lub-20220531

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

____________________________________

FORM 10-KT


☐			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Ended


☒			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From August 26, 2021 to May 31, 2022

____________________________________

Commission file number 001-08308

LUB Liquidating Trust

(Exact name of registrant as specified in its charter)


Delaware			74-1335253
(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification Number)

Two Liberty Square, 9th Floor

Boston, Massachusetts 02109

(Address of principal executive offices, including zip code)

(617) 570-4600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Luby’s, Inc. (“Luby’s”) currently has no shares of common stock outstanding and all of its assets have been transferred to LUB Liquidating Trust (the “Trust”). Units of beneficial interest in the Trust have been issued to the shareholders of Luby’s effective May 31, 2022, as explained in more detail in this report. The Trust’s units are not listed on an exchange. Therefore, Luby’s and Trust has no public float.

The registrant had 31,300,837 units of beneficial interest outstanding as of August 29, 2022.

Documents incorporated by reference: None

Auditor Name: N/A Auditor Location: N/A Auditor Firm ID: 9999

Luby’s, Inc.

Form 10-K

Period Beginning August 26, 2021 and ended May 31, 2022

Table of Contents


		Page
Part I

Item 1	Business	5

Item 1A	Risk Factors	6

Item 1B	Unresolved Staff Comments	7

Item 2	Properties	8

Item 3	Legal Proceedings	8

Item 4	Mine Safety Disclosure	8

Part II

Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	9

Item 6	Selected Financial Data	10

Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10

Item 7A	Quantitative and Qualitative Disclosures about Market Risk	17

Item 8	Financial Statements and Supplementary Data	18

Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	39

Item 9A	Controls and Procedures	40

Item 9B	Other Information	40

Part III

Item 10	Directors, Executive Officers and Corporate Governance	41

Item 11	Executive Compensation	42

Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	47

Item 13	Certain Relationships and Related Transactions, and Director Independence	47

Item 14	Principal Accountant Fees and Services	48

Part IV

Item 15	Exhibits, Financial Statement Schedules	50

Item 16	Form 10-K Summary	51

Signatures		52

Additional Information

Our annual reports on Form 10-K, current reports on Form 8-K and any amendments to those reports and other Securities and Exchange Commission (“SEC”) filings are electronically filed with, or furnished to, the SEC. All reports filed by the Trust with the SEC are available free of charge via EDGAR through the SEC website at http://www.sec.gov. Our website address is www.lubysinc.com. Please note that our website address is provided as an inactive textual reference only. The information provided on our website is not part of this report, and is therefore not incorporated by reference unless such information is specifically referenced elsewhere in this report.

FORWARD-LOOKING STATEMENTS

This Transition Report on this "Form 10-K” contains statements that are “forward-looking statements” within the meaning of the federal securities laws. All statements contained in this Form 10-K, other than statements of historical facts, are “forward-looking statements” for purposes of these provisions, including any statements regarding:

•the timing and amount of any liquidating distribution made,

•future sales of assets and the amount of proceeds that we may receive as a result of any such sales, and

•the resolution of any outstanding creditor claims and liabilities.

In some cases, investors can identify these statements by forward-looking words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “outlook,” “may,” “should,” “will,” and “would” or similar words. Forward-looking statements are based on certain assumptions and analyses made by the Trustees in light of their experience and perception of historical trends, current conditions, expected future developments and other factors it believes are relevant. Although management believes that its assumptions are reasonable based on information currently available, those assumptions are subject to significant risks and uncertainties, many of which are outside of its control. The following factors, as well as the factors set forth in Item 1A of this Form 10-K and any other cautionary language in this Form 10-K, provide examples of risks, uncertainties, and events that may cause our financial and operational results to differ materially from the expectations described in our forward-looking statements:

•our ability to successfully sell our remaining assets, realize the proceeds from the sale thereof and to accurately estimate the expenses associated with such dispositions, the functioning of the Trust and the remaining claims and liabilities,

•our ability to successfully resolve all our outstanding or unknown future creditor claims and liabilities,

•the duration of the COVID-19 pandemic and its impact on general business and economic conditions,

•the ability to realize property values,

•collectability of accounts receivable, including payment of principal and interest on promissory notes received as consideration for asset sales,

•costs relating to legal proceedings, and

•changes in governmental regulations and the cost of compliance and increases in administrative operating expenses.

Each forward-looking statement speaks only as of the date of this report, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Investors should be aware that the occurrence of the events described above and elsewhere in this report could have material adverse effect on our ability to liquidate our assets.

PART I

Item 1. Business

References to “Company” or "Luby's" refer to Luby’s, Inc., RFL, LLC (formerly known as Luby's Fuddruckers Restaurants, LLC), a Texas Limited Liability Company ("LFR")) and the consolidated subsidiaries of Luby’s, Inc. and references to "Trust" refer to LUB Liquidating Trust. References to “Luby’s Cafeteria” refer specifically to the Luby’s Cafeteria brand restaurants. With respect to the period prior to May 31, 2022, references to "we", "our", or "us" refer to Luby's and with respect to the periods after May 31, 2022, refer to the Trust.

