In the September 15, 2015 update to this webpage, I indicated that I was attempting to finish the work of the Trust so that we can close the Trust as soon as possible. Also, as indicated in that memo, I am the disbursement agent for the Class case. At that time I outlined a number of things that must be done, and I will now give an update on where those things currently stand.
Shreveport – I am certain that you are all aware of what has been a historic low time for oil and gas prices. It appears that these prices will stay low for sometime in the future. Currently, and since year end, there have been no royalty payments to the Trust in that the operational expenses born by Chesapeake have exceeded production revenue for the period. At this point, I do not see it likely that there will be any real cash coming from this property for some time. This being the case, I am exploring other alternatives for hopefully selling this asset.
MacDowell – Within the last 6 months we were able to negotiate a final payment to close out this matter. We pursued due-diligence investigations and determined that MacDowell’s financial condition is such that we reasonably could not be expected to be paid the full amount. This being the case, we agreed to accept a $60,000 final payment to close out his debt to us, which was $196,000. As per the Class Settlement Agreement, 50% of the funds collected ($30,000) will be transferred to the Class and included in the Class distribution.
Debt to Silicon Valley Law Group – In order to finalize this debt of the Trust, we agreed to make a final payment of $20,000. The original assertion by Silicon Valley Law Group originated from its retainer agreement with 1031 Advance in which there was a provision for attorney’s fees should SVLG be sued by 1031 Advance and prevail. These fees were asserted to be in the $2 million range. Certainly we feel that the settlement that was reached was favorable to the Trust.
With the MacDowell final settlement and payment and receipt thereof, I am holding $530,000 to distribute to the Class members. This distribution is in process, and we believe will be finalized and checks mailed out to the beneficiaries within the next 14 days.
The small amount of cash remaining will be used to pay for final administrative charges which include final tax return preparation fees and miscellaneous items such as destruction of records and the like. Neither I nor my counsel is receiving any payments currently from the Trust. No payments have been made to my counsel or myself since October of 2013.
By now you should have received your Grantor Letter for the year 2015 year-end tax reporting.
If you have any questions, please contact Sue Sprehn in my office.
1031 TAX GROUP DEBTORS LIQUIDATION TRUST
Gerard A. McHale, Jr.
Attachments: Cash Balance Report (PDF)