SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

Annual Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

 

For the fiscal year ended December 31, 2017

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

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class	Name of each exchange on which registered
None	None

 

 

Securities registered pursuant to Section 12(g) of the Act:

 

Beneficial Interest Units

(Title of Class)

 

Indicate by check mark whether the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [ ] No [ X ]

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes [ ] No [ X ]

 

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 "Act") 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 [ X ] No [ ]

Indicate by check mark whether registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the proceeding 12 months (or such shorter period that the registrant was required to submit and post such files).

Yes [ ] No [ ]

 

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 [ X ]

 

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	[ X ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes [ ] No [ X ]

 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter. Not applicable.

 

Documents Incorporated by Reference

 

Certain portions of the Prospectus of the registrant dated September 16, 1987, and filed with the Commission pursuant to Rules 424(b) and 424(c) under the Securities Act of 1933 are incorporated by reference in Part III of this Annual Report on Form 10-K.

Table of Contents

 

Part I			Page
Item 1.		Description of Business	1
Item 1A.		Risk Factors	4
Item 1B.		Unresolved Staff Comments	4
Item 2.		Properties	4
Item 3.		Legal Proceedings	4
Item 4.		Mine Safety Disclosures	7
Part II
Item 5.		Market for the Registrant’s Common Equity, Related Security Holder Matters and Issuer Purchases of Equity Securities	8
Item 6.		Selected Financial Data	9
Item 7.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 7A.		Quantitative and Qualitative Disclosures About Market Risk	12
Item 8.		Financial Statements and Supplementary Data	13
Item 9.		Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	25
Item 9A.		Controls and Procedures	25
Item 9B.		Other Information	26
Part III
Item 10.		Directors and Executive Officers of the Registrant	27
Item 11.		Executive Compensation	28
Item 12.		Security Ownership of Certain Beneficial Owners and Management and Related Security Holder Matters	29
Item 13.		Certain Relationships, Related Transactions and Director Independence	30
Item 14.		Principal Accountant Fees and Services	31
Part IV
Item 15.		Exhibits and Financial Statement Schedules	36
Signatures			34

 

i

 

Part I

 

 

Item 1. Description of Business

 

All references to "Notes" are to Notes to Financial Statements contained in this report.

 

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 former 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 elected 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 report, references to ALP shall be deemed to include activities of the Partnership prior to September 30, 2005.

 

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.

The current registrant, ALP Liquidating Trust was originally a limited partnership formed in 1987 and governed under the Revised Uniform Limited Partnership Act of the State of Delaware. The Partnership was formed to own and develop substantially all of the assets of Arvida Corporation (the "Seller"), a subsidiary of The Walt Disney Company, which were acquired by the Partnership from the Seller on September 10, 1987. On September 16, 1987, the Partnership commenced an offering to the public of up to $400,000,000 in Limited Partnership Interests and assignee interests therein ("Interests") pursuant to a Registration Statement on Form S-1 under the Securities Act of 1933 (No. 33-14091). A total of 400,000 Interests were sold to the public (at an offering price of $1,000 per Interest before discounts) and the holders of 400,000 Interests were admitted to the Partnership in October 1987. The offering terminated October 31, 1987. In addition, a holder (an affiliate of the dealer-manager of the public offering) of 4,000 Interests was admitted to the Partnership in October 1987. Subsequent to admittance to the Partnership, no Holder of Interests (a "Holder" or "Holder of Interests") has made any additional capital contribution. The Holders of Interests of the Partnership generally share in their portion of the benefits of ownership of the Partnership's real property investments and other assets according to the number of Interests held.

 

Pursuant to Section 5.5J of the Partnership's Amended and Restated Agreement of Limited Partnership (the "Partnership Agreement"), on October 23, 1997, the Board of Directors of the General Partner met and approved a resolution selecting the option set forth in Section 5.5J(i)(c) of the Partnership Agreement for the Partnership to commence an orderly liquidation of its remaining assets that was to be completed by October 2002. In October 2002, the Partnership commenced a solicitation for consents to an amendment (the "Amendment") to the Partnership Agreement providing for an extension of the term of the Partnership's liquidation period to not later than October 31, 2005. In addition, under the terms of the Amendment, Arvida/JMB Managers, Inc., the General Partner of the Partnership, was authorized, in its sole discretion, to complete the liquidation of the Partnership by forming ALP and contributing any remaining Partnership assets to ALP subject to all outstanding obligations and liabilities of the Partnership. In November 2002, the Holders of a majority of the outstanding Interests gave their consent to the Amendment, which became effective October 29, 2002.

 

As noted above, under the terms of the Amendment, the General Partner was authorized, in its sole discretion, to complete the liquidation of the Partnership by forming a Liquidating Trust. The trustee or trustees of ALP could be an officer or officers of the General Partner or an affiliate of the General Partner. The remaining Partnership assets would be contributed to ALP subject to all outstanding obligations and liabilities of the Partnership. The General Partner, Associate Limited Partners and Holders of Interests would receive beneficial interests in ALP in proportion to their respective interests in the Partnership. Subsequently, after liquidating any remaining non-cash assets and providing for the payment or satisfaction of all such obligations and liabilities, the trustee(s) of ALP would distribute any remaining proceeds to Arvida, Associate Limited Partners and Holders of Interests in proportion to their respective interests in ALP.

 

Prior to the commencement of the Partnership's orderly liquidation, the assets of the Partnership consisted principally of interests in land developed into master-planned residential communities (the "Communities"), and, to a lesser extent, commercial properties; accounts receivable; construction, brokerage and other support businesses; real estate assets held for investment and certain club and recreational facilities. The Partnership was principally engaged in the development of comprehensively planned resort and primary home Communities containing a diversified product mix designed for the middle and upper income segments of the various markets in which the Partnership operated. The Communities were located primarily throughout the State of Florida, with Communities also located near Atlanta, Georgia and Highlands, North Carolina. In addition, the Partnership, directly or through certain subsidiaries, provided development and management services to the homeowners associations within the Communities.

Pursuant to a management agreement with the Partnership, through December 31, 1997, Arvida provided development and management supervisory and advisory services and the personnel therefore to the Partnership for all of its projects and operations, subject, in each case, to the overall control of the General Partner on behalf of the Partnership. Arvida entered into a sub-management agreement with St. Joe/Arvida Company, LP (now known as St. Joe Towns & Resorts, LP - "Towns & Resorts LP"), effective January 1, 1998, whereby Towns & Resorts LP provided (and was reimbursed for) a substantial portion of the development and management supervisory and advisory services (and personnel with respect thereto) to the Partnership that Arvida would have otherwise provided pursuant to its management agreement with the Partnership. Affiliates of JMB Realty Corporation owned a minority interest in Towns & Resorts LP until July 2003, when they sold their minority interest to an affiliate of the St. Joe Company. Such sale did not involve the sale of any assets of the Partnership, the sale of the General Partner's interest in the Partnership, nor a change in the submanagement agreement for the services provided to the Partnership by Towns & Resorts LP. The St. Joe Company beneficially owns 23.9% of the outstanding beneficial interest units of ALP as of March 30, 2017.

 

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 generally 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.

 

ALP has no employees.

 

ALP currently owns select licenses and trademarks that relate to Sawgrass. Towns & Resorts LP owns the Arvida name and service marks with respect to the Arvida name. ALP has a license agreement with Towns & Resorts LP to use the Arvida name.

 

The terms of transactions between ALP and the successor Administrator and its affiliates are set forth in Items 10 and 12 filed with this annual report to which reference is hereby made for a description of such terms and transactions.

Item 1A. Risk Factors

 

The liquidation of ALP faces numerous risks, including those set forth below.

 

Reference is made to Item 1. Business and Item 3. Legal Proceedings for an item specific detailed discussion of some of the risk factors facing ALP.

 

Risk 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, contingencies, 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.

 

 

Item 1B. Unresolved Staff Comments

 

Not Applicable

 

 

Item 2. Properties

 

ALP has no housing units or other material real estate assets. It continues to own a number of minor parcels that it will endeavor to sell or otherwise dispose of prior to liquidation, which are not expected to yield any material proceeds to ALP.

 

 

Item 3. Legal Proceedings

 

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 December 31, 2017 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 were 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 purported 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. The Arvida defendants filed their answer to the amended complaint. 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 was returned to the trial court for further proceedings including trial. The parties and their insurers entered into various agreements in principle to settle this case and the related cases discussed hereafter, some of which agreements have been finalized. On June 22, 2016, the court gave final approval of the settlement of the Rothal class action. No timely appeal was taken from the court’s order approving the settlement and it is now final. Disbursements of Rothal settlement proceeds is taking place. The related agreements that Arvida has with various other parties and their insurers related to the funding of the settlement have been executed. Administration of the settlement is nearly complete. The amounts associated with ALP’s share of the settlement are reflected in ALP’s financial statements.

 

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 11^th Judicial Circuit in and for Miami-Dade County, Florida, Case No. 12-42903 CA-06. The case arose out of and in connection with the Rothal claims against the Partnership and related insurance litigation (“Rothal Claims”). The defendants included 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 alleged that in the event they were 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 were entitled to recover from each damages, attorneys’ fees as provided by contract or applicable law, as the case might be, or such other relief that the Court may deem just and proper. An amended complaint was filed on February 25, 2014. The case was transferred to the complex litigation division of the court. Waterproofing filed an answer to the amended complaint and Arvida replied. Trinity filed an answer to the amended complaint and a counterclaim. In Trinity’s counterclaim it sought, among other things, a declaratory judgment that it had no duty to indemnify or defend Arvida in the Rothal action and that it is entitled to its attorneys’ fees and costs. Quality Truss has filed an answer to the amended complaint. A mutual release and settlement agreement has been executed providing funding for the settlement of the Rothal lawsuit and dismissal of this action. A dismissal order was entered on November 7, 2016. Administration of the Rothal settlement is nearly complete.

 

 

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 sought a declaratory judgment order that it owed 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 declared that ALP had an interest in the plaintiff’s policies that purport to cover Waterproofing and by its complaint sought an order that would attempt to effectively adjudicate ALP’s rights to any coverage benefits under the Investors Insurance policies. The Partnership 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 had 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. A mutual release and settlement agreement has been executed providing funding for the settlement of the Rothal lawsuit and dismissal of this action. Administration of the Rothal settlement is nearly complete.

 

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”), sought 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 was transferred from the complex litigation unit to the trial court handling the Rothal action. The declaration in this case sought to affect the rights that Waterproofing, Rothal, and the Partnership might have in these policies. On or about August 29, 2012, the Partnership filed an answer, affirmative defenses and a counterclaim seeking, among other things, defense and indemnity in connection with the Rothal action. Scottsdale filed an answer to the Partnership’s counterclaim. A mutual release and settlement agreement has been executed providing funding for the settlement of the Rothal lawsuit and dismissal of this action. A dismissal order was entered in November 15, 2016. Administration of the Rothal settlement is nearly complete.

 

On July 15, 2014, the Partnership and affiliated and associated entities (“Partnership”) filed a two-count complaint for breach of contract and declaratory judgment in the Circuit Court for the 11^th Judicial Circuit in and for Miami Dade County, Florida entitled Arvida/JMB Partners, et al v. Lexington Insurance Company, Case No. 14-018397 CA 01. This suit was filed against Lexington Insurance Company (“Lexington”) alleging, among other things, that Lexington has failed to timely pay the Partnership’s defense costs for the Rothal litigation. The Partnership alleged that Lexington was under an obligation to pay the Partnership’s defense costs on a timely basis under various insurance policies it wrote covering the roofer in the Rothal litigation and which obligate Lexington to defend and indemnify the Partnership. The Partnership sought damages, pre and post-judgment interest, attorneys’ fees and any further relief the Court deems equitable, just and proper. On September 19, 2014, Lexington filed an answer, affirmative defenses, and a counterclaim to the Partnership’s complaint. In the counterclaim, Lexington sought, among other things, a declaration that it had no duty to defend or indemnify the Partnership, that its duty to reimburse the Partnership for fees should be shared with the Partnership’s carriers and be more limited in amount and scope. Lexington joined Waterproofing and Zurich in its counterclaim alleged due to their interest in the outcome. Each of them filed a responsive pleading to the Lexington counterclaim. The Partnership filed its reply to the Lexington counterclaim. A mutual release and settlement agreement has been executed providing funding for the settlement of the Rothal lawsuit and dismissal of this action. The action was dismissed by an order dated November 7, 2016. Administration of the Rothal settlement is nearly complete.

