Commitments And Contingencies
|9 Months Ended|
Sep. 30, 2021
|Commitments And Contingencies [Abstract]|
|Commitments And Contingencies||
12. Commitments and Contingencies
In the ordinary course of business, BBX Capital and its subsidiaries are parties to lawsuits as plaintiff or defendant involving its operations and activities. Additionally, from time to time in the ordinary course of business, the Company is involved in disputes with existing and former employees, vendors, taxing jurisdictions, and various other parties and also receives individual consumer complaints as well as complaints received through regulatory and consumer agencies. The Company takes these matters seriously and attempts to resolve any such issues as they arise. The Company may also become subject to litigation related to the COVID-19 pandemic, including with respect to any actions we take or may be required to take as a result thereof.
Reserves are accrued for matters in which management believes it is probable that a loss will be incurred and the amount of such loss can be reasonably estimated. Management does not believe that the aggregate liability relating to known contingencies in excess of the aggregate amounts accrued will have a material impact on the Company’s results of operations or financial condition. However, litigation is inherently uncertain, and the actual costs of resolving legal claims, including awards of damages, may be substantially higher than the amounts accrued for these claims and may have a material adverse impact on the Company’s results of operations or financial condition.
Adverse judgments and the costs of defending or resolving legal claims may be substantial and may have a material adverse impact on the Company’s financial statements. Management is not at this time able to estimate a range of reasonably possible losses with respect to matters in which it is reasonably possible that a loss will occur. In certain matters, management is unable to estimate the loss or reasonable range of loss until additional developments provide information sufficient to support an assessment of the loss or reasonable range of loss. Frequently in these matters, the claims are broad, and the plaintiffs have not quantified or factually supported their claims.
Renin Supplier Dispute
In October 2020, Renin incurred approximately $6.0 million in costs for the expedited shipment of products to Renin from a foreign supplier and an additional $2.0 million in costs for the expedited shipment of product displays from the same supplier. The supplier had failed to deliver both the products and displays on the contractually agreed upon delivery schedule, and Renin incurred these costs, which were significantly in excess of the shipping costs that would have been incurred had such products been delivered on schedule, based on its belief that the costs were necessary in order for Renin to meet its obligations to one of its major customers. The products were committed to be sold by Renin in connection with the customer’s November 2020 holiday sale program, while the displays were required to be delivered in connection with the rollout of new products with the customer. Renin believes that the supplier is liable for damages suffered by Renin related to the increased costs pursuant to the terms of the agreements between Renin and the supplier and notified the supplier of its exercise of a right of offset of the costs against outstanding amounts due to the supplier of approximately $8.1 million. However, the supplier is disputing that it is liable for the additional shipping costs and has demanded that Renin pay the outstanding amounts due to it.
As the supplier is disputing that it is liable to Renin for damages and there is no assurance regarding the ultimate resolution of the matter and Renin’s assertion that it is entitled to damages, Renin recognized the cost of the products and related shipping costs of such products in cost of trade sales during the year ended December 31, 2020, while the costs of the displays and related shipping were deferred and are being amortized over the period in which the Company expects to benefit from their use.
If Renin is unable to establish that it is entitled to damages from the supplier and is ultimately required to pay the supplier for all outstanding amounts due to it, it would cause Renin to be out of compliance with the covenants under its TD Bank facility. If Renin is unable to comply with its covenants, it would be required to seek a waiver from the bank. If a waiver is required and Renin is unable to obtain a waiver, Renin could lose availability under its line of credit, be required to provide additional collateral, and/or repay all or a portion of its borrowings, any of which would have a material adverse effect on the Company’s liquidity, financial position, and results.
Other Commitments and Guarantees
BBX Capital guarantees certain obligations of its wholly-owned subsidiaries and unconsolidated real estate joint ventures, including the following:
BBX Capital is a guarantor of 50% of the outstanding balance of a third-party loan to the Bayview real estate
joint venture, which had an outstanding balance of $5.0 million as of September 30, 2021.
BBX Capital is guarantor on a lease agreement executed by IT’SUGAR for base rent of $0.7 million and common area costs for the lease term which expires in January 2023.
BBX Capital is a guarantor on certain notes payable by its wholly-owned subsidiaries. See Note 9 for additional information regarding these obligations.
The entire disclosure for commitments, contingencies, and guarantees.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef