14.    Certain Relationships and Related Party Transactions



The Company paid Parent $0.5 million and $1.9 million during the three and nine months ended September 30, 2020, respectively, and $0.2 million and $0.4 million during the three and nine months ended September 30, 2019, for management advisory and employer provided medical insurance. The Company reimbursed Parent the actual cost of providing the services. 



Included in other revenues in the Company’s condensed consolidated statements of operations and comprehensive loss or income for both the three and nine months ended September 30, 2020 and September 30, 2019 was $0.2 million and $0.6 million, respectively, received by the Company for risk management consulting services provided to Parent and Bluegreen. As of September 30, 2020, the Company had $0.1 million due, and as of December 31, 2019, no amounts due, from Bluegreen for these services. 



Expenses related to certain support functions paid for by Parent, 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 the Parent 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 condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2020 were $4.8 million and $12.7 million, respectively, and $5.4 million and $16.7 million for the three and nine months ended September 30, 2019, respectively. The allocated support function costs were recognized as contributed capital in the Company’s condensed consolidated statements of financial condition for the three and nine months ended September 30, 2020 and 2019.



The Company was previously a party to an Agreement to Allocate Consolidated Income Tax Liability and Benefits with Parent, Bluegreen, and Woodbridge. Under this tax sharing agreement, the parties calculated their respective income tax liabilities and attributes as if each of them was a separate filer. If any tax attributes were used by another party to the agreement to offset its tax liability, the party providing the benefit would receive an amount for the tax benefits realized. As of September 30, 2020 and December 31, 2019, $0 and $2.8 million, respectively, was due to Parent in accordance with the tax sharing agreement. This tax sharing agreement was terminated with respect to the Company upon the consummation of the spin-off. 



Upon the consummation of the spin-off, all agreements with Parent 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 Parent 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, Parent 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 Parent 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, Parent 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 Parent 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 Parent 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 Parent 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. 



As further described in Note 1, in connection with the spin-off, Parent 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.



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