Dissolution and Termination of the Company

On May 31, 2022, the Company, the Trustees identified below and Delaware Trust Company (the “Resident Trustee”) entered into a Liquidating Trust Agreement (the “Liquidating Trust Agreement”) in connection with the formation of a liquidating trust, LUB Liquidating Trust (the “Trust”), for the benefit of the stockholders of the Company, to facilitate the dissolution and termination of the Company in accordance with the Plan of Liquidation and Dissolution of the Company (the "Plan of Liquidation" or the “Plan”) that was previously approved by the Company’s stockholders on November 17, 2020. The trustees of the Trust consist of the Company’s Interim President and Chief Executive Officer, John Garilli, and members of the Company’s board of directors, Gerald Bodzy and Joe C. McKinney (collectively, the “Trustees”), and the Resident Trustee.

At 5:00 p.m. Eastern Daylight Time on May 31, 2022 ("the Effective Time"), the Company transferred its remaining assets (including its membership in Luby's Fuddruckers Restaurants, LLC, which has been renamed RFL, LLC) and liabilities to the Trust pursuant to the Plan of Liquidation. The last day of trading for our common stock, par value $0.32 per share, on the New York Stock Exchange was May 27, 2022.

At the Effective Time of the transfer, holders of the Company's common stock automatically received one unit in the Trust ("Unit") for each share of the Company's common stock held by such holder. Units in the Trust will not be listed on the New York Stock Exchange, or any other exchange, and will generally not be transferable except by will, intestate succession or operation of law. Pursuant to the Liquidating Trust Agreement, on and after May 31, 2022, all outstanding shares of the Company are automatically deemed to be cancelled. In anticipation of the transfer, we cancelled the 500,000 shares of common stock we held as Treasury Shares.

The Company has filed a Certificate of Dissolution with the Delaware Secretary of State, effective May 31, 2022.

The Trust will terminate upon the earlier of three years from the date of creation or the final distribution from the Trust of all Trust assets in compliance with the Delaware General Corporation Law, unless the Trustees determine that a longer period is needed to sell real estate or collect payment in full of any installment obligations owed by a purchaser of assets of the Company or Trust assets and to make any final distribution of any such proceeds.

The Trust is headquartered in Boston, Massachusetts, with its corporate headquarters is located at Two Liberty Square, 9th Floor, Boston, MA 02109, telephone number (617) 570-4600. The Company website is www.lubysinc.com. The information on the Company website is not, and shall not be deemed to be, a part of this transition report on Form 10-K or incorporated into any of our other filings with the SEC.

Luby’s Cafeterias

On August 26, 2021, the Company sold the Luby’s Cafeteria brand and 35 operating locations to Luby’s Restaurant Corporation, an unrelated third party. As of May 31, 2022, the remaining operating Luby's cafeterias that are owned or leased by the Trust are operated by the purchaser of the Luby's brand under a management agreement. See Item 2. Properties.

Fuddruckers

On August 6, 2021, the Company sold the Fuddruckers franchise brand to an affiliate of Black Titan Holdings, LLC, who previously acquired 13 franchise locations. As of May 31, 2022, the remaining operating Fuddruckers restaurant that is owned by the Trust is leased to and operated by an affiliate of Black Titan Holdings, LLC and the remaining operating Fuddruckers restaurant that is leased by the Trust is operated under a management agreement. See Item 2. Properties.

Culinary Services

On March 28, 2022, the Company sold the Culinary Services business to a company affiliated with a related party. See Item 13. Certain Relationships, Related Persons and Director Independence for further discussion of this transaction.

Real Estate

During the fiscal period beginning August 26, 2021 and ended May 31, 2022, the Company sold 39 real estate assets pursuant to its Plan of Liquidation. Subsequent to May 31, 2022, the Trust has sold four additional real estate assets pursuant to the Plan. See Item 2. Properties.

Other Assets and Liabilities

The Company’s liabilities as of May 31, 2022 are disclosed in the consolidated statement of net assets in liquidation included in Item 8. of this Transition Report. They consist of accounts payable, accrued expenses and other liabilities, operating lease liabilities, liability for estimated costs in excess of estimated receipts during liquidation, and other liabilities. The Company paid all outstanding amounts due under its credit facility and the facility was terminated, effective September 30, 2021.

Under the Plan, the Trust intends to attempt to convert all of its assets into cash, satisfy or resolve its remaining liabilities and obligations, including contingent liabilities and claims and costs associated with the liquidation of the Trust.

Employees

As of August 29, 2022, we had eight employees providing administrative support to the Trust.

Item 1A. Risk Factors

The risks and uncertainties described below should be carefully reviewed together with all other information included in this transition report on Form 10-K. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may also become important factors that may harm our financial condition and the timing and amount of future liquidating distributions, if any. The occurrence of any of the following risks could harm our financial condition and the timing and amount of future liquidating distributions, if any.

We may not be able to pay liquidating distributions to our unitholders at the times and in the amounts expected.

We cannot predict the timing or amount of any liquidating distributions, as uncertainties exist as to the value we may receive upon the sale of our assets, the net value of any remaining assets after such sales are completed, the ultimate amount of our expenses associated with completing our monetization strategy, liabilities, the operating costs and amounts to be set aside for claims, obligations and provisions during the liquidation and winding-up process, and the related timing to complete such transactions. These and other factors make it impossible to predict with certainty the actual net cash amount that will ultimately be available for distribution to unitholders or the timing of any such distributions.

