been prepared on the same basis as the annual audited financial statements and include all adjustments, which are in the opinion of management, necessary to present a fair statement of ALP's financial position, results of operations and of cash flows as of and for the interim periods presented. The results of operations for the nine months ended September 30, 2012 are not necessarily indicative of the results to be expected for the year ending December 31, 2012 or for any other interim period or for any other future year.

 

 

 

7

Basis of Presentation

 

Until the ultimate completion of the liquidation, winding up and termination of ALP, it is currently anticipated that ALP will retain all or substantially all of its funds in reserve to provide for the payment of, the defense against, or other satisfaction or resolution of obligations, liabilities (including contingent liabilities) and current and possible future claims, and pending and possible future litigation. It is not possible at this time to estimate the amount of time or money that it will take to effect ALP's liquidation, winding up and termination. That portion, if any, of the funds held in reserve that are not ultimately used to pay, defend or otherwise resolve or satisfy obligations, liabilities or claims are currently anticipated to be distributed to the Unit Holders in ALP at a later date and may not be distributed until the completion of the liquidation. At such time that ALP considers its liquidation, winding up and termination to be imminent and its net realizable assets to be reasonably determinable, it expects to adopt the liquidation basis of accounting.

 

Various factors may affect the timing of completing the liquidation, winding up and termination of ALP and the amount of liquidating distributions of funds, if any, out of those retained in reserve. These factors include the time and expense to resolve all obligations, liabilities and claims, including contingent liabilities and claims that are not yet asserted but may be made in the future. Among other things, delays in resolving pending or threatened litigation or other asserted claims, currently unasserted claims that arise in the future and other factors could result in a reduction in future distributions to Unit Holders in ALP and could extend the time, and significantly increase the cost, to complete the liquidation, winding up and termination of ALP. While ALP intends to defend against asserted claims where appropriate, it is currently not possible to identify or assess any defenses or counterclaims that may be available to ALP, or the magnitude of any claims that may be asserted.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported or disclosed in the financial statements and accompanying notes. Significant estimates include the ultimate outcome of contingencies. Actual results could differ from those estimates.

 

Cash, Cash Equivalents

 

Cash and cash equivalents may consist of U.S. Government obligations with original maturities of three months or less, money market demand accounts and repurchase agreements, the cost of which approximates market value. Cash invested in U.S. Government obligations with maturities greater than three months is classified as short-term investments. ALP maintains funds in financial institutions that exceed the FDIC insured limit. ALP does not believe it is exposed to any significant credit risk.

 

Liabilities

 

Accounts payable and accrued expenses include legal fees, real estate taxes, and other miscellaneous accruals.

 

 

 

8

Indemnification of Certain Persons

 

Under certain circumstances, ALP indemnifies the Administrator and certain other persons performing services on behalf of ALP for liability they may incur arising out of the indemnified persons' activities conducted on behalf of ALP. There is no limitation on the maximum potential payments under these indemnification obligations, and, due to the number and variety of events and circumstances under which these indemnification obligations could arise, ALP is not able to estimate such maximum potential payments. However, historically ALP has not made payments in material amounts under such indemnification obligations, and no amount has been accrued in the accompanying financial statements for these indemnification obligations of ALP.

 

Transactions with Affiliates

 

The Administrator or its affiliates are entitled to reimbursements for their direct expenses or out of pocket expenses related to the administration and management of ALP. For the nine months ended September 30, 2012 and 2011, the Administrator or its affiliates were entitled to reimbursements for legal, accounting, treasury and corporate services. Such costs for the periods totaled $283,000 and $230,000, respectively, and are included in general and administrative expenses.

 

Amounts receivable from or payable to the Administrator or its respective affiliates do not bear interest and are expected to be paid in future periods. At September 30, 2012 and December 31, 2011, approximately $29,300 and $98,600 was payable to the Administrator or its affiliates and is included in accounts payable and accrued expenses.

 

The St. Joe Company is reimbursed for its direct costs. For the nine months ended September 30, 2012, no such costs were reimbursed. Such costs for the nine months ended September 30, 2011 were approximately $20,000. The St. Joe Company beneficially owns 23.9% of the outstanding beneficial interest units of ALP.

