(11) Investment in Limited Partnership

Subscription Agreement

On August 16, 2019 (the "Effective Date"), the Company entered into a subscription agreement (the "Subscription Agreement") with Lamington ("Class B Limited Partner"), White Eagle, WEGP ("Withdrawing General Partner"), and Palomino JV, L.P. ("Palomino" or "Class A Limited Partner")~~, in connection with the commitment letter signed on June 22, 2019 with Jade Mountain Partners, LLC ("Jade Mountain" ),~~ pursuant to which White Eagle sold to Palomino 72.5% of its limited partnership interests, consisting of all of the newly issued and outstanding Class A and Class D interests, and WEGP sold to an affiliate (the "Manager") of Jade Mountain ~~(the "Manager"~~Partners, LLC ("Jade Mountain") all of its general partnership interests (collectively, the "WE Investment"). Pursuant to the Subscription Agreement, Lamington ~~received~~retained 27.5% of the limited partnership interests of White Eagle, consisting of all of the newly issued and outstanding Class B interests in exchange for all of its previously owned White Eagle limited partnership interests.

The proceeds of the WE Investment and certain funds then held in accounts of White Eagle were used to satisfy in full (i) the White Eagle Revolving Credit Facility and (ii) the DIP Financing, each in connection with the termination of the White Eagle Revolving Credit Facility and the release of the related liens on the collateral thereunder pursuant to the Master Termination Agreement. The repayment and termination of the White Eagle Revolving Credit Facility and the termination of the DIP Financing, which had not been drawn against, were in accordance with the Plan of Reorganization.

The WE Investment was consummated, and the White Eagle Revolving Credit Facility was paid off in full and terminated, on August 16, 2019. The payoff totaled $402.5 million, which included payment directly to CLMG by Palomino of $374.2 million and payment to CLMG by White Eagle of $28.3 million, collectively sufficient to repay, under the White Eagle Revolving Credit Facility, the outstanding principal of $368.0 million, accrued and unpaid interest of $21.3 million plus, under the Plan of Reorganization, an early payment amount due to LNV of $7.4 million and lender allowed claims of $5.8 million. Of the $374.2 million purchase price, $8.0 million was allocated to the Class D interests which amount is to be repaid in accordance with the distribution terms of the A&R LPA.

On August 16, 2019, Lamington also entered into (i) the Pledge Agreement pursuant to which it pledged the 27.5% limited partnership interests of White Eagle owned by it to Palomino and certain other secured parties in support of the payment and indemnification obligations described above, and (ii) the Assumption Agreement pursuant to which Lamington assumed all liabilities and obligations of White Eagle and WEGP as of the closing date of the Transactions, and Lamington, the Company and WEGP agreed to terminate, waive and release any intercompany debt, obligations and liabilities of White Eagle to Lamington, the Company and WEGP. On August 16, 2019, Emergent entered into the Indemnification Agreement pursuant to which it indemnified Wilmington Trust, National Association against claims and liabilities that may arise in relation to policies that have matured prior to the Closing Date but as to which Wilmington Trust, National Association has historically held title as securities intermediary.

Amended and Restated Limited Partnership Agreement of White Eagle

In connection with the WE Investment, the Limited Partnership Agreement of White Eagle was amended and restated (the "A&R LPA") to provide for the issuance of the Class A, B and D limited partnership interests, ~~and~~ for funding of an "Advance Facility" evidenced by the Class D limited partnership interests and to maintain reserves sufficient to fund premiums, certain operating expenses of White Eagle and certain minimum payments to Lamington as the holder of the Class B interests. The A&R LPA provides generally that holders of the Class A and Class B Interests receive distributions of proceeds of the assets of White Eagle based on their 72.5% and 27.5% ownership, respectively, after certain expenses and reserves are funded (including such minimum payments to Lamington totaling approximately $8.0 million per year for the first three (3) years and $4.0

million for the subsequent seven (7) years, provided that commencing after year three (3), such minimum payments will be utilized to repay the Class D Return of $8.0 million, which was advanced at closing, plus the greater of $2.0 million or 11% per annum on such $8.0 million to the extent necessary to fully repay such Class D Return. The minimum payments to the Company will occur regardless of maturities with payments through the premium/expense reserve account when there are no maturity proceeds available for distribution as described below). However, the A&R LPA also provides that all payments to holders of the Class B interests (other than such minimum payments to Lamington during the first eight (8) years following the Closing Date) are fully subordinated to payments in respect of the minimum returns to holders of the Class A and Class D interests (including repayment of all amounts advanced in respect of the Advance Facility) and to any indemnification payments, if any, due to such holders and related indemnified persons pursuant to the indemnities afforded them in and in relation to the A&R LPA, Subscription Agreement, Master Termination Agreement and related documents. As of the closing of

the WE Investment, Lamington Road Bermuda, LTD resigned as manager of the portfolio and was replaced by an affiliate of Jade Mountain.