The amount of cash available to distribute to unitholders depends on our ability to successfully dispose of all or substantially all of our assets.

Our efforts to monetize the Trust’s assets may not be successful, which would significantly reduce the proceeds of such disposition available for distribution to unitholders. There will be risks associated with any potential divestiture transaction, including whether we will attract potential acquirers for the Trust’s assets, and whether offers made by such potential acquirers, if any, will be at valuations that we deem reasonable. Moreover, we are not able to predict how long it will take to complete our monetization of the Trust’s assets. The timing and terms of any transaction in furtherance of our dissolution and termination will depend on a variety of factors, many of which are beyond our control. A delay in, or failure to complete, any such transaction could have a material effect on the amount of any potential distributions to unitholders.

In addition, our ability to successfully monetize the Trust’s assets could be materially negatively affected by economic conditions generally, including public health risks related to COVID-19. We are exploring and evaluating potential transactions, the success or timing of which may be impacted by the effects of the COVID-19 pandemic. In order to successfully monetize our assets, we must identify and complete one or more additional transactions with third parties. Our assets and the availability of potential buyers of our assets may be significantly impacted by public health issues or pandemics, including COVID-19. The uncertain severity and impact of COVID-19 could result in reduced demand to purchase our assets by third parties or reduced values such parties may ascribe to our assets.

Even if we are able to identify potential transactions in furtherance of our monetization of the Trust’s assets, such buyers may be operationally constrained or unable to locate financing on attractive terms or at all, which risk may be heightened due to the uncertainty of COVID-19 and its impact. If financing is unavailable to potential buyers of our assets, or if potential buyers are unwilling to engage in transactions due to the uncertainty in the market, our ability to complete such transactions would be significantly impaired, which could cause the amounts ultimately available for distribution to unitholders to be dependent on the operational success of the buyers of our assets.

Any negative impact on such third parties due to any of the foregoing events could cause costly delays and have a material adverse effect on our ability to make liquidating distributions to unitholders, including our ability to realize full value from a sale or other disposition of our assets. Any such negative impacts could also reduce the amount of liquidating distributions to unitholders.

We will continue to incur liabilities and expenses that will reduce the amount available for liquidating distributions to unitholders.

Liabilities and expenses from operations, such as insurance, legal, accounting and consulting fees and other administrative expenses, will continue to be incurred as we complete the monetization of our assets. To the extent that these expenses and liabilities exceed our current estimates they will reduce the amount of assets available for future liquidating distributions to our unitholders.

Failure to collect accounts receivable or amounts receivable under promissory notes provided by buyers of our businesses and assets could adversely affect our financial performance and net assets in liquidation.

We have been provided promissory notes by buyers of our businesses and assets. Failure to recognize the amounts anticipated to be collectible under these notes would adversely affect our net assets in liquidation and could reduce the amount of liquidating distributions to unitholders.

We face the risk of adverse litigation, which could have a material adverse effect on our financial performance.

We may, from time to time, be the subject of complaints or litigation challenging the Plan of Liquidation, which may name the Trust or the Trustees as defendants. If such a lawsuit is filed, we cannot assure you as to the outcome of any such lawsuits, including the amount of costs associated with defending any such claims or any other liabilities that may be incurred in connection with such claims. Claims may be expensive to defend and may divert time and money away from our efforts to monetize our assets and hurt our financial performance. A judgment significantly in excess of our insurance coverage, if any, for any claims could materially adversely affect our financial performance and net assets in liquidation and reduce the amount available for liquidating distributions to unitholders.

Our property taxes could increase due to reassessment or property tax rate changes.

We are required to pay real property taxes in respect of our properties and such taxes may increase as our properties are reassessed by taxing authorities or as property tax rates change. An increase in the assessed value of our properties or our property tax rates could adversely impact our financial condition and reduce the amount of future liquidating distributions to our unitholders.

We may incur costs to comply with federal, state and local laws and regulations.

The obligation to pay for the cost of complying with existing environmental laws, ordinances and regulations, as well as the cost of complying with future legislation, may increase our operating costs. Failure to timely comply with these rules and regulations could result in penalties.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

The following table summarizes our owned properties as of August 29, 2022.


						Number of Properties

Restaurant Locations:
Luby's cafeterias operated by Luby's Restaurant Corporation under a management agreement						3
Fuddruckers restaurant leased to Black Titan Holdings						1
Total Restaurant Locations						4
Non-occupied locations						7
Total						11

The following table summarizes our leased properties as of August 29, 2022.


						Number of Properties

Occupied Restaurants:
Luby's cafeterias operated by Luby's Restaurant Corporation under a management agreement						8

Fuddruckers restaurant operated by Black Titan under a management agreement						1
Total Occupied Restaurants						9
Abandoned restaurant property leases						6
Total						15

At May 31, 2022, we have leases on six restaurant properties where we have ceased operations. Although the Trust remains obligated under the terms of the leases for the rent and other costs that may be associated with the leases, operations have ceased and there are no plans to occupy the leased spaces as a restaurant in the future.

Our corporate office lease of approximately 13,000 square feet of office space expired in June 2022.

We maintain general liability insurance and property damage insurance on all properties in amounts which we believe provides adequate coverage.

Item 3. Legal Proceedings

We are subject to various private lawsuits, administrative proceedings and claims that arose in the ordinary course of Luby's business. A number of these lawsuits, proceedings and claims may exist at any given time. These matters typically involve claims from guests, employees and others related to issues common to the restaurant industry. We currently believe that the final disposition of these types of lawsuits, proceedings, and claims will not have a material adverse effect on our net assets or our ability to monetize our remaining assets.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

There is no public market for the units of beneficial interest in the Trust (the "Units"). On May 31, 2022, the Company filed its certificate of dissolution with the Secretary of State of Delaware, which became effective on that date, and transferred its remaining assets and liabilities to the Trust. Upon the transfer of the assets and liabilities to the Trust, the Company's stock records were closed, all of the outstanding shares of the Company's common stock were cancelled, and each stockholder of the Company automatically became the holder of one Unit for each one share of common stock of the Company then currently held of record by such stockholder. The Units are not and will not be listed on any exchange or quoted on any quotation system. The Units generally will not be transferable or assignable, except by will, intestate succession, or operation of law.

Equity Compensation Plans

There are no Securities authorized under our equity compensation plans as of May 31, 2022. See Market Information above.

Stock Performance Graph

As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

Item 6. (Reserved)

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s discussion and analysis of the financial condition and results of operations should be read in conjunction with the consolidated financial statements and footnotes for the fiscal period beginning August 26, 2021 and ended May 31, 2022 (“fiscal 2022”) and the fiscal year ended August 25, 2021, (“fiscal 2021”) included in Part II, Item 8 of this Transition Report on Form 10-K.

During the period beginning August 26, 2021 and ended May 31, 2022:

•we sold 35 Luby's restaurants and 1 Fuddruckers restaurant that were operating at the time of sale,

•we closed operations at 8 Luby's restaurants and 4 Fuddruckers restaurants.

•Effective May 28, 2022, Black Titan Holdings, LLC assumed operations of the Company's one remaining Fuddruckers restaurant under a lease agreement.

The Company entered into a management agreement with the purchaser of the Luby's brand to assume operations of the Company's 10 remaining Luby's cafeterias, effective June 2, 2022. As of this date, we no longer operate any Luby's cafeterias or Fuddruckers restaurants.

Overview

Dissolution and Termination of the Company

The Company has filed a Certificate of Dissolution with the Delaware Secretary of State, effective May 31, 2022.

The Trust will terminate upon the earlier of three years from the date of creation or the final distribution from the Trust of all Trust Assets in compliance with the Delaware General Corporation Law, unless the Trustees determine that a longer period is needed to sell real estate or collect payment in full of any installment obligations owed by a purchaser of assets of the Company or Trust Assets and to make any final distribution of any such proceeds.

Prior to Adoption of the Plan of Liquidation

The consolidated financial statements prior to November 19, 2020 were prepared on the going concern basis of accounting, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business and were prepared in accordance with accounting principles generally accepted in the United States ("US GAAP").

Following the Adoption of the Plan of Liquidation

As a result of the approval of the Plan by our shareholders, we determined that liquidation was imminent, as defined in the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 205-30 Financial Statement Presentation, Liquidation Basis of Accounting ("ASC 205-30") and we changed our basis of accounting from the going concern basis to the liquidation basis effective November 19, 2020. Although shareholder approval of the Plan occurred on November 17, 2020, we are using the liquidation basis of accounting effective November 19, 2020 as a convenience date. Any activity between November 17, 2020 and November 19, 2020 would not be materially different under the liquidation basis of accounting.

The liquidation basis of accounting differs significantly from the going concern basis, as summarized below.

Under the liquidation basis of accounting, the consolidated balance sheet and consolidated statements of operations, equity and cash flows are no longer presented.

The liquidation basis of accounting requires a statement of net assets in liquidation, a statement of changes in net assets in liquidation and all disclosures necessary to present relevant information about our expected resources in liquidation. The liquidation basis of accounting may only be applied prospectively from the day liquidation becomes imminent and the initial statement of changes in net assets in liquidation may present only changes in net assets that occurred during the period since that date.

Under the liquidation basis of accounting, our assets are measured at their estimated net realizable value, or liquidation value, which represents the amount of their estimated cash proceeds or other consideration from liquidation, based on current contracts, estimates and other indications of sales value, and includes business unit valuations representing previously unrecognized assets that we may expect to either sell in the course of our liquidation or use in settling liabilities, such as trademarks or other intangibles. In developing these estimates, we utilized third party valuation experts, investment bankers, real estate brokers, the expertise of members of the Special Committee of our Board of Directors, and forecasts generated by our management. For estimated real estate values, we considered comparable sales transactions, our past experience selling real estate assets of the Company and, in certain instances, indicative offers, as well as capitalization rates observed for income-

producing real estate. For estimated business unit valuations we considered estimated values of the economic components of possible transactions, the value of a buyer assuming certain liabilities in a purchase transaction, and, in certain instances, indicative offers, as well as the probabilities of certain outcomes. Estimates for the liquidation value of the business units, or subset of operating restaurants, were also tested for reasonableness through a multiple of historical and projected business cash flows. All estimates by nature involve a large degree of judgement and sensitivity to the underlying assumptions.