 

Commitments and Contingencies

 

As security for performance of certain development obligations, ALP was contingently liable under performance bonds for approximately $48,000. These performance bonds are fully collateralized.

 

In late 2007 it was determined that certain remnant parcels from past developments were still owned by ALP rather than by relevant homeowners associations or public entities. These remnant parcels have no value and, to the extent hereafter deeded to third parties, will result in no material proceeds to the Trust. ALP is working with relevant parties on some of these parcels to affect the transfer of these parcels where feasible. However, certain of these parcels carry past-due taxes that include years where they had been assessed on pre-subdivision values that, due to the passage of time and the expiration of local appeals periods, precluded their being deeded over in the normal course. These taxes are non-recourse to ALP. While these parcels are being handled on a case-by-case basis, where ALP is unable to effect a transfer whereby any material accrued taxes are waived by the taxing authority or assumed by the transferee, ALP generally will allow such parcels to be acquired by third parties at tax sale in order to relieve ALP from any future liabilities associated with them. ALP continues to work to transfer or otherwise dispose of the remaining parcels. The cost of completing this process is not expected to be material, however ALP is unable to predict the time period required.

9

 

ALP accrues legal liabilities when it is probable that the future costs will be incurred and such costs can be reasonably estimated. Such accruals are based upon developments to date, management's estimates of the outcome of these matters and its experience in contesting, litigating and settling other matters. Based on evaluation of the Partnership's litigation matters and discussions with internal and external legal counsel, management believes that an adverse outcome on one or more of the matters set forth below, against which no accrual for loss has been made at September 30, 2012 unless otherwise noted, is reasonably possible but not probable, and that the outcome with respect to one or more of these matters, if adverse, is reasonably likely to have a material adverse impact on the accompanying financial statements of ALP.

 

The Partnership, the General Partner and certain related parties as well as other unrelated parties have been named defendants in an action entitled Rothal v. Arvida/JMB Partners Ltd. et al., Case No. 03-10709 CACE 12, filed in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida. In this suit that was originally filed on or about June 20, 2003, plaintiffs purport to bring a class action allegedly arising out of construction defects occurring during the development of Camellia Island in Weston, which has approximately 150 homes. On May 9, 2005, plaintiffs filed a nine count second amended complaint seeking unspecified general damages, special damages, statutory damages, prejudgment and post-judgment interest, costs, attorneys' fees, and such other relief as the court may deem just and proper. Plaintiffs complain, among other things, that the homes were not adequately built, that the homes were not built in conformity with the South Florida Building Code and plans on file with Broward County, Florida, that the roofs were not properly attached or were inadequate, that the truss systems and installation thereof were improper, and that the homes suffer from improper shutter storm protection systems. Plaintiffs have filed a motion to expand the class to include other homes in Weston. The motion to expand the class was denied. The case went to mediation on March 11, 2010. The case did not settle. The Arvida defendants have filed their answer to the amended complaint. The Arvida defendants believe that they have meritorious defenses and intend to vigorously defend themselves. The court concluded its hearings on the motion to certify the class covering the homes in Camellia Island and certified the class by order dated September 16, 2010. On October 15, 2010, the Partnership filed its notice of appeal challenging the certification order. On June 1, 2011, the appellate court affirmed the trial court’s order certifying the class. The case has been returned to the trial court for further proceedings including trial. The defense of the case is proceeding. The Partnership intends to vigorously defend itself. The Partnership is not able to determine what, if any, loss exposure that it may have for this matter. This case has been tendered to one of the Partnership's insurance carriers, Zurich American Insurance Company (together with its affiliates collectively, "Zurich"), for defense and indemnity. Zurich is providing a defense of this matter under a purported reservation of rights. The Partnership has also engaged other counsel in connection with this lawsuit. The ultimate legal and financial liability of the Partnership, if any, in this matter cannot be estimated with certainty at this time. The Partnership is unable to determine the ultimate portion of the expenses, fees and damages, if any, which will be covered by its insurance.