On August 16, 2019, White Eagle , Palomino JV GP Limited, ("the General Partner") and the Manager entered into the Management Agreement, setting forth the terms and conditions pursuant to which the General Partner has delegated certain of its management rights and obligations under the A&R LPA to the Manager.

Advance Facility. The facility under which the Class A Limited Partner or its Affiliates from time to time advance to the Class B Limited Partner (or, as a matter of convenience only, provides the proceeds of any such advance directly to the Partnership on behalf of the Class B Limited Partner, provided that, for the avoidance of doubt, any such advance distributed directly to the Partnership shall not be deemed to be an incurrence of an obligation of the Partnership for the repayment thereof) the portion of the premium/expense reserve account owed by the Class B Limited Partner under the Agreement. Essentially, this is the aggregate amount owed by the Class B Limited Partner to the Class A Limited Partner thereunder as a result of such advances.

Class A Minimum Return Cumulative Amount. An amount equal to 11% per annum, compounded quarterly and accruing from the Effective Date, on the sum of (i) 100% of the initial contribution by the Class A Limited Partner on its own behalf to the premium/expense reserve account, accruing from the Effective Date until repaid (as reduced by any repayment thereof) (but for the avoidance of doubt excluding any advances made by the Class A Limited Partner under the Advance Facility), (ii) 100% of the amounts funded into the premium/expense reserve account by the Class A Limited Partner on its own behalf after the Effective Date (as reduced by any repayment thereof), accruing from the date of funding until repaid (but for the avoidance of doubt excluding any advances made by the Class A Limited Partner under the Advance Facility), and (iii) the Purchase Price of $374.2 million (as reduced by any portion thereof repaid by the Class B Interest Monthly Distribution, as defined below, (v) that reflects amortization of principal, all sale proceeds received by the Class A Limited Partner and any reductions thereof as contemplated by the permitted disposition of policies, (plus (x) the amount necessary to reduce the principal balance to the targeted principal balance hereto for such Distribution Date, plus (y) later contributions by the Class A Limited Partner (excluding any advances made by the Class A Limited Partner under the Advance Facility but, for the avoidance of doubt, including amounts funded into the premium/expense reserve account by the Class A Limited Partner on its own behalf), plus (z) the Class D Return. At August 16, 2019, the target principal balance was $406.0 million, including, $366.2 million for the asset purchase price, $21.8 million for Class A premium reserve funding, $8.3 million Class B Advance Facility, $8.0 million for Class D interests and $1.8 million for facility expenses.

On December 4, 2019 the Company and certain of its subsidiaries entered into a Settlement Agreement and Mutual Release (the "Settlement Agreement") with Sun Life Assurance Company of Canada ("Sun Life") and Wilmington Trust, N.A. as securities intermediary ("Wilmington Trust").

Pursuant to the Settlement Agreement, 31 life insurance policies with face value totaling $163.5 million issued by Sun Life were canceled in exchange for a lump sum payment of $36.1 million. The settlement included two policies held by the Company outside of White Eagle with an aggregate face value of $12.0 million, 28 policies held by White Eagle with an aggregate face value of $141.5 million and one policy with a face value of $10.0 million in receivable for maturity for White Eagle. Of this amount, approximately $12.7 million was received by the Company, $13.4 million was paid to White Eagle and $10.0 million was paid to Wilmington Trust for the maturity receivable. With this settlement, the Company no longer owns any life insurance policies directly. With this settlement, the target principal balance for the Class A Partner was reduced by the proceeds from the Sun Life settlement of $13.4 million with $392.6 million outstanding at May 31, 2020.

During the three and six months ended May 31, 2020, approximately $10.0 million was distributed to the Class A Partner to satisfy the Class A minimum return.

Class A True Up Payment. As of the applicable Distribution Date, (i) the excess (if positive) of (x) 72.5% of the total return distributions over (y) the sum of cumulative amounts actually received by the Class A Limited Partner prior to such Distribution Date on account of clauses (w), (x) and (y) of the Class A Minimum Return Cumulative Amount, any Class A true up payments and amounts paid to the Class A Limited Partner pursuant plus (ii) the amount necessary such that the Class A Limited Partner shall have received 72.5% of total return distributions after giving effect to the amounts to be paid to the Class A Limited Partner on such Distribution Date.