 

 

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.

 

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

 

Part II

 

 

Item 5.

Market for the Registrant’s Common Equity, Related Security Holder Matters and

Issuer Purchases of Equity Security

 

 

As of January 1, 2018, there were 15,401 record holders of the 439,532 beneficial interest units outstanding in ALP. There is no public market for beneficial interest units. However, there are restrictions governing the transferability of these beneficial interest units set forth in the Liquidating Trust Agreement of ALP Liquidating Trust (the “Trust Agreement”). In addition, no transfer will be effective until the first day of the next succeeding calendar quarter after the requisite transfer form satisfactory to the Administrator has been received by the Administrator. The transferee consequently will not be entitled to receive any cash distributions or any allocable share of profits or losses for tax purposes until such next succeeding calendar quarter. Cash distributions to a Unit Holder of beneficial interest units will be distributed to the person recognized as the Unit Holder of the beneficial interest units as of the last day of the quarterly period preceding the quarter in which such distribution is made. From time to time, a Unit Holder may abandon its beneficial interest units at which time the Trust has no actual or contingent obligation to the former Unit Holders for the abandoned beneficial interest units. No distributions have been paid by ALP in 2017 and 2016, or through the date this report was filed.

 

Reference is made to Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations for a discussion of the retention of cash reserves to pay or resolve obligations and liabilities of, and claims asserted, and possible future cash distribution(s).

Item 6. Selected Financial Data

 

The following selected consolidated financial data should be read in conjunction with the consolidated financial statements and the notes to the financial statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations," which are included elsewhere in this report. The consolidated financial data of ALP Liquidating Trust as of and for the years ended December 31, 2017, 2016, 2015, 2014 and 2013, is derived from the consolidated financial statements and the notes thereto that have been audited by RSM US LLP, independent registered public accounting firm.

 

ALP Liquidating Trust

 

As of and for the Years Ended 2017, 2016, 2015, 2014 and 2013

 

	2017			2016			2015			2014			2013
Total revenues	$	70,349		$	364,859		$	15,000		$	1,674		$	4,534
Net loss attributable to     Unit Holders	$	(830,552)		$	(961,520)		$	(2,720,387)		$	(1,860,388)		$	(1,510,835)
Net loss per unit (a)	$	(1.89)		$	(2.18)		$	(6.15)		$	(4.20)		$	(3.41)
Total assets (b)	$	10,189,235		$	11,472,712		$	13,222,844		$	15,045,587		$	16,499,799
Total liabilities (b)	$	138,915		$	591,611		$	1,380,442		$	482,733		$	76,507
Cash distributions     per unit (c)	$	--		$	--		$	--		$	--		$	--

 

(a)		The net (loss) per beneficial interest unit is based upon the number of units outstanding at the end of each period.
(b)		ALP does not present a classified balance sheet as a matter of industry practice, and as such, does not distinguish between current and non-current assets and liabilities.
(c)		Cash distributions from ALP are generally not equivalent to income as determined for Federal income tax purposes or as determined under generally accepted accounting principles. Cash distributions to the Unit Holders reflect distributions paid during the calendar year, a portion of which represents a return of capital for Federal income tax purposes.

 

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

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 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.

 

Effective September 30, 2005, the Partnership completed its liquidation by contributing all of its remaining assets to ALP, subject to all of the Partnership's obligations and liabilities. Arvida Company, an affiliate of the general partner of the Partnership, acts as the Administrator of ALP.

 

ALP is a statutory trust formed under the laws of the State of Delaware. The purpose of ALP is to complete the liquidation and winding up of the business affairs of the Partnership. The liquidation, winding up and termination of ALP will be managed by Arvida Company, as administrator of ALP. In its capacity as such, the Administrator has the authority to exercise all of the powers granted to it under the Trust Agreement, including selling or otherwise disposing of the remaining property of ALP, resolving litigation against ALP or its predecessor, preparing tax returns for ALP, making distributions to Unit Holders and retaining advisors to assist it in carrying out its powers. Wilmington Trust Company is the Delaware resident trustee of ALP. Both the Administrator and the Delaware resident trustee are entitled to fees for their services and/or reimbursement for the expenses they incur in connection with their activities under the Trust Agreement. In addition, each of them will generally be indemnified for liabilities that arise as a result of the activities they provide under the Trust Agreement unless such liabilities result from such person's own bad faith, fraud, willful misconduct or gross negligence. ALP will generally continue in existence until all claims, debts, liabilities and obligations of ALP and the Partnership have been paid or otherwise discharged.

 

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 ("Unit Holders") 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 elected 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.

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.

 

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.

 

The Financial Accounting Standards Board issued accounting guidance on when and how an entity should apply the liquidation basis of accounting. Under the guidance, liquidation basis of accounting should only be used when liquidation is imminent, as defined in the guidance. Liquidation basis of accounting requires an entity to measure its assets at the estimated amount of cash or other consideration that it expects to collect and its liabilities at the amount otherwise prescribed under U.S. GAAP. ALP has assessed the guidance and concluded that the liquidation of ALP is not imminent, as defined in the guidance. ALP will continue to monitor whether liquidation is imminent and, thereby, evaluate whether liquidation basis of accounting is required.