10

 

On October 31, 2012, the Partnership filed an action entitled ALP Liquidating Trust, et al. v. Waterproofing Systems of Miami, Inc. et al. in the Circuit Court of the 11th Judicial Circuit in and for Miami-Dade County, Florida, Case No. 12-42903 CA-06. The case arises out of and in connection with the Rothal claims against the Partnership and related insurance litigation (“Rothal Claims”). The defendants include Waterproofing Systems of Miami, Inc. (“Waterproofing”), the alleged roofing subcontractor for the homes involved in the Rothal action, Trinity Construction Corp. (“Trinity”), the alleged installer of the roofing trusses involved in the Rothal action, and Quality Truss Inc. (“Quality Truss”), the alleged manufacturer of the roofing trusses involved in the Rothal action. In the nine-count complaint for contractual indemnity, common law indemnity and negligence, plaintiffs essentially allege that in the event they are held liable for defects and damages for the roofs and truss systems in the Rothal action, which defects and damages are denied to exist, plaintiffs are entitled to recover from each damages, attorneys’ fees as provided by contract or applicable law, as the case may be, or such other relief that the Court may deem just and proper.

 

On June 23, 2011, the Partnership was sued in a case entitled, Investors Insurance Company of America (“Investors Insurance”) v. Waterproofing Systems, Inc., et al., Case No. 0:11-cv-61408-DMM, United States District Court for the Southern District of Florida (Ft. Lauderdale). In the complaint, as amended, an insurer for Waterproofing Systems, Inc. and Waterproofing Systems of Miami, Inc. (“Waterproofing”), the alleged roofer of the homes and co-defendant in the Rothal case discussed above seeks a declaratory judgment order that it owes no duty of indemnity or defense to Waterproofing for the damages sought in the Rothal complaint. In the Investors Insurance complaint, as amended, the plaintiff declares that ALP has an interest in the plaintiff’s policies that purport to cover Waterproofing and by its complaint seeks an order that would attempt to effectively adjudicate ALP’s rights to any coverage benefits under the Investors Insurance policies. The Partnership has filed a motion to dismiss the case for lack of jurisdiction and a motion to stay. The motion to dismiss Arvida was granted. The court determined that Investors Insurance has a duty to defend its insured and the case was subsequently dismissed with prejudice except that the court reserved jurisdiction to determine whether the insurer has a duty to indemnify once the underlying Rothal action is concluded.

 

On August 4, 2011, the Partnership was sued in a case entitled, Scottsdale Insurance Company v. Richard Rothal et al, Case No. 11-61732-civ-dimitrouleas, in the United States District Court, Southern District of Florida, Fort Lauderdale Division. In the complaint, Scottsdale Insurance Company (“Scottsdale”), an alleged insurer of Waterproofing Systems of Miami, Inc. (“Waterproofing”), brings an action for declaratory relief against, among others, Waterproofing, the class certified in the Rothal action and the Partnership, seeking a declaration of its rights and obligations to, among others, Waterproofing, the class certified in Rothal and Arvida in connection with two policies it allegedly issued. The Partnership filed a motion to dismiss Arvida from this case and it was granted. This federal case has been closed and Scottsdale re-filed its case in Florida state court.

11

 

On January 19, 2012, the Partnership was sued in a case entitled, Scottsdale Insurance Company v. Richard Rothal, et al., Case No. 2012-CA-03451, in the Circuit Court of the Seventeenth Circuit in and for Broward County, Florida, Complex Litigation Unit. In this case, Scottsdale Insurance Company (“Scottsdale”), an alleged insurer of Waterproofing Systems of Miami, Inc. (“Waterproofing”), seeks a declaratory judgment against, among others, Waterproofing, the class certified in the Rothal action and the Partnership, seeking a declaration of Scottsdale’s rights and obligations under two commercial general liability policies it allegedly issued over the years May 29, 2000 - May 29, 2002. The case has been transferred from the complex litigation unit to the trial court handling the Rothal action. The declaration in this case seeks to affect the rights that Waterproofing, Rothal, and the Partnership may have in these policies. On or about August 29, 2012, the Partnership filed an answer, affirmation defenses and a counterclaim seeking, among other things, defense and indemnity in connection with the Rothal action. The Partnership will vigorously pursue its interests in the policies written by the plaintiff. The Partnership is unable to determine what portion of its fees and damages in the Rothal case, if any, may be recovered under the Scottsdale policies.

