Condensed and Consolidated Financial Statements for Entities in Bankruptcy

Condensed consolidated financial information for Lamington Road DAC is set forth below, presented at historical cost basis.

Lamington Road DAC

(Debtor-in-Possession)

Condensed and Consolidated Statements

Balance Sheet



	February 29, 2020		February 28, 2019
	(Unaudited)
	(In thousands except share data)
ASSETS
Assets
Cash and cash equivalents	$	—	$	21,742
Prepaid expenses and other assets	—		833
Investment in life settlements, at estimated fair value	—		494,732
Receivable for maturity of life settlements	—		36,754
Total assets	$	—	$	554,061

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued expenses	$	—	2,702
Other liabilities (subject to compromise)*	—		7,181
Revolving Credit Facility debt, at estimated fair value	—		365,499
Promissory notes payable (subject to compromise)*	—		146,393
Total liabilities	—		521,775

Share Capital (1 share of $1 authorized and issued)	—		—
Additional paid in capital	—		60,602
Accumulated deficit/retained earnings	—		(28,316		)
Total stockholders' deficit/equity	—		32,286
Total liabilities and stockholders' equity	$	—	$	554,061

*Liabilities subject to compromise include pre-petition unsecured claims, which may be settled at amounts different from those recorded in the condensed consolidated balance sheet.

Lamington Road DAC

(Debtor-in-Possession)

Condensed and Consolidated Statements of Operations



	For the Three Months Ended February 29,		For the Three Months Ended February 28,
	2020		2019
Change in fair value of life settlements (Notes 11 & 16)	$	—	$	(12,750	)
Other income	—		234
Total income	—		(12,516		)

Interest expense	—		2,400
Change in fair value of White Eagle Revolving Credit Facility (Notes 12 & 16)	—		14,608
Reorganization cost	—		1,901
Legal fees	—		587
Professional fees	—		428
Administrative service fees - affiliate	—		1,427
Other general and administrative expenses	—		98
Total expenses	—		21,449
Income taxes	—		—
(Loss) income	$	—	$	(33,965	)

Lamington Road DAC

(Debtor-in-Possession)

Condensed and Consolidated Statements of Cash Flows



	For the Three Months Ended February 29,		For the Three Months Ended February 28,
	2020		2019

Net cash used in operating activities	$	—	$	(4,951	)
Cash flows from investing activities
Premiums paid on life settlements	—		(25,247		)
Proceeds from maturity of life settlements	—		14,000
Net cash provided by/(used in) investing activities	$	—	$	(11,247	)
Cash flows from financing activities
Borrowings from White Eagle Revolving Credit Facility	—		4,221
Net cash provided by financing activities	$	—	$	4,221
Net increase (decrease) in cash and cash equivalents	—		(11,977		)
Cash and cash equivalents, at beginning of the period	—		33,719
Cash and cash equivalents, at end of the period	$	—	$	21,742
Supplemental disclosures of cash flow information:
Cash paid for interest during the period	$	—	$	2,400

Related Party Transactions

Certain related party transactions had been eliminated in consolidation. Due to the deconsolidation of Lamington, transactions after November 13, 2018 are no longer eliminated. With the discharge of the Chapter 11 Cases, effective August 17, 2019 related party transactions are now eliminated in consolidation. The below is a description of related party transactions for the period.

Administrative Services Fees

In 2014, White Eagle entered into an Administrative Service Agreement with Imperial Finance and Trading ("IFT"). Under the agreement, IFT will perform certain non-discretionary, administrative or ministerial services to assist with certain reporting, compliance and document retention duties and obligations arising under or in connection with the Amended and Restated Loan and Securities Agreement. IFT shall recover all cost incurred in performing these services, with billings quarterly or annually. Bills will be based on actual cost or an appropriate allocation methodology. White Eagle incurred post-petition administrative service expenses of approximately $0 and $1.4 million during the three months ended February 29, 2020 and three months ended February 28, 2019, respectively. Amounts due from White Eagle resulting from the administrative services during three months ended February 28, 2019 are included in investment in deconsolidated subsidiaries and amounts payable to IFT are included in other liabilities on the Lamington Road DAC consolidated balance sheet totaling $7.2 million, net of repayments.

Promissory Notes Receivables

Effective May 16, 2014, Lamington entered into a 10 year, $59.3 million unsecured Promissory Note ("the 8.5% Promissory Note") with its parent company, Markley Asset Portfolio, LLC ("Markley"). The amount was used by Lamington as the partial purchase price of Markley’s interest in White Eagle. The annual interest rate on the Promissory Note is 8.5% and is due to be paid at the end of each calendar year; provided that any interest accrued at the end of a calendar year which is not paid within seven business days thereafter shall be capitalized and increased to the outstanding principal balance. As of February 28, 2019 the outstanding principal balance was $87.1 million, which includes $27.7 million in capitalized interest. The entire remaining principal balance of the 8.5% Promissory Note shall be due and payable, together with all accrued but unpaid interest, on May 16, 2024. No principal payments are due prior to the maturity date.

Effective July 28, 2017, Lamington issued an unsecured Promissory Note to Markley, in a principal amount of $57.0 million. The amount represents distributions of earnings from Lamington's share of profits of White Eagle, to satisfy Profit Participating Notes issued by Markley to Lamington (the "Special Dividend Note").The Special Dividend Note matures on July 28, 2027 and bears interest at an annual rate of 5.0% provided that any interest accrued at the end of a calendar year which is not paid within seven business days thereafter shall be capitalized and increased to the outstanding principal balance. As of February 28, 2019 the outstanding principal balance was $60.6 million, which includes $3.6 million in capitalized interest. The entire remaining principal balance of the Special Dividend Note shall be due and payable, together with all accrued but unpaid interest, on July 28, 2027. No principal payments are due prior to the maturity date.

The Company stopped accruing interest on both notes during the Chapter 11 cases, effective August 17, 2019 the notes are consolidated and interest expense has been eliminated on consolidation.

At February 28, 2019, the notes were fair valued in accordance with ASC 820, with a fair value of approximately $56.6 million and was included in investment in deconsolidated subsidiaries and not separately presented on the face of the consolidated balance sheet. At February 28, 2019 the combined face value of the notes was $147.6 million.