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. Why is my Charles Schwab statement showing my balance at $0?
Charles Schwab is reporting a $0 balance because DLI is not providing monthly statements after 11/30/18. Charles Schwab is working to address the issue on their end.
17. What happened at the April 15 Status Conference?
The Receiver and counsel provided an overview of the activity that transpired in the first 15 days of the Receivership. This included gaining control of the cash and related management systems and preserving all records while working to evaluate the available assets and execute a strategy to maximize value to the investors, creditors, employees and interested parties.
18. Do you have any updates related to the Claims Bar Date or the process for filing a claim?
We do not yet have any update related to the Claims Bar Date or the process. 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.
19. What is the Receiver's plan for the loan portfolio?
The Receiver has not yet fully determined the long term strategy with respect to the balance of the loan portfolio but seeks clarification from the court that he has authority to sell or liquidate assets in the ordinary course of business. The Receiver intends to file a motion to seek to employ an investment banker to assist him in the evaluation of the assets. If he determines to sell any assets outside of the ordinary course of business, he will seek Court authority to do so.
20. What is happening with 12/31/18 and 1/31/19 redemptions?
The Receiver is evaluating redemption requests subsequent to 11/30/18 and after and will provide an update once a distribution plan has been determined and approved by the court.
21. Do you have any updates regarding VoIP Guardian Partners I LLC ("VoIP GP")?
VoIP GP filed a voluntary Chapter 7 petition for liquidation on March 11, 2019. The Receiver attended the 341 Meeting of the Creditors and will continue to monitor the proceedings of VoIP GP's bankruptcy. The Receiver is evaluating the assets of the receivership estate and intends to file a motion to engage an investment banker to assist him in the process.
22. When will additional updates to investors be provided and how do I receive these?
Please continue to check the website for periodic updates. The Receiver will continue to send periodic notices and updates through email and the investor portal. To subscribe to receive updates as items are filed on the court docket, please visit https://cases.stretto.com/dli and click on the “Civil Docket” on the top menu of the website. From there, please select “Subscribe” to sign up to get email notifications as pleadings are filed, daily, or weekly.
23. 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.
24. Who do I contact for additional information?
The website (https://cases.stretto.com/dli) will be updated with additional information as it becomes available.