 

Liquidity and Capital Resources

 

At December 31, 2017 and 2016, ALP had unrestricted cash and cash equivalents of approximately $10,126,000 and $11,412,000, respectively. At February 28, 2018, ALP had unrestricted cash and cash equivalents of approximately $10,045,000. The source of both short-term and long-term future liquidity is expected to be derived from cash on hand and interest income earned thereon.

 

At December 31, 2017, ALP is liable for performance bonds in the amount of $48,000 which are fully collateralized.

 

ALP expects to use its existing capital resources to execute its liquidation and dissolution, and with remaining funds, if any, to be used to make liquidating distributions to Unit Holders.

 

Results of Operations

 

The decrease in accounts payable and accrued expenses at December 31, 2017 as compared to December 31, 2016 and the associated decrease in professional services for the year ended December 31, 2017 as compared to the year ended December 31, 2016 and December 31, 2015 are due to the timing of payments made on litigation related expenses in which ALP is involved and the costs incurred to settle certain litigation.

 

The decrease in interest and other income for the year ended December 31, 2017 as compared to the years ended December 31, 2016 and the increase in interest and other income for the year ended December 31, 2016 as compared to December 31, 2015 is due to the sale of a remnant parcel in May 2016.

 

Inflation

 

The relatively low rates of inflation in recent years generally have not had a material effect on ALP. Inflation in future periods is likely to increase the costs of ALP's operations, principally for professional services and general and administrative expenses.

 

 

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

 

None

 

Item 8. Financial Statements and Supplementary Data

 

 

 

ALP Liquidating Trust

 

Index

 

 

Report of Independent Registered Public Accounting Firm

 

Consolidated Balance Sheets as of December 31, 2017 and 2016

 

Consolidated Statements of Operations for the years ended December 31, 2017, 2016 and 2015

 

Consolidated Statements of Changes in Unit Holders' Equity for the years ended

      December 31, 2017, 2016 and 2015

 

Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015

 

Notes to Consolidated Financial Statements

 

 

Schedules Not Filed:

 

All schedules have been omitted as the required information is inapplicable or immaterial, or the information is presented in the consolidated financial statements or related notes.

 

 

 

 

Report of Independent Registered Public Accounting Firm

 

 

The Trustees of

ALP Liquidating Trust

 

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of ALP Liquidating Trust (the Trust) as of December 31, 2017 and 2016, and the related consolidated statements of operations, changes in unit holders' equity and cash flows for each of the three years in the period ended December 31, 2017, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Trust as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with U.S. generally accepted accounting principles.

 

Basis for Opinion

These financial statements are the responsibility of the Trust's management. Our responsibility is to express an opinion on the Trust's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

We have served as the Trust’s auditor since 2006.

 

 

 

/s/ RSM US LLP

 

 

Chicago, Illinois

March 20, 2018

 

 

 

 

ALP Liquidating Trust

 

Consolidated Balance Sheets

 

December 31, 2017 and 2016

 

 

 

Assets

	2017			2016
Cash and cash equivalents	$	10,126,256			11,411,883
Prepaid expenses and other assets		62,979			60,829
Total assets	$	10,189,235			11,472,712
Liabilities and Unit Holders’ Equity
Accounts payable and accrued expenses	$	138,915			591,611
Total liabilities		138,915			591,611
Commitments and Contingencies
Unit Holders’ equity (439,532 and 440,314 beneficial     interest units at December 31, 2017 and 2016, respectively)		10,013,473			10,844,025
Non controlling interest		36,847			37,076
Total equity		10,050,320			10,881,101
Total liabilities and Unit Holders’ equity	$	10,189,235			11,472,712

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

ALP Liquidating Trust

 

Consolidated Statements of Operations

 

Years Ended December 31, 2017, 2016 and 2015

 

 

 

	2017			2016			2015
Income:
Interest and other income	$	70,349			364,859			15,000
		70,349			364,859			15,000
Expenses:
Professional services		516,746			905,213			2,303,392
General and administrative		380,515			403,675			424,612
Other		3,869			17,272			7,448
		901,130			1,326,160			2,735,452
Net loss		(830,781)			(961,301)			(2,720,452)
Less: Net income (loss) attributable to               non controlling interests		(229)			219			(65)
Net loss attributable to Unit Holders	$	(830,552)			(961,520)			(2,720,387)
Net loss per beneficial interest unit	$	(1.89)			(2.18)			(6.15)
Cash distributions per beneficial interest unit	$	--			--			--

 

The net loss per beneficial interest unit is based upon the number of units outstanding at the end of each period.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

ALP Liquidating Trust

 

Consolidated Statements of Changes in Unit Holders’ Equity

 

Years Ended December 31, 2017, 2016 and 2015

 

 

 

					Unit Holders
		Total			Amount			Units		Non Controlling Interests
Balance, December 31, 2014		$	14,562,854		$	14,525,932		442,010		$	36,922
Net loss			(2,720,452)			(2,720,387)		--			(65)
Units abandoned			--			--		(667)			--
Balance, December 31, 2015			11,842,402			11,805,545		441,343			36,857
Net income (loss)			(961,301)			(961,520)		--			219
Units abandoned			--			--		(1,029)			--
Balance, December 31, 2016			10,881,101			10,844,025		440,314			37,076
Net income (loss)			(830,781)			(830,552)		--			(229)
Units abandoned			--			--		(782)			--
Balance, December 31, 2017		$	10,050,320		$	10,013,473		439,532		$	36,847

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

ALP Liquidating Trust

 

Consolidated Statements of Cash Flows

 

Years Ended December 31, 2017, 2016 and 2015

 

 

 

	2017			2016			2015
Operating activities:
Net loss	$	(830,781)		$	(961,301)		$	(2,720,452)
Changes in:
Prepaid expenses and other assets		(2,150)			(1,568)			(1,100)
Accounts payable and accrued expenses		(452,696)			(788,831)			897,709
Net cash used in operating activities		(1,285,627)			(1,751,700)			(1,823,843)
Decrease in cash and cash equivalents		(1,285,627)			(1,751,700)			(1,823,843)
Cash and cash equivalents, beginning of year		11,411,883			13,163,583			14,987,426
Cash and cash equivalents, end of year	$	10,126,256		$	11,411,883		$	13,163,583

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

ALP Liquidating Trust

 

Notes to Consolidated Financial Statements

 

 

(1) Operations and Significant Accounting Policies

 

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 former 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. As of December 31, 2017, there were 15,401 record holders of the 439,532 beneficial interest units outstanding in ALP.