The liquidation basis of accounting requires us to accrue and present separately, without discounting, the estimated disposal and other costs, including any costs associated with the sale or settlement of our assets and liabilities and the estimated operating income or loss that we reasonably expect to incur, including providing for federal income taxes during the remaining expected duration of the liquidation period. In addition, deferred tax assets previously provided for under the going concern basis of accounting, which include net operating losses and other tax credits, may be realized partially or in full, subject to IRS limitations, to offset taxable income we expect to generate from the liquidation process.

Under the liquidation basis of accounting, we recognize liabilities as they would have been recognized under the going concern basis as adjusted for the timing assumptions related to the liquidation process and they will not be reduced to expected settlement values prior to settlement.

These estimates will be periodically reviewed and adjusted as appropriate. There can be no assurance that these estimated values will be realized. Such amounts should not be taken as an indication of the timing or the amount of future distributions or our actual dissolution.

The valuation of our assets and liabilities, as described above, represents estimates, based on present facts and circumstances, of the net realizable value of the assets and costs associated with carrying out the Plan. The actual values and costs associated with carrying out the Plan may differ from amounts reflected in the accompanying consolidated financial statements because of the Plan's inherent uncertainty. These differences may be material. In particular, these estimates will vary with the length of time necessary to complete the Plan.

Net assets in liquidation represents the estimated liquidation value to unitholders upon liquidation. It is not possible to predict with certainty the timing or aggregate amount which may ultimately be distributed to our unitholders and no assurance can be given that the distributions will equal or exceed the estimate presented in these consolidated financial statements.

Prior to May 31, 2022, we had one class of common stock. As further discussed at Note 1. Nature of Operations and Significant Accounting Policies, the dissolution and termination of the Company resulted in holders of our common stock receiving one unit of the Trust for each share of common stock and the common stock was cancelled. The net assets in liquidation at May 31, 2022 would result in liquidating distributions of $1.96 per unit in the Trust based on 31,300,837 common shares that were converted to units in the Trust on that date. This estimate is dependent on projections of costs and expenses to be incurred during the period required to complete the Plan and the realization of estimated net realizable value of our properties and business units. There is inherent uncertainty with these estimates, and they could change materially based on the timing of the remaining property sales, the performance of the underlying assets, any changes in the underlying assumptions of the projected cash flows. No assurance can be given that the liquidating distributions will equal or exceed the estimate presented in these consolidated financial statements.

COVID-19

The COVID-19 pandemic could continue to materially impact our cash flows and value of net assets in liquidation, while we monetize our remaining assets.

Asset Disposal and Liquidation Activities

Brands

•In December 2020 we terminated our sub-license to the Cheeseburger in Paradise brand name in return for compensation from the sub-licensor. Proceeds from the sale were immaterial.

•During the second quarter of fiscal 2021, we sold our rights to the Koo Koo Roo brand name to an independent third party. Proceeds from the sale were immaterial.

•During the fourth quarter of fiscal 2021, we sold the Fuddruckers franchise business operations for $15.0 million plus the assumption of certain liabilities to Black Titan Franchise Systems LLC, an affiliate of Black Titan Holding, LLC which previously purchased 13 franchise locations in separate transactions. The notes issued in connection with this transaction are included in accounts and notes receivable in the accompanying consolidated statement of net assets in liquidation at August 25, 2021 at a discounted rate that represents the amount we expect to receive upon liquidation. There can be no assurance that we will realize or receive the full value of such consideration.

•On August 26, 2021, we sold the Luby’s Cafeterias brand name and the business operations at 35 Luby’s locations to an unrelated third party for an adjusted aggregate consideration of approximately $28.4 million which includes the

assumption of certain liabilities and the issuance of notes to us. There can be no assurance that we will realize or receive full value of such consideration. The net asset value of the sale is included in properties and business units for sale on the accompanying consolidated statement of net assets in liquidation at August 25, 2021 and in various accounts on the accompanying consolidated statement of net assets in liquidation at May 31, 2022 at the aggregate amount we expect to receive upon liquidation.

•On March 28, 2022, we sold our Culinary Contract Services business, which did not include our frozen packaged foods business, to Culinary Concessions, LLC ("Purchaser"), a member managed limited liability company. Purchaser is wholly owned by Pappas Restaurants, Inc. ("PRI"). PRI is jointly owned and controlled by Christopher J. Pappas and Harris J. Pappas ("Messrs. Pappas"), who were formerly directors and officers of the Company and who were owners of greater than 5% of our common stock.

Fuddruckers

•In December 2020, we announced that we entered into an agreement to franchise 13 of our company-owned Fuddruckers restaurants to Black Titan Holdings, LLC.

◦In March 2021, we closed on the sale and transfer of nine of these Fuddruckers restaurants. In each case, Black Titan Holdings, LLC entered into a franchise agreement with us to operate each of these nine Fuddruckers restaurants. Black Titan Holdings, LLC assumed the lease obligation or ownership of the tenant entity at each of these nine locations and thus Luby’s no longer has a lease obligation at these property locations.

