Receivership for Direct Lending Investments, LLC

Receivership for Direct Lending Investments, LLC

Case Number: 19-02188

Central District of California
FREQUENTLY ASKED QUESTIONS 

General Questions:

1. What is the status of DLI?

    The United States District Court appointed Brad Sharp of Development Specialists, Inc. as Permanent Receiver for Direct Lending Investments LLC, Direct Lending Income Fund, L.P., Direct Lending Income Feeder Fund, Ltd., DLI Capital, Inc., DLI Lending Agent, LLC, and DLI Assets Bravo, LLC and their successors, subsidiaries and affiliated entities (collectively, “DLI” or the “Receivership Entity”) on April 1, 2019. Additional information about the Receivership, including a copy of the Preliminary Injunction Order and Order Appointing Permanent Receiver, can be found at https://cases.stretto.com/dli.

2. Why was the Receivership necessary? 

    See the Complaint filed by the Securities and Exchange Commission at docket entry 01 filed on March 22, 2019 at https://cases.stretto.com/dli for a summary of the reasons for the filing.

3. What is a Receivership?

    Receivership is a process in which a legally appointed receiver acts as custodian of a company's assets or business operations. The Receivership process is designed to allow a court‐appointed third party to act as a custodian for assets and maximize asset values for investors, creditors, employees and parties who have an interest in the estate.

4. Who does the Receiver work for?

    The Receiver is an agent of the Court and therefore works for the appointing judge.   The beneficiaries of the Receiver's work are the investors, creditors, employees and parties who have an interest in the estate.

5. Does this mean DLI is going out of business?

    DLI will not be accepting any additional investor funds. The goal of the Receiver is to evaluate assets and maximize asset values to create as much value as possible for investors, creditors, employees and interested parties.

6. What entities are included in the Receivership?

    Direct Lending Investments, LLC; Direct Lending Income Fund, L.P.; Direct Lending Income Feeder Fund, Ltd.; DLI Capital, Inc.; DLI Lending Agent, LLC; and DLI Assets Bravo LLC and their successors, subsidiaries and affiliated entities.

7. Where can I learn more about the Receivership and obtain periodic updates?

    Additional information about the DLI Receivership can be found at https://cases.stretto.com/dli. Status reports as filed with the court will be posted as they become available.

Investor Specific Questions:

8. Will I continue to receive distributions?

    Receiverships provide for a process whereby a claims bar date will be set for parties to file a claim.  The Receiver will evaluate all claims and will make distributions based on a determination of such claims and court approval of a distribution plan.  As of yet, the court has not yet set a claims bar date.  The claims bar date will be set to provide several weeks advance notice to investors to file a claim.  Further information will be provided once this process is approved.

9. How do I file a claim?

    The Receiver will establish a process for the submission of claims.  As of yet, the court has not yet set a claims bar date.  The claims bar date will be set to provide several weeks advance notice to investors to file a claim.  Further information will be provided once this process is approved.

10. Will I continue to receive monthly statements in the investor portal?

    No, investors will no longer receive regular monthly statements, including statements as of December 31, 2018.

11. How do I request and obtain audit confirmations for investor accounts?

    DLI will no longer be able to respond to investor audit confirmation requests.

12. What is the timing for payments to investors?

    The Receiver will evaluate the available assets and execute a strategy to maximize value to the investors, creditors, employees and interested parties. The timetable will be dependent upon the time required for maximum recovery. As such, no estimate can be provided for timing of any payments to investors, creditors, employees and interested parties. 

13. Do you have an estimate of what percent of our original investment may be returned to us in the form of a distribution?

    It is too early to make such an estimate. The Receiver will seek approval of a claims process and a distribution plan. The amounts ultimately distributed will be calculated pursuant to allowed claim amounts and percentage distributions allowable under an approved distribution plan and contingent upon the total amount available for distribution.

14. When will I receive my 2018 Schedule K‐1?

    The Receiver hopes to provide the 2018 Schedule K‐1s by September 15, 2019.

15. Can I write off my investment loss?

    The Receiver cannot give tax or other legal advice. Please consult with your accountant or tax advisor and seek their advice.

16. Will Brendan Ross have continued involvement?

    Brendan Ross formally resigned all positions at DLI on March 18, 2019 and ceded control to DLI’s management committee. The Receiver has taken custody of DLI’s assets and operations.

17. Who do I contact for additional information?

    The website (https://cases.stretto.com/dli) will be updated with additional information as it becomes available.

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