 

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 elected 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 report, references to ALP shall be deemed to include activities of the Partnership prior to September 30, 2005.

 

Summary of Significant Accounting Policies

 

Fair Value Disclosures

 

GAAP applicable to Fair Value Measurements applies to all assets and liabilities that are being measured and reported at fair value and requires disclosures that establish a framework for measuring fair value. This accounting principle enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values.

 

The carrying amount of ALP’s financial instruments, principally cash and cash equivalents, other assets, accounts payable and accrued expenses, approximate fair value at December 31, 2017 and 2016.

 

Recently Issued Accounting Pronouncements

 

In November 2016, the Financial Accounting Standards Board (“FASB”) issued guidance under the Account Standards Codification (“ACS”) 2016-18, Statement of Cash Flows: Restricted Cash, which provides guidance on the presentation of restricted cash or restricted cash equivalents in the statement of cash flows. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. ALP is currently evaluating the impact of the adoption of this requirement on our Consolidated Financial Statements.

 

 

In August 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments, which provides guidance on how certain cash receipts and cash payments should be presented and classified in the statement of cash flows with the objective of reducing existing diversity in practice with respect to these items. This guidance is effective for annual periods, and interim periods within those years, beginning after December 15, 2017 and shall be applied retrospectively to all periods presented. Early adoption of this update is permitted. ALP is currently evaluating the impact of the adoption of this requirement on our Consolidated Financial Statements.

 

Basis of Presentation

 

The Financial Accounting Standards Board issued accounting guidance on when and how an entity should apply the liquidation basis of accounting. Under the guidance, liquidation basis of accounting should only be used when liquidation is imminent, as defined in the guidance. Liquidation basis of accounting requires an entity to measure its assets at the estimated amount of cash or other consideration that it expects to collect and its liabilities at the amount otherwise prescribed under U.S. GAAP. ALP has assessed the guidance and concluded that the liquidation of ALP is not imminent, as defined in the guidance. ALP will continue to monitor whether liquidation is imminent and, thereby, evaluate whether liquidation basis of accounting is required.

 

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), 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.

 

Income Taxes

 

No provision for state or Federal income taxes has been made as the liability for such taxes is that of the Unit Holders rather than ALP. However, in certain instances in the past, ALP was required under applicable state law to remit directly to the state tax authorities amounts representing withholding on applicable taxable income allocated to the Unit Holders. Such payments on behalf of Unit Holders of Interest are deemed distributions to them.

 

 

The Financial Accounting Standards Board (FASB) has provided guidance for how uncertain tax positions should be recognized, measured, disclosed and presented in the financial statements. This requires the evaluation of tax positions taken or expected to be taken in the course of preparing the entity's tax returns to determine whether the tax positions are more-likely-than-not of being sustained when challenged or when examined by the applicable taxing authority. For the years ended December 31, 2017 and 2016, management has determined that there are no material uncertain income tax positions. The current and prior three years remain open for examination.

 

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.

 

Liabilities and Professional Services

 

Accounts payable and accrued expenses primarily include professional services, legal fees and expected litigation settlements. The liability also includes real estate taxes and other miscellaneous accruals. ALP accrues liabilities when costs are incurred and such costs can be reasonably estimated.

 

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.

 

Principles of Consolidation

 

The consolidated financial statements included the accounts of ALP and its consolidated ventures. All intercompany balances and transactions have been eliminated in consolidation.

 

Non Controlling Interest

 

Non controlling interest represents the portion of equity in a subsidiary not attributable, directly or indirectly, to ALP. The non controlling interest’s share of income or loss derived from the performance of the subsidiary is allocated to the non controlling interest in the consolidated statements of operations.

 

 

(2) Cash and 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. ALP maintains funds in financial institutions that exceed the FDIC insured limit. ALP does not believe it is exposed to any significant credit risk.

 

 

(3) 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 years ended December 31, 2017, 2016 and 2015, the Administrator or its affiliates were entitled to reimbursements for legal, accounting, treasury and corporate services. Such costs, included in general and administrative expenses, for the periods totaled $304,098, $306,368 and $317,291, respectively. Additionally, an affiliate of the Administrator earned and received brokerage commissions for providing insurance coverage for ALP. Such commissions paid for the years ended December 31, 2017, 2016 and 2015 were $132, $132 and $132, respectively.

 

Amounts receivable from or payable to the Administrator or their respective affiliates do not bear interest and are expected to be paid in future periods. At December 31, 2017 and 2016, approximately $56,000 and $17,000, respectively, was payable to the Administrator or its affiliates and is included in accounts payable and accrued expenses.

 

 

(4) 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 generally 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.

 

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 December 31, 2017 and 2016 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 were 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 purported 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. The Arvida defendants filed their answer to the amended complaint. 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 was returned to the trial court for further proceedings including trial. The parties and their insurers entered into various agreements in principle to settle this case and the related cases discussed hereafter, some of which agreements have been finalized. On June 22, 2016, the court gave final approval of the settlement of the Rothal class action. No timely appeal was taken from the court’s order approving the settlement and it is now final. Disbursements of Rothal settlement proceeds is taking place. The related agreements that Arvida has with various other parties and their insurers related to the funding of the settlement have been executed. Administration of the settlement is nearly complete. The amounts associated with ALP’s share of the settlement are reflected in ALP’s financial statements.