Class B True Up Payment. As of the applicable Distribution Date, (i) the excess (if positive) of (x) 27.5% of the Total Return Distributions over (y) the sum of cumulative amounts actually received by the Class B Limited Partners prior to such Distribution Date on account of the Minimum Class B Interest Monthly Distributions, the Class B True Up Payments and amounts paid to the Class B Limited Partners pursuant to Section 3.2(b)(v) (plus the cumulative amounts that were paid to the Class A Limited Partner in repayment of the Advance Facility, to the Class D Limited Partner on account of the Class D Return, or to the Purchaser Indemnified Parties to satisfy (in whole or in part) the indemnity obligations of Parent, Lamington ~~Road~~ or the Class B Limited Partner) plus (ii) the amount necessary such that the Class B Limited Partners shall have received 27.5% of Total Return Distributions after giving effect to the amounts to be paid to the Class B Limited Partner on account of the Minimum Class B Interest Monthly Distributions and amounts paid to the Class B Limited Partners on such Distribution Date in the priority of payments after payment of any Class A True Up Payments and Class B True Up Payments (plus the cumulative amounts that would have been distributed to the Class B Limited Partners but that were paid to the Class A Limited Partner in repayment of the Advance Facility, to the Class D Limited Partner on account of the Class D Return, or to the Purchaser Indemnified Parties to satisfy (in whole or in part) the indemnity obligations of Parent, Lamington ~~Road~~ or the Class B Limited Partner).

At May 31, 2020 there was no Class B true up payment outstanding.

Class D Return. The aggregate repayment amount of approximately $8.0 million ( as described above) owed by the Class B Limited Partner to the Class D Limited Partner, payable in accordance with the terms herein, which shall equal the greater of (x) 125% of the Class D Payment Amount (which is $10.0 million), and (y) the Class D Payment Amount plus the total amount of unpaid interest accruing on the Class D Payment Amount at a rate equal to 11% per annum compounded quarterly from the Effective Date through the date on which the Class D payment amount and all accrued and unpaid interest is repaid in full.

At May 31, 2020, accrued and unpaid interest on the Class D Return was approximately $709,000 with outstanding principal of $8.0 million. The amount is to be repaid through the waterfall distribution as stated above. There was no payment made during the six months ended May 31, 2020.

Distribution Date. The 5th Business Day of each month.

Minimum Class B Interest Monthly Distribution. The monthly amount equal to (i) for each month commencing prior to the third anniversary of the Effective Date, the greater of $667,000 and 1/12th of 1.50% of the Net Asset Value as determined by the most recent valuation report obtained on or prior to such Distribution Date and (ii) for each month commencing on or after the third anniversary of the Effective Date and prior to the tenth anniversary of the Effective Date, the greater of $333,000 and 1/12th of 0.75% of the net asset value as determined by the most recent valuation report obtained on or prior to such Distribution Date.

During the three months and six months ended May 31, 2020, approximately $2.0 million and $4.0 million, respectively, were received by the Company for the minimum Class B interest monthly distribution. These amounts are included in change in fair value of investment in limited partnership, net of distributions on the consolidated statements of operations.

Expense. On August 16, 2019, the Class A Limited Partner contributed $21.8 million to the premium/expense reserve account in satisfaction of its obligations to fund the premium/expense reserve account as of the Effective Date, and (ii) advanced under the Advance Facility $8.3 million by deposit into the premium/expense reserve account on behalf of the Class B Limited Partner, in satisfaction of the Class B Limited Partner’s obligations to fund the premium/reserve fund as of the Effective Date. This $8.3 million is to be repaid through the waterfall distribution from amounts to be distributed to the Company. Total initial premium/expense reserve was approximately $30.0 million on August 16, 2019. The Class A Limited Partner also contributed $1.8 million towards expenses on August 16, 2019.

At May 31, 2020, approximately $751,000 in accrued and unpaid interest was outstanding on the $8.3 million advanced on behalf of the Class B Limited Partner, the amount is to be repaid through the waterfall distribution as stated above. There was no payment during the three months ended May 31, 2020.

If at any time prior to a Distribution Date, the amount in the premium/expense reserve account is less than an amount sufficient to cover the next month of premiums and expenses, as set forth in the budget or as otherwise determined by the General Partner based upon advice of the Manager, the Class A Limited Partner will (i) contribute its percentage interest of 72.5%, and (ii) make advances under the Advance Facility of the Class B Limited Partner’s percentage interest of 27.5%, for the aggregate amount of additional capital needed to increase the balance of the premium/expense reserve account to an amount sufficient to cover the next three months of premiums and expenses, as set forth in the budget.