 

The following lawsuit in large part allegedly arose out of landscaping issues at a certain subdivision in the Weston Community. In addition to the following landscaping case, the General Partner has received letters from other homeowners' associations in the Weston Community complaining about their landscaping. These associations have not filed suit.

 

A case, The Ridges Maintenance Association, Inc. v. Arvida/JMB Partners, et al., Case No. 03-10189 (05) (the "Ridges Case"), was filed on or about June 6, 2003 in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida. The defendants in this action included Arvida/JMB Partners, Arvida/JMB Managers, Inc., Arvida Management Limited Partnership, CCL Consultants, Inc. ("CCL"), Bamboo Hammock Nursery, Inc. ("Bamboo Hammock"), and Lagasse Pool Construction, Co. ("Lagasse"). Plaintiff was alleged to be a homeowners' association representing the owners of approximately 1,500 homes and extensive common areas in the Ridges subdivision in Weston. In the seven-count amended complaint that was filed on September 16, 2005, plaintiff sought unspecified compensatory damages, prejudgment interest, court costs and such other and further relief as the court might deem just and proper. In Count I, plaintiff sought damages from the Arvida defendants for alleged negligent design, construction and/or maintenance of the landscaping and common elements that allegedly resulted in defects of the landscaping, sidewalks, irrigation systems, and community pool. With respect to the landscaping claims, the plaintiff claimed that it evaluated the condition of the common areas after the turnover of the community in January 2000 and alleged that it discovered numerous construction, design and maintenance defects and deficiencies including, but not limited to, improper planting of inferior quality/grade of landscaping contrary to controlling government codes, shallow planting of landscaping, landscape planting in inappropriate areas, and the planting of landscaping that would uproot sidewalks. In Count II, plaintiff sought damages from CCL, the alleged civil engineer for the community, in connection with the alleged negligent design, construction or maintenance of the common areas and elements. In Count III, plaintiff sought damages from Bamboo

12

 

Hammock, the alleged landscape engineer, architect, supplier, installer and/or designer, in connection with alleged defects in the landscaping resulting in damage to, among other things, the landscaping and sidewalks. In Count IV, plaintiff sought damages from Lagasse for alleged defects in the community pool. In Count V, plaintiff sought damages from Arvida/JMB Partners, a general partnership in which ALP owns a 99.9% interest, and Arvida/JMB Managers, Inc., the former General Partner of the Partnership, seeking to hold these entities vicariously responsible for the acts of CCL, Bamboo Hammock, and/or Lagasse. In Count VI, plaintiff sought damages from the Arvida/JMB Partners and Arvida/JMB Managers, Inc. for various breaches of fiduciary duty. In this count, plaintiff alleged that prior to the turnover of the community, these defendants engaged in acts that amounted to a breach of fiduciary duty to plaintiff in that they, among other things, (i) allegedly improperly executed an amendment to the declarations of covenant for their sole benefit and to the financial detriment of the plaintiff; (ii) allegedly engaged in acts that constituted a conflict of interest; (iii) allegedly failed to maintain appropriate care, custody and control over the financial affairs of the homeowners' association by failing to pay for common expenses; (iv) allegedly improperly transferred funds by and between plaintiff and a non-party, The Town Foundation, Inc., which transfers allegedly amounted to a violation of these defendants' obligations to fund operating deficits and a breach of fiduciary duty; and (v) allegedly transferred funds by and between various entities under their common control in violation of Florida statute and their fiduciary duty to plaintiff. Plaintiffs voluntarily withdrew Count VII. The Arvida defendants filed their answer to the amended complaint denying substantive liability and raising various defenses. Plaintiff has filed a motion to add punitive damages that was denied without prejudice. The case was transferred to the complex litigation unit of the Broward County court system and was set for trial. Before trial, the case went to mediation on April 21, 2010 and settled. The case settled for the payment of $100,000 to the plaintiff homeowners' association plus legal fees and costs. Such amounts were paid on April 27, 2010. The Ridges remains subject to the purported reservation of rights letter despite the settlement of certain disputes with the carrier discussed below.