 

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 11^th Judicial Circuit in and for Miami-Dade County, Florida, Case No. 12-42903 CA-06. The case arose out of and in connection with the Rothal claims against the Partnership and related insurance litigation (“Rothal Claims”). The defendants included 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 alleged that in the event they were 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 were entitled to recover from each damages, attorneys’ fees as provided by contract or applicable law, as the case might be, or such other relief that the Court may deem just and proper. An amended complaint was filed on February 25, 2014. The case was transferred to the complex litigation division of the court. Waterproofing filed an answer to the amended complaint and Arvida replied. Trinity filed an answer to the amended complaint and a counterclaim. In Trinity’s counterclaim it sought, among other things, a declaratory judgment that it had no duty to indemnify or defend Arvida in the Rothal action and that it is entitled to its attorneys’ fees and costs. Quality Truss has filed an answer to the amended complaint. A mutual release and settlement agreement has been executed providing funding for the settlement of the Rothal lawsuit and dismissal of this action. A dismissal order was entered on November 7, 2016. Administration of the Rothal settlement is nearly complete.

 

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 sought a declaratory judgment order that it owed 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 declared that ALP had an interest in the plaintiff’s policies that purport to cover Waterproofing and by its complaint sought an order that would attempt to effectively adjudicate ALP’s rights to any coverage benefits under the Investors Insurance policies. The Partnership 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 had 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. A mutual release and settlement agreement has been executed providing funding for the settlement of the Rothal lawsuit and dismissal of this action. Administration of the Rothal settlement is nearly complete.

 

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”), sought 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 was transferred from the complex litigation unit to the trial court handling the Rothal action. The declaration in this case sought to affect the rights that Waterproofing, Rothal, and the Partnership might have in these policies. On or about August 29, 2012, the Partnership filed an answer, affirmative defenses and a counterclaim seeking, among other things, defense and indemnity in connection with the Rothal action. Scottsdale filed an answer to the Partnership’s counterclaim. A mutual release and settlement agreement has been executed providing funding for the settlement of the Rothal lawsuit and dismissal of this action. A dismissal order was entered in November 15, 2016. Administration of the Rothal settlement is nearly complete.

 

On July 15, 2014, the Partnership and affiliated and associated entities (“Partnership”) filed a two-count complaint for breach of contract and declaratory judgment in the Circuit Court for the 11^th Judicial Circuit in and for Miami Dade County, Florida entitled Arvida/JMB Partners, et al v. Lexington Insurance Company, Case No. 14-018397 CA 01. This suit was filed against Lexington Insurance Company (“Lexington”) alleging, among other things, that Lexington has failed to timely pay the Partnership’s defense costs for the Rothal litigation. The Partnership alleged that Lexington was under an obligation to pay the Partnership’s defense costs on a timely basis under various insurance policies it wrote covering the roofer in the Rothal litigation and which obligate Lexington to defend and indemnify the Partnership. The Partnership sought damages, pre and post-judgment interest, attorneys’ fees and any further relief the Court deems equitable, just and proper. On September 19, 2014, Lexington filed an answer, affirmative defenses, and a counterclaim to the Partnership’s complaint. In the counterclaim, Lexington sought, among other things, a declaration that it had no duty to defend or indemnify the Partnership, that its duty to reimburse the Partnership for fees should be shared with the Partnership’s carriers and be more limited in amount and scope. Lexington joined Waterproofing and Zurich in its counterclaim alleged due to their interest in the outcome. Each of them filed a responsive pleading to the Lexington counterclaim. The Partnership filed its reply to the Lexington counterclaim. A mutual release and settlement agreement has been executed providing funding for the settlement of the Rothal lawsuit and dismissal of this action. The action was dismissed by an order dated November 7, 2016. Administration of the Rothal settlement is nearly complete.

 

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. ALP evaluates subsequent events up until the date the consolidated financial statements are issued.

 

 

 

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 

None.

 

 

 

Item 9A. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

The principal executive officer and the principal financial officer of ALP have evaluated the effectiveness of ALP's disclosure controls and procedures as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended, (the "Exchange Act") 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 ALP's disclosure controls and procedures were effective.

 

Management’s Report on Internal Control Over Financial Reporting

 

ALP's management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rule 13a-15(f) under the Exchange Act. Under the supervision and with the participation of management including the principal executive officer and the principal financial officer management conducted an evaluation of the effectiveness of internal control over financial reporting based on the framework in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can only provide reasonable assurances with respect to financial statement preparation and presentation.

 

Based on ALP's evaluation under the framework in Internal Control - Integrated Framework, management concluded that its internal control over financial reporting was effective as of December 31, 2017.

 

This Form 10-K does not include an attestation report of the Trust’s registered public accounting firm regarding internal control over financial reporting. As a smaller reporting company, management’s report is not subject to attestation by the Trust’s registered public accounting firm pursuant to the rules in the Dodd-Frank Act that permit the Trust to provide only management’s report in the Annual Report.

 

Changes in Internal Control over Financial Reporting

 

There were no significant changes to our internal control over financial reporting (as defined in Rule 13a-15(f) or Rule 15d-15(f) of the Securities Exchange Act of 1934) during the year ended December 31, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

Item 9B. Other Information

 

None.

 

 

Part III

 

 

Item 10. Director and Executive Officers of the Registrant

 

The Administrator of ALP is Arvida Company, an Illinois corporation, an affiliate of JMB Realty Corporation, a Delaware corporation ("JMB") that is in the business of real estate investment. Substantially all of the outstanding shares of stock of Arvida Company are owned by certain of JMB's past and present officers and directors, members of their families and their affiliates. The Administrator has responsibility for all aspects of ALP's liquidations. Certain relationships of ALP to the Administrator and its affiliates are described under the captions "Determinations by the Administrator," "Relationships of Affiliates to Liquidating Trust," "Remuneration of JMB, Arvida and Affiliates" and "Fiduciary Responsibility of the Administrator" in the section "Conflicts of Interest" at pages 21 and 23-24 of the Prospectus of the Partnership, dated September 16, 1987 and updated with the Trust Agreement.