◦In April 2021, we closed on the sale and transfer of two of these Fuddruckers restaurants and we entered into a management agreement on one of these Fuddruckers Restaurants with Black Titan Holdings, LLC. However, Luby's continues to be either directly or contingently liable for the lease obligation at these property locations.

◦In May 2021, we closed on the sale and transfer of the remaining Fuddruckers location to Black Titan Holdings, LLC and Black Titan Holdings, LLC entered into a franchise agreement with us to operate this Fuddruckers restaurant. Black Titan Holdings, LLC assumed the lease obligation for this location and thus Luby's no longer has a lease obligation at this property location.

•In February 2021, we completed the sale and transfer of a previously company-owned Fuddruckers restaurant to HPCP Investments, LLC, a company affiliated with Messr. Pappas. Proceeds from the sale were approximately $0.2 million. Concurrent with the sale, PRI, entered into a franchise agreement with us to operate a Fuddruckers restaurant at this location. Also as part of this transaction, our operating lease with HPCP Investments, LLC for this location was terminated and our remaining lease obligation was cancelled. Each of these transactions was approved by the Finance and Audit Committee of our Board of Directors. These transactions were monetization events under the Plan of Liquidation.

•Effective May 28, 2022, Black Titan Holdings, LLC assumed operations of the Company's one remaining Fuddruckers restaurant under a lease agreement.

Cafeterias

•The Company entered into a management agreement with the purchaser of the Luby's brand to assume operations of the Company's 10 remaining Luby's cafeterias, effective June 2, 2022.

Real Estate

•During fiscal year 2020, we sold nine properties for total gross proceeds of approximately $23.7 million.

•During fiscal year 2021, we sold 11 properties for total gross proceeds of approximately $32.1 million.

•During the fiscal period beginning August 26, 2021 and ended May 31, 2022 we sold 39 properties for total gross proceeds of $118.7 million.

•Subsequent to May 31, 2022, through August 29, 2022 we have closed on the sale of 4 properties for total gross proceeds of approximately $7.6 million.

•As of August 29, 2022, the Company owns 11 properties.

Liquidating Distributions

During the fiscal period ending May 31, 2022, we made the following liquidation distributions to the holders of our common stock:

•On November 1, 2021, we paid $62.2 million, or $2.00 per share to shareholders of record as of October 25, 2021.

•On March 28, 2022, we paid $15.5 million, or $0.50 per share to shareholders of record as of March 21, 2022.

•On May 24, 2022, we paid $6.2 million, or $0.20 per share to shareholders of record as of May 17, 2022.

General and Administrative Expenses

As we continue the efforts to monetize our assets, we remain focused on reducing our operating and administrative costs, when appropriate, to provide maximum liquidation value to our unitholders.

Accounting Periods

Historically, the Company’s fiscal year ended on the last Wednesday in August. Accordingly, each fiscal year normally consisted of 13 four-week periods, or accounting periods, accounting for 364 days in the aggregate. However, every fifth or sixth year, there was a fiscal year that consists of 53 weeks, accounting for 371 days in the aggregate. The first fiscal quarter consisted of four four-week periods, or 16 weeks, and the remaining three quarters typically included three four-week periods, or 12 weeks, in length. The fourth fiscal quarter included 13 weeks in certain fiscal years to adjust for our standard 52 week, or 364 day, fiscal year compared to the 365 day calendar year.

The Trust's fiscal year will be the twelve months beginning January 1 and ending December 31, which will be effective beginning June 1, 2022 for the year ending December 31, 2022.

RESULTS OF OPERATIONS

Under the liquidation basis of accounting subsequent to November 18, 2020, we no longer report results of operations information. Comparisons of the 12 week period ended November 18, 2020 to future periods are not meaningful.

LIQUIDITY AND CAPITAL RESOURCES

Cash and Cash Equivalents

Our ability to meet our obligations is contingent upon the monetization of our remaining assets. We expect that the proceeds from the sale of our assets will be adequate to meet our obligations; however, we cannot provide assurance as to the prices or net proceeds we may receive from the monetization of our assets.

STATUS OF LONG-TERM INVESTMENTS AND LIQUIDITY

We had no long-term investments as of May 31, 2022.

STATUS OF TRADE ACCOUNTS AND NOTES RECEIVABLES, NET

We monitor the aging of our receivables and record reserves to adjust to estimated net realizable value, as appropriate.

Our notes receivable at May 31, 2022 and August 25, 2021 are recorded in our consolidated statement of net assets at the amount we expect to realize based on the credit terms of the notes. See Note 7. Accounts and Notes Receivable in our consolidated financial statements included in Item 8. of this Transition Report on Form 10-K for a further description of the notes. We continue to monitor the terms of the notes receivable and the payment history of the issuers to determine net realizable value.

CAPITAL EXPENDITURES

Capital expenditures for the period beginning August 26, 2021 and ended May 31, 2022 were not material. We do not expect future capital expenditures to be significant.

DEBT

The following table summarizes our debt balances (in thousands).



	May 31, 2022		August 25, 2021
Long-Term Debt
2018 Credit Agreement - Revolver	$	—	$	5,000
2018 Credit Agreement - Term Loans	—		12,024
Total credit facility debt	$	—	$	17,024

2018 Credit Agreement

All amounts outstanding under this Credit Facility were repaid and the Credit Agreement was terminated on September 30, 2021.

