Bankruptcy Court Approves Consensual Resolution Directing Appointment of New Woodbridge Board of Directors and Formation of Ad Hoc Creditors' Groups

The Securities and Exchange Commission announced today an order in the bankruptcy action involving Woodbridge Group of Companies, LLC, et al., Case No. 17-12560 (KJC), resolving motions on behalf of the SEC, Creditors, as well as Debtors Woodbridge and affiliated companies. The resolution follows several days of a vigorously contested hearing regarding the control and management of Woodbridge while it is in bankruptcy. During the hearing, the SEC presented substantial evidence of fraud committed by Woodbridge prior to filing for bankruptcy.

In a hearing yesterday, the Honorable Judge Kevin J. Carey of the United States Bankruptcy Court for the District of Delaware approved a settlement Term Sheet presented by the SEC, the Debtors, the Creditors' Committee, and Ad Hoc Committees of Unitholders and Noteholders. Among other things, the settlement provides for the appointment of a New Board of Managers consisting of representatives recommended by the parties which will take necessary actions for managing Woodbridge. The settlement also provides for the SEC's consent, not unreasonably withheld, to the retention of a CEO or Chief Restructuring Officer, and the selection of Debtors' professionals.

Judge Carey's Order approving the Term Sheet stated that the resolution is in the best interest of the Creditors, the Committee, the Debtors, their estates, and other parties in interest, and provided the appointment of a New Board of Managers, which will select a CEO or Chief Restructuring Officer for the Debtors. In furtherance of the settlement, the SEC has agreed to dismiss its request in the District Court action for the appointment of a receiver over the Debtors and related entities.

According to the Term Sheet attached to the Order, all parties will also cooperate in facilitating non-debtor entities, subject to the asset freeze by the U.S. District Court for the Southern District of Florida, to come under control of the New Board and under jurisdiction of the Bankruptcy Court administering the Woodbridge Chapter 11 cases. The settlement also provided for the formation and appointment of Unitholders and Noteholders committees, to represent the interests of investors who purchased Woodbridge notes and unit investments.

The SEC's litigation in the bankruptcy case has been led by David W. Baddley, Russell Koonin, Christine Nestor, Alistaire Bambach, Scott A. Lowry and Neal Jacobson, and has been supervised by Andrew O. Schiff in the Miami Regional Office. The SEC is continuing its District Court litigation. The SEC's investigation, which is continuing, has been conducted by Mr. Lowry, Linda S. Schmidt and Mark Dee, and supervised by Jason R. Berkowitz and Fernando Torres.