 

ALP is subject to certain conflicts of interest arising out of its relationships with the Administrator and affiliates. Various services have been and, to some extent, will continue to be provided to ALP by the Administrator and affiliates, including insurance brokerage and administrative services such as legal, accounting and treasury services. In addition, the timing and amount of cash distributions and cash reserves and allocations of profits and losses for tax purposes, as well as the amount of expenses charged to ALP for services, are or may be affected by determinations made by the Administrator. Because the Administrator and/or its affiliates have interests in the cash distributions and the profits or losses for tax purposes of ALP or in the amount of payments or reimbursements made for services rendered to ALP, the Administrator has a conflict of interest in making the determinations affecting these matters.

 

The director and executive officers of the Administrator of ALP are as follows:

 

Name	Office	Served in Office Since
Gary Nickele	Director and President	2005
Gailen J. Hull	Vice President and Chief Financial Officer	2005

 

There is no family relationship among the foregoing director or any officer. Mr. Nickele has been elected to serve a one-year term as director at the annual meeting of the Administrator held on August 8, 2017. Both of the foregoing officers have been elected to serve one-year terms. There are no arrangements or understandings between or among any of said director or officer and any other person pursuant to which the director or any officer was selected as such.

The foregoing director and officer are also officers of JMB. The foregoing director and officer are also officers and/or directors of various affiliated companies of JMB.

 

The business experience during the past five years of the director and officer of the Administrator of ALP includes the following:

 

Gailen J. Hull (age 69), in addition to being a Vice President of the Administrator, has acted as the Chief Financial Officer of the Partnership since August 2002. He is also a Senior Vice President and, since August 2002, Chief Financial Officer of JMB and an officer of various JMB affiliates. Mr. Hull has been associated with JMB since March, 1982. He holds a Master’s degree in Business Administration from Northern Illinois University and is a Certified Public Accountant.

 

Gary Nickele (age 65) is Executive Vice President of JMB and an officer and/or director of various JMB affiliates. Prior to becoming President of the Administrator, in May 2004, Mr. Nickele had been a Vice President of that corporation since June 1987. He has been associated with JMB since February, 1984. He holds a J.D. degree from the University of Michigan Law School and is a member of the Bar of the State of Illinois.

 

ALP is organized under the laws of the State of Delaware, and the rights of its trustees are governed by the Trust Agreement and Chapter 38 of Title 12 of the Delaware Code, 12 Del. c 8 3Ed, et. seq., as amended from time to time (as so amended, the "Trust Act"). Moreover, the beneficial interest units are not publicly traded. In view of these facts, as well as the limited business activity of ALP, the Administrator has determined that it is not necessary for ALP to have a separately designated audit committee, compensation committee, an "audit committee financial expert" or a "code of ethics" as those terms are defined in the rules and regulations of the Securities and Exchange Commission.

 

 

Item 11. Executive Compensation

 

The officers and the director of the Administrator receive no direct remuneration in such capacities from ALP. The Administrator and the trustees are entitled to receive a share of cash distributions, when and as cash distributions are made. The Administrator and its affiliates received no cash distributions in 2017 and 2016. Pursuant to the Trust Agreement, the Administrator and its affiliates were allocated net loss for Federal income tax purposes for 2017 and 2016 of approximately $114,000 and $164,000, respectively.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and

Related Security Holder Matters

 

(a)       The following have reported beneficial ownership of more than 5% of the outstanding Beneficial Interest Units of ALP as of March 30, 2017.

 

Title of Class		Name and Address of Beneficial Owner		Amount and Nature of Beneficial Ownership		Percent Of Class
Beneficial Interest Units		The St. Joe Company		106,200.4399 Units (1)		23.9%
Beneficial Interest Units		Fairholme Capital Management, LLC		106,200.4399 Units (2)		23.9%
Beneficial Interest Units		Bruce R. Berkowitz		106,200.4399 Units (2)		23.9%
Beneficial Interest Units		Fairholme Funds, Inc.		106,200.4399 Units (2)		23.9%

 

(1)

Reflects beneficial ownership of beneficial interest units held directly by The St. Joe Company. The address for the St. Joe Company is 133 South WaterSound Parkway, WaterSound, Florida 32413.

 

(2)

Reflects indirect beneficial ownership of beneficial interest units held directly by the The St. Joe Company. As a result of the direct and beneficial ownerships of outstanding shares of common stock of The St. Joe Company, Fairholme Capital Management, LLC, Mr. Berkowitz and Fairholme Funds, Inc. are or may be deemed to be indirect beneficial owners of the 106,200.4399 Interests owned directly by the St. Joe Company. See note (1) above. The address for each is 4400 Biscayne Boulevard, 9th Floor, Miami, Florida 33137.

(b)       The Administrator and its executive officers and director beneficially own the following Interests of ALP:

 

Title of Class		Name of Beneficial Owner		Amount and Nature of Beneficial Ownership		Percent Of Class
Beneficial Interest Units		Administrator and its executive officers and director as a group		None		--

 

No executive officer or director of the Administrator of ALP possesses a right to acquire beneficial interest units of ALP.

 

(c)       There exists no arrangement, known to ALP, the operation of which may at a subsequent date result in a change in control of ALP.

 

(d)       ALP has no compensation plans or individual compensation arrangements under which beneficial interest units of ALP are authorized for issuance to any person.

 

 

Item 13. Certain Relationships, Related Transactions and Director Independence

 

Pursuant to the original Partnership Agreement and subsequent Trust Agreement, ALP is permitted to engage in various transactions involving the Administrator and their respective affiliates. Such transactions involve conflicts of interest for the Administrator or its affiliates. Certain relationships of the Administrator (and its director and executive officer) and its affiliates to ALP are set forth above in Item 10.

 

JMB Insurance Agency, Inc., an affiliate of the Administrator, earned and received insurance brokerage commissions in 2017 and 2016 of approximately $130 and $130, respectively, in connection with providing insurance coverage for certain of ALP, all of which was paid as of December 31, 2017. Such commissions are at rates set by insurance companies for the classes of coverage provided.