All advances made by the Class A Limited Partner under the Advance Facility, whether prior to, on or after the Effective Date, shall accrue interest at the rate of 11% per annum, compounded quarterly, until repaid, and all such amounts (including any accrued but unpaid interest) shall be secured by the Class B Partnership Units pursuant to the Pledge Agreement. After the Effective Date, the General Partner will use commercially reasonable efforts to obtain financing proposals for premiums and expenses on terms more favorable to the Class B Limited Partner than the Advance Facility, if and to the extent available, and in the event such financing is obtained, the Class A Limited Partner shall no longer have any obligation to fund advances under the Advance Facility.

Funds in the premium/expense reserve account shall be used or otherwise distributed in the following order of ~~priority:~~priority (in

thousands):


Premium/Expense Reserve Account	Three Months Ended August 31, 2019		Nine Months Ended August 31, 2019			Three Months Ended May 31, 2020		Six Months Ended May 31, 2020
	Amount				Use of Proceeds	Amount		Amount		Use of Proceeds
First	$	8,210	$	8,210	Premiums, Expenses and Manager Fees	$	26,726	$	50,952	Premiums, Expenses and Manager Fees
Second	—		—		Minimum Class B Interest Monthly Distribution - after three years, Class D Returns takes priority until paid in full	2,000		4,000		Minimum Class B Interest Monthly Distribution - after three years, Class D Returns takes priority until paid in full
Third	—		—		Minimum Class B Interest Monthly Distribution	—		—		Minimum Class B Interest Monthly Distribution
Fourth	—		—		Retained For Premium/Expense to Cover Three Months of Transactions, excess to be sent to the Collection Account	—		—		Retained for Premium/Expense to Cover Three Months of Transactions, excess to be sent to the Collection Account
	$	8,210	$	8,210		$	28,726	$	54,952

(17) Segment Information

On October 25, 2013, the Company sold its structured settlement business, which was previously reported as an operating segment. The operating results related to the Company’s structured settlement business have been included in discontinued operations in the Company’s Consolidated Statements of Operations for all periods presented and the Company has discontinued segment reporting. See Note 9 "Discontinued Operations" to the accompanying consolidated financial ~~statements for further information. Management views its current operations as one segment.~~statements.

(18) Commitments and Contingencies

Lease Agreements

Effective December 1, 2019, the Company adopted ASC 842, Leases, which requires lessees to recognize on the balance sheet at lease commencement, the lease assets and the related lease liabilities for the rights and obligations created by operating and finance leases with lease terms of more than 12 months. The lease term commences on the date the lessor makes the underlying property available, irrespective of when lease payment begins under the contract.

The Company leases office space under a lease that commenced on October 1, 2014. The lease expires on September 30, 2020. The annual base rent is ~~$261,000,~~$268,000, with a provision for a 3% increase on each anniversary of the rent commencement date. ~~Rent~~

Upon adoption, our lease liability was $203,000 and was calculated based on the present value of the minimum lease payments from December 1, 2019 to September 30, 2020, the lease expiration date, consisting of the base rent, provision for a 3% increase on each anniversary of the rent commencement date and our incremental borrowing rate applicable to the lease term. The interest rate used in our calculation is estimated and was derived using the interest rate we pay on our existing

borrowings, adjusted for other factors which requires judgment by management. The lease liability is increased by accreted interest and reduced by the lease payment made by the Company on a monthly basis.

At May 31, 2020, the operating lease liability was $66,000 and is included under liabilities on the consolidated balance sheet.

The Company initially measured the right-of-use asset ("ROU asset" or "operating lease asset") at the initial measurement of the lease liability, adjusted for payments made before the commencement date and lease incentives received before the commencement date, which resulted in an initial ROU assets value of approximately $179,000.

At May 31, 2020, the operating lease asset was $72,000 and is included under assets on the consolidated balance sheet.

Over the lease term, the Company is required to amortize the ROU asset and record interest expense on the lease liability created at lease commencement. Operating lease expense was approximately ~~$63,000 and $109,000~~$134,000 for the three months ended ~~August~~May 31, 2020 and $245,000 for the six months ended May 31, 2020. Rent expense was $114,000 for the three months ended May 31, 2019 and ~~2018, respectively, with approximately $215,000 and $338,000~~$228,000 for the ~~nine~~six months ended ~~August~~May 31, ~~2019 and 2018, respectively.~~2019.

Sublease Agreement

During the eleven months ended November 30, 2018, the Company entered into a sublease agreement with a subtenant that commenced on October 1, 2018 and expires on September 15, 2020. The annual base rent of the subtenant is $78,000. On March 11, 2019, the sublease contract was amended to increase the square footage thereunder, hence increasing the annual base rent to $89,000.

