Annual report pursuant to Section 13 and 15(d)

Certain Relationships And Related Party Transactions

v3.20.4
Certain Relationships And Related Party Transactions
12 Months Ended
Dec. 31, 2020
Certain Relationships And Related Party Transactions [Abstract]  
Certain Relationships And Related Party Transactions

20.    Certain Relationships and Related Party Transactions 



The Company may be deemed to be controlled by Alan B. Levan, the Company’s Chairman, John E. Abdo, the Company’s Vice Chairman, Jarett S. Levan, the Company’s Chief Executive Officer and President, and Seth M. Wise, the Company’s Executive Vice President. Together, they may be deemed to beneficially own shares of BBX Capital’s Class A Common Stock and Class B Common Stock representing approximately 79% of BBX Capital’s total voting power. Mr. Alan B. Levan serves as the Chairman, Chief Executive Officer, and President of BVH and Bluegreen, Mr. Abdo serves as Vice Chairman of BVH and Bluegreen, Mr. Jarett Levan serves as a director of BVH and Bluegreen and Mr. Wise serves as a director of Bluegreen.



Included in selling, general and administrative expenses in the Company’s consolidated statements of operations and comprehensive loss or income was $1.3 million,  $0.6 million, and $1.0 million during the years ended December 31, 2020, 2019 and 2018, respectively, for management advisory and employer provided medical insurance provided by BVH to the Company. Also included in selling, general and administrative expenses during the year ended December 31, 2020 was $0.3 million of rent for office space provided by BVH to the Company.  The Company reimbursed BVH the actual cost of providing the services. 



The Company also received $0.2 million for providing management services to The Altman Companies and received $0.2 million for providing administrative services to Bluegreen during the year ended December 31, 2020. 



Included in other revenues in the Company’s consolidated statements of operations and comprehensive loss or income was $0.7 million, $0.8 million, and $1.0 million for providing risk management consulting services to Bluegreen for the years ended December 31, 2020, 2019 and 2018, respectively. 



Prior to the spin-off of BBX Capital on September 30, 2020, expenses related to certain support functions paid for by BVH, including executive services, treasury, tax, accounting, legal, internal audit, human resources, public and investor relations, general management, shared information technology systems, corporate governance activities, and centralized managed employee benefit arrangements, were allocated to the Company on the basis of direct usage when identifiable, while the remainder of the expenses, including costs related to executive compensation, were allocated primarily on a pro-rata basis of combined revenues and equity in earnings of unconsolidated joint ventures of BVH and its subsidiaries. The expenses related to these support functions allocated to the Company and included in selling, general and administrative expenses in the Company’s consolidated statements of operations and comprehensive loss or income for the years ended December 31, 2020, 2019 and 2018 were $12.7 million, $21.0 million, and $21.2 million, respectively. The allocated support function costs were recognized as contributed capital in the Company’s consolidated statements of financial condition for the years ended December 31, 2020, 2019 and 2018.



Upon the consummation of the spin-off, all agreements with BVH were terminated and replaced with a Transition Services Agreement, Tax Matters Agreement, and Employee Matters Agreement. 



The Transition Services Agreement generally sets out the respective rights, responsibilities and obligations of BVH and BBX Capital with respect to the support services to be provided to one another after the spin-off, as may be necessary to ensure an orderly transition.  The Transition Services Agreement establishes a baseline charge for certain categories or components of services to be provided, which will be at cost unless the parties mutually agree to a different charge. The Transition Services Agreement was effective on September 30, 2020 and will continue for a minimum term of one year, provided that after that year, BVH or BBX Capital may terminate the Transition Services Agreement with respect to any or all services provided thereunder at any time upon thirty (30) days prior written notice to the other party. Either party may renew or extend the term of the Transition Services Agreement with respect to the provision of any service which has not been previously terminated.



The Tax Matters Agreement generally sets out the respective rights, responsibilities, and obligations of BVH and BBX Capital with respect to taxes (including taxes arising in the ordinary course of business and taxes incurred as a result of the spin-off), tax attributes, tax returns, tax contests, and certain other related tax matters. The Tax Matters Agreement allocates responsibility for the preparation and filing of certain tax returns (and the payment of taxes reflected thereon). Under the Tax Matters Agreement, BVH will generally be liable for its own taxes and taxes of all of its subsidiaries (other than the taxes of BBX Capital and its subsidiaries, for which BBX Capital shall be liable) for all tax periods (or portion thereof) ending on September 30, 2020, the effective date of the spin-off. BBX Capital will be responsible for its taxes, including for taxes of its subsidiaries, as well as for taxes of BVH arising as a result of the spin-off (including any taxes resulting from an election under Section 336(e) of the Internal Revenue Code of 1986, as amended (the “Code”) in connection with the spin-off).  BBX Capital will bear liability for any transfer taxes incurred in the spin-off.  Each of BVH and BBX Capital will indemnify each other against any taxes to the extent paid by one party but allocated to the other party under the Tax Matters Agreement, or arising from any breach of its covenants thereunder, and related out-of-pocket costs and expenses.



The Employee Matters Agreement sets out the respective rights, responsibilities, and obligations of BVH and BBX Capital with respect to the transfer of certain employees of the businesses of BBX Capital and related matters, including benefit plans, terms of employment, retirement plans and other employment-related matters. Under the Employee Matters Agreement, BBX Capital or its subsidiaries will generally assume or retain responsibility as employer of employees whose duties primarily relate to their respective businesses as well as all obligations and liabilities with respect thereto.



The Company was also previously a party to an Agreement to Allocate Consolidated Income Tax Liability and Benefits with BVH and Bluegreen that was terminated in connection with the spin-off. See Note 12 for further discussion. 



As further described in Note 1, in connection with the spin-off, BVH also issued a $75.0 million note payable to BBX Capital that accrues interest at a rate of 6% per annum and requires payments of interest on a quarterly basis.



During the three months ended December 31, 2020, the Company paid Abdo Companies, Inc. approximately $38,000 for certain management services. John E. Abdo, the Company’s Vice Chairman, is the principal shareholder and Chief Executive Officer of Abdo Companies, Inc.















The components of net transfers from/to BVH in the consolidated statements of changes in equity consisted of the following (in thousands):





 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 



For the Years Ended



December 31,



2020

 

2019

 

2018

Cash pooling

$

81,581 

 

 

(85,246)

 

 

(14,222)

Corporate overhead allocations

 

12,694 

 

 

21,037 

 

 

21,198 

Asset transfers

 

75,320 

 

 

302 

 

 

660 

Income taxes

 

(1,685)

 

 

(1,460)

 

 

(21)

Net transfers from (to) BVH

$

167,910 

 

 

(65,367)

 

 

7,615