 

The Administrator of ALP or its affiliates are entitled to reimbursement for their direct expenses or out-of-pocket expenses relating to the administration of ALP and the management of ALP assets. In 2016, the Administrator and its affiliates were entitled to reimbursements for legal, accounting and treasury services. Such costs for 2017 and 2016 were approximately $304,000 and $306,000, respectively, of which approximately $56,000 was unpaid as of December 31, 2017.

 

Amounts payable to or by the Administrator or its affiliates do not bear interest and are expected to be paid in future periods.

 

Item 14. Principal Accountant Fees and Services

 

RSM US LLP (RSM) audited the accompanying consolidated financial statements for the years ended December 31, 2017 and 2016. The fees billed by RSM for the years ended December 31, 2017 and 2016 are as follows:

 

(1)       Audit Fees

 

The aggregate fees billed for the years ended December 31, 2017 and 2016 for professional services rendered for the audit of ALP's annual financial statements and review of the statements in ALP's Form 10-Q filings were approximately $56,000 and $70,000, respectively.

 

(2)       Audit Related Fees

 

None

 

(3)       Tax Fees

 

The aggregate fees billed for the years ended December 31, 2017 and 2016 for professional services rendered for tax compliance and tax return preparation were approximately $13,000 and $14,000, respectively.

 

(4)       All Other Fees

 

None

 

ALP has not adopted any pre-approval policies and procedures for its audit, audit related and permitted non-audit services. All such services are approved by the sole director of the Administrator before the services are rendered.

 

Part IV

 

Item 15. Exhibits and Financial Statement Schedules

 

(a)

The following documents are filed as part of this report:

 

	(1)	Financial Statements (See Index to Financial Statements and Supplementary Data filed with this report).
	(2)	Exhibits.
		3-1.	Amended and Restated Agreement of Limited Partnership.*
		3-2.	Acknowledgment and Amendment of Partnership Agreement.*
		3.3.	Amendment to the Amended and Restated Agreement of Limited Partnership, effective October 29, 2002, is incorporated herein by reference to Exhibit 3.3 to the Partnership's Report for the year ended December 31, 2002 on Form 10-K (File No. 0-16976) dated March 24, 2003.
		3.4.	Assignment Agreement by and among the General Partner, the Initial Limited Partner and the Partnership.*
		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.
		10-1.	Agreement between the Partnership and The Walt Disney Company dated January 29, 1987 is incorporated herein by reference to Exhibit 10.1 to the Partnership's Report for the year ended December 31, 2002 on Form 10-K (File No. 0-16976) dated March 24, 2003.
		10-2.	Letter Agreement, dated as of September 10, 1987, between the Partnership and The Walt Disney Company, is incorporated herein by reference to Exhibit 10.2 to the Partnership's Report for the year ended December 31, 2002 on Form 10-K (File No. 0-16976) dated March 24, 2003.
		10-3.	Management, Advisory and Supervisory Agreement, including the License Agreement for the use of the Arvida name as exhibit A thereto, is incorporated herein by reference to Exhibit 10.3 to the Partnership's Report for the year ended December 31, 2002 on Form 10-K (File No. 0-16976) dated March 24, 2003.
		10.4.	Fourth Amended and Restated Agreement of Partnership of Arvida/JMB Partners, together with Amendment No. 1 thereto, is incorporated herein by reference to Exhibit 10.4 to the Partnership's Report for the year ended December 31, 2002 on Form 10-K (File No. 0-16976) dated March 24, 2003.
		10.5.	Information Systems Sharing Agreement dated November 6, 1997 between Arvida/JMB Partners, L.P. and Arvida Company is hereby incorporated herein by reference to Exhibit 10.15 to the Partnership's Report for the year ended December 31, 1997 on Form 10-K (File No.  0-16976) dated March 25, 1998.

 

		31.1.	Certification of Principal Executive Officer Pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the Securities Exchange Act of 1934 is filed herewith.
		31.2.	Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the Securities Exchange Act of 1934 is filed herewith.
		32.	Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1850, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are filed herewith.
		*	Previously filed with the Securities and Exchange Commission as Exhibits 3.1, 3.2 and 3.3, respectively, to the Partnership's Form 10-Q/A Report (File No. 0-16976) filed on June 6, 2002, and incorporated herein by reference.
	(b)	No report on Form 8-K was filed since the beginning of the last quarter of the period covered by this report.

 

Signatures

 

Pursuant to the requirements of Section 13 or 15(d) 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:	March 20, 2018

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

		.
		Gailen J. Hull
	By:	Gailen J. Hull, Vice President Principal Accounting Officer and Principal Financial Officer
	Date:	March 20, 2018
		Gary Nickele
	By:	Gary Nickele, President and Sole Director Principal Executive Officer
	Date:	March 20, 2018

 

ALP Liquidating Trust

 

Exhibit Index

 

Exhibit No.		Exhibit		Document Incorporated by Reference
3.1.		Amended and Restated Agreement of Limited Partnership.		Yes
3.2.		Acknowledgment and Amendment of Partnership Agreement.		Yes
3.3.		Amendment to the Amended and Restated Agreement of Limited Partnership, effective October 29, 2002.		Yes
3.4.		Assignment Agreement by and among the General Partner, the Initial Limited Partner and the Partnership.		Yes
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.		Yes
10.1.		Agreement between the Partnership and The Walt Disney Company dated January 29, 1987		Yes
10.2.		Letter Agreement, dated as of September 10, 1987, between the Partnership and The Walt Disney Company		Yes
10.3.		Management, Advisory and Supervisory Agreement, including the License Agreement for the use of the Arvida name as exhibit A thereto		Yes
10.4.		Fourth Amended and Restated Agreement of Partnership of Arvida/JMB Partners, together with Amendment No. 1 thereto		Yes
10.5.		Information Systems Sharing Agreement dated November 6, 1997 between Arvida/JMB Partners, L.P. and Arvida Company		Yes
31.1.		Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the Securities Exchange Act, as amended.		No
31.2.		Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the Securities Exchange Act, as amended.		No
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.		No