The sublease did not relieve the Company of its primary obligation under the original lease. As a result, the Company will continue to account for the original lease as an operating lease independent of the sublease agreement, in terms of balance sheet presentation. Rental income is recognized on a monthly basis and was approximately $38,000 and $39,000, respectively, for the three months ended May 31, 2020 and three months ended May 31, 2019, respectively, $77,000 and $75,000, respectively, for the six months ended May 31, 2020 and six months ended May 31, 2019, respectively and is included as other income in the consolidated statement of operations.

Employment Agreements

The Company has entered into employment agreements with certain of its officers, including with its chief financial officer, whose agreement provides for payments in the event that the executive terminates her employment with the Company due to a material change in the geographic location where the chief financial officer performs her duties or upon a material diminution of her base salary or responsibilities, with or without cause (the "2018 Martinez Agreement"). If the Company terminates the 2018 Martinez Agreement without cause or she resigns with Good Reason (as defined in the 2018 Martinez Agreement), she will be entitled to receive her base salary or $352,229, whichever is greater, through the twelve (12) months following such termination (the "Martinez Severance Period") as well as any bonus earned but not yet paid. If Ms. Martinez resigns for good reason, she will also be entitled to have the Company continue to pay its portion of healthcare premiums for plans in which she is participating immediately prior to the termination through the Martinez Severance Period. If such termination or resignation occurs within two years after a change in control (as defined in the 2018 Martinez Agreement), then in lieu of receiving her base salary, Ms. Martinez would be entitled to receive (i) accrued vacation days, (ii) a lump sum payment equal to the sum of two times her then base salary, (iii) a portion of her bonus prorated through the termination date that would be due to her when bonus payments are otherwise made for the year in which the termination occurs, (iv) any unpaid portion of a bonus for the year preceding the termination, and (v) reimbursement of COBRA healthcare costs through the Martinez Severance Period.

On March 13, 2018, the Company entered into an employment agreement with Jack Simony (the "Simony Agreement"), pursuant to which Mr. Simony will continue to serve as Vice President and Chief Investment Officer of the Company. The term of the Simony Agreement commenced on March 13, 2018 and continues for one year, with automatic one-year extensions unless (x) either Mr. Simony or the Company gives written notice not to extend at least sixty (60) days’ prior to the end of the then-current term or (y) Mr. Simony’s employment is terminated in accordance with the terms of the Simony Agreement. Pursuant to the Simony Agreement, Mr. Simony will receive an annual base salary of $275,000.

The Simony Agreement further provides that Mr. Simony is entitled to participate in all benefit plans provided to executives of the Company. If the Company terminates Mr. Simony’s employment without cause or he resigns with Good

Reason (as defined in the Simony Agreement), the Simony Agreement provides that he will be entitled to receive his base salary through the six (6) months following such termination (the "Simony Severance Period") as well as any incentive bonus that has been declared or awarded to him for a prior fiscal year but has not yet been paid. If Mr. Simony resigns for good reason, he will also be entitled to have the Company continue to pay its portion of health care premiums for plans in which he is participating immediately prior to the termination through the Simony Severance Period.

On March 13, 2018, the Company entered into an employment agreement with Harvey Werblowsky (the "Werblowsky Agreement"), pursuant to which Mr. Werblowsky will continue to serve as Vice President, Chief Legal Officer and General Counsel of the Company. The term of the Werblowsky Agreement commenced on March 13, 2018 and continues for one year, with automatic one-year extensions unless (x) either Mr. Werblowsky or the Company gives written notice not to extend at least

sixty (60) days’ prior to the end of the then-current term or (y) Mr. Werblowsky’s employment is terminated in accordance with the terms of the Werblowsky Agreement. Pursuant to the Werblowsky Agreement, Mr. Werblowsky will receive an annual base salary of $250,000.

The Werblowsky Agreement further provides that Mr. Werblowsky is entitled to participate in all benefit plans provided to executives of the Company. If the Company terminates Mr. Werblowsky’s employment without cause or he resigns with Good Reason (as defined in the Werblowsky Agreement), the Werblowsky Agreement provides that he will be entitled to receive his base salary through the six (6) months following such termination (the "Werblowsky Severance Period") as well as any incentive bonus that has been declared or awarded to him for a prior fiscal year but has not yet been paid. If Mr. Werblowsky resigns for good reason, he will also be entitled to have the Company continue to pay its portion of health care premiums for plans in which he is participating immediately prior to the termination through the Werblowsky Severance Period.