COMMITMENTS AND CONTINGENCIES

The Company has no off-balance sheet arrangements.

As of May 31, 2022, we had approximately $3.3 million committed under lines of credit, which are used as security for the payment of insurance and other obligations and are fully cash collateralized.

From time to time, we are subject to various private lawsuits, administrative proceedings and claims that arise in the ordinary course of our former business. A number of these lawsuits, proceedings and claims may exist at any given time. These matters typically involve claims from guests, employees and others related to issues common to the restaurant industry. We believe that the final disposition of these types of lawsuits, proceedings, and claims will not have a material adverse effect on the Trust’s cash flows and net assets under liquidation.

AFFILIATIONS AND RELATED PARTIES

Christopher J. Pappas, our former Chief Executive Office and Harris J. Pappas, a former Director of the Company, own two restaurant entities (the “Pappas entities”) that, from time to time, provided services to the Company and its subsidiaries, as detailed in the Amended and Restated Master Sales Agreement dated August 2, 2017 among the Company and the Pappas entities. Collectively, Messrs. Pappas and the Pappas entities owned greater than 5% of the Company's common stock.

There were no purchases under this agreement for the fiscal period ended May 31, 2022. Our purchases under this agreement were not material for the fiscal year ended August 25, 2021. Services provided under this agreement are subject to review and approval by the Finance and Audit Committee of the Company’s Board of Directors.

Operating Leases

We had leased two restaurant locations that were owned by a Pappas entity. The leases were terminated on December 31, 2020 and February 26, 2021, respectively. Rent payments under the two lease agreements discussed above were not material for the fiscal year ended August 25, 2021.

Fuddruckers Franchise

In February 2021, we completed the sale and transfer of a previously company-owned Fuddruckers restaurant to HPCP Investments, LLC, one of the Pappas entities, for cash proceeds of approximately $0.2 million and the termination of our operating lease on the property, discussed above. Concurrent with the sale, Pappas Restaurants, Inc. entered into a franchise agreement with us to operate a Fuddruckers restaurant at this location. Each of these transactions was approved by the Finance and Audit Committee of our Board of Directors. We sold the Fuddruckers Franchise business on August 6, 2021.

Culinary Contract Services Business

On March 28, 2022, we sold our Culinary Contract Services business, which did not include our frozen packaged foods business, to Culinary Concessions, LLC ("Purchaser"), a member managed limited liability company. Purchaser is wholly owned by Pappas Restaurants, Inc. ("PRI"). PRI is jointly owned and controlled by Messrs. Pappas.

Key Management Personnel

Effective January 27, 2021, the Board of Directors appointed John Garilli as the Company’s Interim President and Chief Executive Officer. The Company and Mr. Garilli’s employer, Winthrop Capital Advisors LLC ("WCA"), entered into an agreement (the “Agreement”), pursuant to which the Company paid WCA a one-time fee of $50,000 and paid a monthly fee of $20,000 for so long as Mr. Garilli served the Company in said positions. The Company also entered into an Indemnity Agreement with Mr. Garilli and WCA.

Effective September 8, 2021, the Board of Directors appointed Eric Montague as the Company's Interim Chief Financial Officer and Treasurer. The Company and Mr. Montague's employer, WCA, entered into an agreement pursuant to which the Company paid WCA a monthly fee of $10,000 for so long as Mr. Montague served the Company in said positions.

The Company and WCA had previously entered into a consulting agreement, pursuant to which WCA provided consulting services related to the Company’s adoption of the liquidation basis of accounting in the filing of our Quarterly Report on Form 10-Q for the quarter ended December 16, 2020. The Company and WCA also executed separate consulting agreements to provide similar services for the filing of our Quarterly Report on Form 10-Q for the quarters ended March 10, 2021, June 2, 2021, December 1, 2021, and March 9, 2022, and for the filing of our Annual Report on Form 10-K for the fiscal year ended August 15, 2021, respectively. WCA continues to provide services to the Trust as it did for the Company, currently on the same terms as noted above.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our accounting policies are described in Note 1, “Nature of Operations and Significant Accounting Policies,” to our Consolidated Financial Statements included in Item 8 of Part II of this report. The Consolidated Financial Statements are prepared in conformity with accounting principles generally accepted in the United States. Preparation of the financial statements requires us to make judgments, estimates and assumptions that affect the amounts of assets and liabilities in the financial statements and revenues and expenses during the reporting periods. The Trustees believe the following are critical accounting policies due to the significant, subjective and complex judgments and estimates used when preparing our consolidated financial statements.

Liquidation Basis of Accounting

Under the liquidation basis of accounting, our assets are measured at their estimated net realizable value, or liquidation value, which represents the amount of their estimated cash proceeds or other consideration from liquidation, based on current contracts, estimates and other indications of sales value, and may include previously unrecognized assets that we may expect to either sell in the course of our liquidation or use in settling liabilities, such as trademarks or other intangibles. The two areas that require the most significant, subjective and complex judgements and estimates are (i) properties and business units for sale and (ii) liability for estimated costs in excess of estimated receipts during liquidation.