 

The Partnership has received from Zurich certain purported reservation of rights letters in connection with certain of the landscaping cases. For this and other reasons, on September 26, 2005, Arvida/JMB Partners, L.P., Arvida/JMB Managers, Inc., and Arvida Management L.P. (collectively "Arvida") filed a complaint, as amended, for declaratory relief and damages against Zurich American Insurance Co., individually and as successor to Zurich Insurance co. (collectively "Zurich"), Case No. 0514346 in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida. In this complaint, Arvida sought, among other things, a declaration of its rights under its policies, attorney fees and costs, and such other relief as the court deems appropriate. On March 11, 2008, Arvida and Zurich entered into an agreement to voluntarily dismiss the pending action pending further discussions about the potential settlement of disputes regarding insurance coverage for the landscaping cases. Pursuant to the parties' agreement, the case was voluntarily dismissed on April 9, 2008. In the third quarter of 2009, ALP entered into a settlement agreement with Zurich. As a result, the parties have settled their differences with respect to the carrier's purported reservation of rights for two prior landscaping cases, the Falls and Weston Lakes matters, which settled in September 2008 and December 2006, respectively, and the parties have released each other with respect to any claims arising out of the defense costs and settlement payments for those matters. Further under the terms of the settlement, the parties resolved their differences with respect to certain claims under agreements governing, among other things, deductibles for a payment of $800,000. This payment was made in July 2009. Further, Zurich paid ALP approximately $436,000 for the defense of the Rothal case through September 30, 2009 and paid certain amounts to ALP's outside counsel for the defense of the Falls litigation. In September 2009, ALP was refunded approximately $328,000 from its outside counsel.

 

Other than as described above, the Partnership is not subject to any material legal proceedings, other than ordinary routine litigation incidental to the business of the Partnership.

13

 

Item 2.  Management’s Discussion and Analysis or Plan of Operation

 

Reference is made to the notes to the accompanying financial statements ("Notes") contained in this report for additional information concerning the Liquidating Trust.

 

This report, including this Management's Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements. Words like "believes," "expects," "anticipates," "likely," and similar expressions used in this report are intended to identify forward-looking statements. These forward-looking statements give ALP's current estimates or expectations of future events, circumstances or results, including statements concerning possible future distributions and the amount of time and money that may be involved in completing the liquidation, winding up and termination of ALP. Any forward-looking statements made in this report are based upon ALP's understanding of facts and circumstances as they exist on the date of this report, and therefore such statements speak only as of that date. In addition, the forward-looking statements contained in this report are subject to risks, uncertainties and other factors that may cause the actual events or circumstances, or the results or performances of ALP, to be materially different from those estimated or expected, expressly or implicitly, in the forward-looking statements. In particular, but without limitation, the accuracy of statements concerning possible future distributions to the holders of the beneficial interest units (the "Unit Holders") or the timing, proceeds or costs associated with completion of a liquidation, winding up and termination may be adversely affected by, among other things, various factors discussed below.

 

Overview

 

Effective September 30, 2005, Arvida/JMB Partners, L.P. (the "Partnership") completed its liquidation by contributing all of its remaining assets to ALP Liquidating Trust ("ALP"), subject to all of the Partnership's obligations and liabilities. Arvida Company, an affiliate of the general partner of the Partnership, acts as Administrator (the "Administrator") of ALP.

 

In connection with its formation, ALP issued a total of 448,794 beneficial interest units to the partners of the Partnership. In the liquidation, each partner in the Partnership received a beneficial interest in ALP for each interest the partner held in the Partnership. As a result, a partner's percentage interest in ALP remained the same as that person's percentage interest was in the Partnership immediately prior to its liquidation.