Severance Agreements

On November 12, 2019, the Company entered into a retention agreement with each of Mr. Simony, (the "Simony Retention Agreement"), and Mr. Werblowsky, (the "Werblowsky Retention Agreement" and, together with the Simony Retention Agreement, the "Retention Agreements"). Each Retention Agreement provides for a cash retention payment (each, a "Retention Payment") and certain extended benefits to each of Mr. Simony and Mr. Werblowsky (the "Benefits") in recognition of his significant contributions to consummating the Company’s August 2019 transaction with Jade Mountain Partners, LLC, which allowed the Company and its then subsidiary White Eagle Asset Portfolio, L.P to refinance an onerous credit facility and improve the Company’s overall financial position (the "White Eagle Transaction), and in consideration of Mr. Simony’s and Mr. Werblowsky’s continued support and assistance with the current restructuring under consideration by the Company (the Restructuring").

The Retention Agreements provide that in exchange for the Retention Payment and Benefits, each of Mr. Simony and Mr. Werblowsky will remain employed by Imperial pursuant to his current employment agreement, each dated March 13, 2018 (the "Employment Agreements"), and that each Retention Payment is in lieu of any severance otherwise payable to Mr. Simony or Mr. Werblowsky under his Employment Agreement. In addition, each of Mr. Simony and Mr. Werblowsky will not be eligible to receive any portion of his Retention Payment if he is terminated for Cause (as defined in the Employment Agreements) or resigns without Good Reason (as defined in the Employment Agreements). The Retention Payments consist of $1.0 million for Mr. Simony and $500,000 for Mr. Werblowsky. The Benefits consist of, for each of Mr. Simony and Mr. Werblowsky, 12 months of (x) COBRA health insurance coverage reimbursement from the company and (x) other benefits to which he would be entitled upon an involuntary termination without Cause under his Employment Agreement. The Retention Payments are payable as to two-thirds upon entering into the Retention Agreements and one-third within three (3) business days of the consummation of the Restructuring, so long as the White Eagle Transaction remains in full force and effect and White Eagle and its limited partnership agreement remain operative and in good standing.

On December 10, 2019, the Company, entered into a retention agreement with Miriam Martinez, the Company’s Senior Vice President, Chief Financial Officer and Secretary (the "Martinez Retention Agreement"). The Martinez Retention Agreement provides for a cash retention payment (the "Martinez Retention Payment") and certain extended benefits to Ms. Martinez (the "Martinez Benefits") in recognition of the significant contributions to consummating the Company’s August 2019 transaction with Jade Mountain, which allowed the Company and White Eagle to refinance the White Eagle Revolving Credit Facility and improve the Company’s overall financial position (the "White Eagle Transaction"), and in consideration of Ms. Martinez’s continued support and assistance with the Restructuring.

The Martinez Retention Agreement provides that in exchange for the Martinez Retention Payment and Martinez Benefits, Ms. Martinez will remain employed by Imperial pursuant to the 2018 Martinez Agreement, and that the Martinez Retention Payment is in lieu of any severance otherwise payable to Ms. Martinez under the 2018 Martinez Agreement. In addition, Ms.

Martinez will not be eligible to receive any portion of the Martinez Retention Payment if she is terminated for Cause (as defined in the 2018 Martinez Agreement) or resigns without Good Reason (as defined in the 2018 Martinez Agreement). The Martinez Retention Payment consists of $700,000. The Martinez Benefits consist of 18 months of (x) COBRA health insurance coverage reimbursement from the Company and (x) other benefits to which she would be entitled upon an involuntary termination without Cause under the 2018 Martinez Agreement. The Martinez Retention Payment is payable as to two-thirds upon entering into the Martinez Retention Agreement and one-third within three (3) business days of the consummation of the Restructuring, so long as the White Eagle Transaction remains in full force and effect and White Eagle and its limited partnership agreement remain operative and in good standing. In the event that the Company files for bankruptcy prior to the payment of any portion of the Martinez Retention Payment or Martinez Benefits, the Company will file with the bankruptcy court a motion to approve a Key Employee Retention Plan to preserve each of Ms. Martinez’s rights under the Martinez Retention Agreement to the full Martinez Retention Payment and Martinez Benefits provided that she must comply with all of the provisions of the Martinez Retention Agreement.