Properties and business units for sale

In developing the estimated net realizable value for our properties and business units held for sale, we utilized third party valuation experts, investment bankers, real estate brokers, the expertise of members of the Special Committee of our Board of Directors, and forecasts generated by our management. For estimated real estate values, we consider comparable sales transactions, our past experience selling real estate assets of the Company and, in certain instances, indicative offers, as well as capitalization rates observed for income-producing real estate. For estimated business unit valuations, we consider estimated values of the economic components of possible transactions, the value of a buyer assuming certain liabilities in a purchase transaction, and, in certain instances, indicative offers, as well as the probabilities of certain outcomes. Estimates for the liquidation value of the business units, or subset of operating restaurants, is also tested for reasonableness through a multiple of historical and projected business cash flows. All estimates by nature involve a large degree of judgement and sensitivity to the underlying assumptions.

Estimated costs in excess of estimated receipts during liquidation

The liquidation basis of accounting requires the estimation of net cash flows from operations and all costs associated with implementing and completing the plan of liquidation. We project that we will have estimated costs in excess of estimated receipts during the liquidation period. These amounts can vary significantly due to, among other things, the timing and estimates for receipts and costs associated with the operations of our business units until they are sold, the timing of business and property sales, estimates of direct costs incurred to complete the sales, the timing and amounts associated with discharging known and contingent liabilities, the costs associated with the winding up of operations, and other costs that we may incur which are not currently foreseeable. These receipts and accruals will be adjusted periodically as projections and assumptions change. These receipts and costs are estimated and are anticipated to be collected and paid out over the liquidation period.

NEW ACCOUNTING PRONOUNCEMENTS

There are no new accounting pronouncements that are applicable or relevant to the Company, or the Trust, under the Liquidation Basis of Accounting.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

Item 8. Financial Statements and Supplementary Data

Luby’s, Inc.

Consolidated Statements of Net Assets in Liquidation

(Liquidation Basis)

(Unaudited)


	May 31, 2022		August 25, 2021
	(in thousands)
ASSETS
Cash and cash equivalents	$	10,107	$	14,392
Accounts and notes receivable	20,796		10,184
Restricted cash and cash equivalents	3,832		5,492
Properties and business units for sale	40,094		176,960
Other assets	3,000		$	—
Total Assets	$	77,829	$	207,028

LIABILITIES
Accounts payable	$	1,252	$	2,968
Accrued expenses and other liabilities	7,011		12,383
Credit facility debt	—		17,024

Operating lease liabilities	4,570		7,181
Liability for estimated costs in excess of estimated receipts during liquidation	2,965		11,289
Other liabilities	525		1,390
Total Liabilities	$	16,323	$	52,235

Commitments and Contingencies

Net assets in liquidation (Note 4)	$	61,506	$	154,793

The accompanying notes are an integral part of these Consolidated Financial Statements.

Luby’s, Inc.

Consolidated Statements of Changes in Net Assets in Liquidation

(Liquidation Basis)

(Unaudited)


	Period from August 26, 2021 through May 31, 2022		Period from November 19, 2020 through August 25, 2021
	(40 weeks)
	(in thousands)
Net assets in liquidation, beginning of period	$	154,793	$	117,341
Changes in net assets in liquidation
Changes in liquidation value of properties and business units for sale	(1,719)		18,431
Changes in accounts and notes receivable	—		3,615
Changes in estimated cash flows during liquidation	(7,935)		15,083
Net changes in liquidation value	(9,654)		37,129
Proceeds received from exercise of stock options	374		323
Distributions Paid	(84,007)		—
Changes in net assets in liquidation	(93,287)		37,452
Net assets in liquidation, end of period	$	61,506	$	154,793

The accompanying notes are an integral part of these Consolidated Financial Statements.

Luby’s, Inc.

Consolidated Statement of Operations

(Going Concern Basis)

(Unaudited)


	Period Ended
	November 18, 2020
	(12 weeks)
	(In thousands, except per share data)
SALES:
Restaurant sales	$	36,485
Culinary contract services	4,918
Franchise revenue	530
Vending revenue	14
TOTAL SALES	41,947
COSTS AND EXPENSES:
Cost of food	9,348
Payroll and related costs	12,964
Other operating expenses	7,154
Occupancy costs	2,634

Cost of culinary contract services	4,467
Cost of franchise operations	294
Depreciation and amortization	2,142
Selling, general and administrative expenses	4,267
Other charges	416
Net provision (gain) on asset impairments and restaurant closings	(85)
Net loss (gain) on disposition of property and equipment	117
Total costs and expenses	43,718
LOSS FROM OPERATIONS	(1,771)
Interest income	8
Interest expense	(1,212)
Other income, net	30
Loss before income taxes and discontinued operations	(2,945)
Provision for income taxes	58
Loss from continuing operations	(3,003)
Loss from discontinued operations, net of income taxes	(16)
NET LOSS	$	(3,019)
Loss per share from continuing operations:
Basic and diluted	$	(0.10)
Loss per share from discontinued operations:
Basic and diluted	$	0.00
Net loss per share:
Basic and diluted	$	(0.10)
Weighted-average shares outstanding:
Basic and diluted

SEC Form 10-KT filed by Luby's Inc.