 

Upon completion of the liquidation of the Partnership, pursuant to Rule 12g-3(a) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), ALP elected to become the successor issuer to the Partnership for reporting purposes under the Exchange Act and elect to report under the Exchange Act effective September 30, 2005. ALP has assumed all reports filed by the Partnership prior to liquidation of the Partnership under the Exchange Act.

 

Critical Accounting Policies

 

ALP accrues liabilities when it is probable that the future costs will be incurred and such costs can be reasonably estimated. Such accruals are based upon developments to date, management's estimates of the outcome of these matters and its experience in such matters. Actual future claims and contingencies could differ from the currently estimated amounts.

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Liquidity and Capital Resources

 

At September 30, 2012, ALP had unrestricted cash and cash equivalents of approximately $18,270,000. The source of both short-term and long-term future liquidity is expected to be derived from cash on hand, short term cash investments and income earned thereon.

 

Until the ultimate completion of the liquidation, winding up and termination of ALP, it is currently anticipated that ALP will retain all or substantially all of its funds in reserve to provide for the payment of, the defense against, or other satisfaction or resolution of obligations, liabilities (including contingent liabilities) and current and possible future claims, and pending and possible future litigation. It is not possible at this time to estimate the amount of time or money that it will take to effect ALP's liquidation, winding up and termination. That portion, if any, of the funds held in reserve that are not ultimately used to pay, defend or otherwise resolve or satisfy obligations, liabilities or claims are currently anticipated to be distributed to the Unit Holders in ALP at a later date and may not be distributed until the completion of the liquidation. At such time that ALP considers its liquidation, winding up and termination to be imminent and its net realizable assets to be reasonably determinable, it expects to adopt the liquidation basis of accounting.

 

Results of Operations

 

The increase in accounts payable and accrued expenses at September 30, 2012 as compared to December 31, 2011 is primarily due to the timing of payments for professional fees.

 

The increase in interest and other income for the nine months ended September 30, 2012 as compared to the same period in 2011 is primarily due to the release of certain deed restrictions to an outside party.

 

The increase in professional services for the three and nine months ended September 30, 2012 as compared to the same period in 2011 is primarily due to the timing of litigation in which ALP is involved.

 

 

Item 4T. Controls and Procedures

 

Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-15 of the Securities Exchange Act of 1934 (the "Exchange Act") promulgated thereunder, the principal executive officer and the principal financial officer of the Liquidating Trust have evaluated the effectiveness of the Liquidating Trust's disclosure controls and procedures as of the end of the period covered by this report. Based on such evaluation, the principal executive officer and the principal financial officer have concluded that the Liquidating Trust's disclosure controls and procedures were effective as of the end of the period covered by this report to ensure that information required to be disclosed in this report was recorded, processed, summarized and reported within the time period specified in the applicable rules and form of the Securities and Exchange Commission for this report.

 

 

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Part II.  Other Information

 

Item 1.  Legal Proceedings

 

See Item 1 of the Financial Statements included in Part I of this report.

 

 

Item 6.  Exhibits

 

  (a) Exhibits
    4.1 Liquidating Trust Agreement of ALP Liquidating Trust, dated as of September 30, 2005, by and among, Arvida/JMB Partners, L.P., Arvida Company, as Administrator, and Wilmington Trust Company, as Resident Trustee.
       
    31.1 Certification of the Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, is filed herewith.
       
    31.2 Certification of the Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, is filed herewith.
       
    32 Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are furnished herewith.
       
  (b) No reports on Form 8-K were filed since the beginning of the last quarter of the period covered by this report.

 

 

 

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SIGNATURES

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Partnership has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

  ALP LIQUIDATING TRUST.
     
  By:

Arvida Company

as Administrator

     
    GAILEN J. HULL
  By: Gailen J. Hull, Vice President
  Date: November 9, 2012

 

     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed on behalf of ALP Liquidating Trust by the following person in the capacities and on the date indicated.

 

 

    GAILEN J. HULL
  By:

Gailen J. Hull, Chief Financial Officer

and Principal Accounting Officer

  Date: November 9, 2012

 

 

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