Compensation Agreement - Chief Executive Officer

On January 27, 2020, the Company, granted a bonus to Patrick J. Curry, the Company’s Chief Executive Officer (the "Bonus"), in recognition of his past and ongoing work for the Company. The Bonus consists of: (i) $400,000 in cash, payable promptly after the grant, and 1,000,000 shares of restricted common stock of Emergent, vesting in thirds upon the first three anniversaries of the grant date, (ii) up to $300,000 in cash, as determined by the Compensation Committee (the "Compensation Committee") of Emergent’s Board of Directors (the "Board"), payable upon the consummation of the Company’s contemplated restructuring, and (iii) up to $300,000 in cash, as determined by the Compensation Committee, if the Company effects the Restructuring at least $600,000 under the budget for such Restructuring that is approved by the Board within 45 days of the date hereof, measured as of 30 days after the date of the Restructuring.

Resignation - Chief Investment Officer

On January 29, 2020, Jack Simony, the Company’s Chief Investment Officer, notified the Company of his resignation, effective on February 7, 2020. Also, on January 29, 2020, the Company and Mr. Simony entered into an amendment (the "Amendment") to the Simony Retention Agreement. Pursuant to the Amendment, the remaining one-third of the retention payment is accelerated and will be paid within seven (7) days of the date of the Amendment.

The Company does not have any general policies regarding the use of employment agreements, but has and may, from time to time, enter into such a written agreement to reflect the terms and conditions of employment of a particular named executive officer, whether at the time of hire or thereafter.

Litigation

In accordance with applicable accounting guidance, the Company establishes an accrued liability for litigation and regulatory matters when those matters present loss contingencies that are both probable and estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued. When a loss contingency is not both probable and estimable, the Company does not establish an accrued liability. As a litigation or regulatory matter develops, the Company, in conjunction with any outside counsel handling the matter, evaluates on an ongoing basis whether such matter presents a loss contingency that is probable and estimable. If, at the time of evaluation, the loss contingency related to a litigation or regulatory matter is not both probable and estimable, the matter will continue to be monitored for further developments that would make such loss contingency both probable and estimable. When a loss contingency related to a litigation or regulatory matter is deemed to be both probable and estimable, the Company will establish an accrued liability with respect to such loss contingency and record a corresponding amount of litigation-related expense. The Company will then continue to monitor the matter for further developments that could affect the amount of any such accrued liability.

~~Litigation~~Lincoln Benefit Settlement

On May 22, 2019, a settlement ~~(the "Lincoln Benefit Settlement")~~ in the amount of $21.3 million was signed between Lincoln Benefit Life Company, ~~("Lincoln Benefit"),~~ White Eagle Asset Portfolio, L.P. and Emergent Capital, Inc. pursuant to which Lincoln Benefit, agreed to not to contest the 55 life insurance policies that are presently owned by White Eagle and Emergent Capital agreed to drop its legal action against Allstate Life Insurance Company and settle for $2.0 million. The ~~Lincoln Benefit Settlement~~settlement relates to six separate legal actions pertaining to the validity of certain White Eagle policies and receivables for maturities of life settlements totaling $39.1 million. The ~~Lincoln Benefit Settlement~~settlement of the litigation was approved by the Bankruptcy Court in June 2019, and accordingly, the receivable for maturities of life settlement was adjusted to reflect the reduction which resulted in approximately $17.8 million recorded as change in fair value of life

settlements loss in the condensed and consolidated financial statements of the Debtors at~~August 31, 2019. The amount was received during the three months ended August~~ May 31, 2019. The $2.0 million settlement related to the Allstate lawsuit ~~was received during the three months ended August 31, 2019 and is~~will be recorded ~~as other income on the statement of operations for consolidated financial statements atAugust 31, 2019.~~upon receipt.

Sun Life Settlement

On April 18, 2013, Sun Life Assurance Company of Canada ("Sun Life") filed a complaint against the Company and several of its affiliates in the United States District Court for the Southern District of Florida, entitled Sun Life Assurance Company of Canada v. Imperial Holdings, Inc., et al. ("Sun Life Case"), asserting, among other things, that at least 28 life insurance policies issued by Sun Life and owned by the Company through certain of its subsidiary companies were invalid. The Sun Life complaint, as amended, asserted the following claims: (1) violations of the federal Racketeer Influenced and Corrupt Organizations ("RICO") Act, (2) conspiracy to violate the RICO Act, (3) common law fraud, (4) aiding and abetting fraud, (5) civil conspiracy to commit fraud, (6) tortious interference with contractual obligations, and (7) a declaration that the policies issued were void. Following the filing of a motion by the Company to dismiss the Sun Life Case, on December 9, 2014, counts (2), (4), (5), (6) and (7) of the Sun Life Case were dismissed with prejudice. The Company then filed a motion for summary judgment on the remaining counts. On February 4, 2015, the Court issued an order (the "Order") granting the

Company’s motion for summary judgment on counts (1) and (3), resulting in the Company prevailing on all counts in the Sun Life Case.

