Item 8.01. Other Events.
Monthly Operating Report
As previously disclosed, on August 30, 2019, RAIT Financial Trust ("RAIT") and
its affiliates RAIT Funding LLC, RAIT General, Inc., RAIT Limited, Inc., Taberna
Realty Finance Trust, RAIT JV TRS, LLC, and RAIT JV TRS Sub, LLC (together, the
"Debtors") filed voluntary bankruptcy cases (the "Chapter 11 Cases")
under chapter 11, Title 11 of the U.S. Bankruptcy Code in the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). The
Chapter 11 Cases are jointly administered under the caption In re: RAIT Funding,
LLC, a Delaware limited liability company, et. al. As previously disclosed in a
Current Report on Form 8-K filed by RAIT on November 19, 2019 (the "11/19/19
8K"), during the pendency of the Chapter 11 Cases, in lieu of filing Quarterly
Reports on Form 10-Q and Annual Reports on Form 10-K under Section 13(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), RAIT intends
to follow the modified reporting procedures (the "Modified Reporting
Procedures") outlined in Exchange Act Release No. 9660 (June 30, 1972) ("Release
No. 9660"), the Securities and Exchange Commission's (the "Commission") Staff
Legal Bulletin No. 2 (April 15, 1997) and the Commission's related no-action
correspondence, as described in the 11/19/19 8K.
On November 27, 2019, the Debtors jointly filed a monthly operating report for
the period from October 1, 2019 to October 31, 2019 (the "Monthly Operating
Report") with the Bankruptcy Court. In accordance with the Modified Reporting
Procedures, a copy of the Monthly Operating Report is attached as Exhibit 99.1
to this Current Report on Form 8-K and is incorporated herein by reference.
The Monthly Operating Report, court filings and other information related to the
Chapter 11 Cases are available at a website administered by the Debtors'
noticing and claims agent, Epiq Corporate Restructuring, LLC, at
https://dm.epiq11.com/rait, or www.deb.uscourts,gov, the official Bankruptcy
Court website. The information set forth in these websites is not incorporated
into this Item 8.01.
Cautionary Statement Regarding Forward-Looking Statements
This Current Report on Form 8-K may contain certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Exchange Act. These statements are often, but not always,
made through the use of words or phrases such as "anticipates," "believes,"
"can," "could," "may," "potential," "should," "will," "plans," "continuing,"
"ongoing," "expects," "intends to," and similar words or phrases. Although RAIT
believes that the expectations reflected in these forward-looking statements are
reasonable, these statements are not guarantees of future performance and
involve risks and uncertainties that are subject to change based on various
important factors, some of which are beyond our control. Such forward-looking
statements include, but are not limited to, statements related to (a) the
transactions contemplated by (i) the Equity and Asset Purchase Agreement, dated
August 30, 2019 (the "Purchase Agreement"), by and among RAIT, certain of its
direct and indirect subsidiaries, and CF RFP Holdings LLC, a Delaware limited
liability company and an entity owned by funds managed by affiliates of Fortress
Investment Group LLC ("Buyer"), pursuant to which, among other things, Buyer
agreed to purchase certain subsidiaries and assets of RAIT (together, the
"Purchased Assets"), (ii) the Restructuring and Plan Support Agreement, dated
August 29, 2019, by and among RAIT, Taberna Realty Finance Trust, and TP
Management LLC, an affiliate of Buyer, in its capacity as delegate collateral
manager, and (iii) the Restructuring and Plan Support Agreement, dated August
31, 2019, by and among RAIT, RAIT Funding, LLC, and Kodiak CDO I, Ltd., as
holder of certain preferred securities, including the Chapter 11 Cases, and (b)
the ability of the Debtors to operate as a "debtor in possession" under the
jurisdiction of the Bankruptcy Court. These risks, uncertainties and
contingencies include, but are not limited to, (i) whether the closing
conditions of the Purchase Agreement will be satisfied or waived and whether the
transactions contemplated thereby will be completed as provided therein, (ii)
whether RAIT or its affiliates will be able to obtain approval with respect to
motions in the Chapter 11 Cases and the Bankruptcy Court's rulings in the
Chapter 11 Cases and the outcome of the Chapter 11 Cases in general; (iii) the
length of time the Debtors will operate under the Chapter 11 Cases; (iv) risks
associated with third-party motions in the Chapter 11 Cases, which may interfere
with RAIT and its affiliates' ability to develop and consummate the sale of the
Purchased Assets; (v) the potential adverse effects of the Chapter 11 Cases on
the Debtors' liquidity, results of operations or business prospects; (vi)
increased legal, advisor and other costs related to the Chapter 11 Cases and
other litigation and the inherent risks involved in a bankruptcy process; and
(vii) the effect of the Chapter 11 Cases on the trading price and value of RAIT
securities. For additional discussion of these risks, refer to the section
entitled "Risk Factors" and elsewhere in the RAIT's Annual Report on Form 10-K
for the year ended December 31, 2018, filed with the Commission on March 26,
2019, Amendment No. 1 to RAIT's Annual Report on Form 10-K/A for the year ended
December 31, 2018, filed with the Commission on April 30, 2019, RAIT's Quarterly
Report on Form 10-Q for the quarterly period ended March 31, 2019, filed with
the Commission on November 7, 2019 and RAIT's Quarterly Report on Form 10-Q for
the quarterly period ended
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June 30, 2019, filed with the Commission on November 7, 2019. In light of the
significant uncertainties inherent in any forward-looking information included
herein, the inclusion of such information should not be regarded as a
representation by RAIT or any other person that RAIT's expectations, objectives
or plans will be achieved in the timeframe anticipated or at all. RAIT
undertakes no obligation to update these forward-looking statements to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events, except as may be required by law. All forward-looking
statements attributable to RAIT are expressly qualified by these cautionary
statements.
Cautionary Statement Regarding Financial Operating Data
The Debtors caution investors and potential investors not to place undue
reliance upon the information contained in the Monthly Operating Report, which
was not prepared for the purpose of providing the basis for an investment
decision relating to any securities of the Debtors. The Debtors prepared the
Monthly Operating Report solely for purposes of complying with the monthly
operating reporting requirements applicable in the Chapter 11 Cases. The
financial information contained in the Monthly Operating Report is unaudited,
limited in scope, and as such, has not been subject to procedures that would
typically be applied to financial statements in accordance with accounting
principles generally accepted in the United States of America. These unaudited
financial statements were prepared using certain assumptions and estimates.
These assumptions and estimates are subject to revision. Further, the amounts
shown in this statement may differ materially due to adjustments in accruals,
changes in facts and circumstances, changes in estimates, further analysis, and
other factors. Accordingly, there can be no assurances that, from the
perspective of an investor or potential investor in RAIT's or its subsidiaries'
securities, the financial information contained in the Monthly Operating Report
is complete.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
The following exhibit is included as part of this report:
Exhibit
No. Description
Debtors' Monthly Operating Report for the period October 1, 2019 to
99.1 October 31, 2019, filed with the United States Bankruptcy Court for the
District of Delaware .
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