On July 29, 2013, the Company filed a separate complaint against Sun Life in the United States District Court for the Southern District of Florida, captioned Imperial Premium Finance, LLC v. Sun Life Assurance Company of Canada ("Imperial Case"), which was subsequently consolidated with the Sun Life Case. The Imperial Case asserted claims against Sun Life for breach of contract, breach of the covenant of good faith and fair dealing, and fraud, and sought a judgment declaring that Sun Life is obligated to comply with the promises made by it in certain insurance policies. The Imperial complaint also sought compensatory damages amounting to at least $30.0 million and an award of punitive damages. On August 23, 2013, Sun Life moved to dismiss the complaint, but the Court denied Sun Life’s motion in early 2015. Subsequently, on February 26, 2015, Sun Life appealed the denial to the United States Court of Appeals for the Eleventh Circuit. The Company moved to dismiss Sun Life’s appeal, and, on December 17, 2015, the Court of Appeals ruled in favor of the Company, dismissing Sun Life’s appeal. The Imperial Case therefore returned to the District Court.

On September 22, 2016, however, the District Court granted summary judgment in favor of Sun Life on the entirety of the Imperial Case. Subsequently, on January 12, 2017, the Company appealed the District Court’s decision, and on January 24, 2017, Sun Life filed its own notice of appeal. As part of these two appeals, the Court of Appeals will review every dispositive order issued by the District Court throughout the consolidated case. Per the Court of Appeals, oral argument will be scheduled in the near future.

In January 2018, oral argument was held in the Eleventh Circuit Court of Appeals. In September 2018, the Circuit Court ruled that Florida is the jurisdiction for all the Sun Life cases.

~~Voluntary Petitions for Relief Under Chapter 11 and Suit~~

On the Petition Date, the November Chapter 11 Cases were filed. The commencement of the November Chapter 11 Cases constitutes an event of default under the White Eagle Revolving Credit Facility, resulting in the principal and accrued interest due from White Eagle thereunder becoming immediately due and payable. Lamington and WEGP have pledged their respective interests in White Eagle to secure its obligations under the White Eagle Revolving Credit Facility. Any efforts by LNV or CLMG to enforce such pledges by Lamington and WEGP of their respective interests in White Eagle in connection with the White Eagle Revolving Credit Facility are automatically stayed as a result of the commencement of the November Chapter 11 Cases and LNV’s and CLMG’s rights of enforcement in respect of the White Eagle Revolving Credit Facility are subject to the applicable provisions of the Bankruptcy Code. In addition, on November 15, 2018, White Eagle, LNV and CLMG entered into an Agreement Regarding Rights and Remedies (the "Standstill Agreement"), pursuant to which LNV and CLMG agreed to refrain from exercising their rights and remedies in connection with the White Eagle Revolving Credit Facility, subject to the terms and provisions of the Standstill Agreement, until 12:00 p.m. noon Pacific time on November 26, 2018, to facilitate negotiations.

On December 13, 2018, the White Eagle Chapter 11 Case was filed. The commencement of the White Eagle Chapter 11 Case would constitute a default and event of default under the terms of the Amended and Restated Senior Note Indenture 8.5% Senior Secured Notes Unsecured and the New Convertible Indenture relating to the New Convertible Notes. However, such defaults and events of default and their consequences were waived by holders of all of the outstanding principal amount of the outstanding 8.5% Senior Secured Notes and by holders of a majority of the outstanding principal amount of the outstanding New Convertible Notes, and consequently, the Company believes that no defaults, events of default or acceleration of the payment obligations thereunder, including principal or accrued interest, occurred under either the Amended and Restated Senior Note Indenture or the New Convertible Note Indenture.

~~On January 25,~~4, 2019 the Company ~~White Eagle, Lamington,~~ and ~~WEGP, collectively the "Plaintiffs"~~certain of its subsidiaries entered into a Settlement Agreement and Mutual Release (the "Settlement Agreement") with Sun Life Assurance Company of Canada ("Sun Life") and Wilmington Trust, N.A. as securities intermediary ("Wilmington Trust"). The Settlement Agreement relates to Sun Life Assurance Company of Canada v. Imperial Holdings, Inc., ~~filed the Suit against LNV, Silver Point and GWG, the Defendants, in the Bankruptcy Court, where the Suit will be administered together~~et al., Case No. 13-cv-80385 BRANNON (consolidated with ~~the Chapter 11 Cases. LNV, a subsidiary of Beal, is the lender under the White Eagle Revolving Credit Facility.~~Case No. 13-cv-80730) (S.D. Florida) (the "Legal Action"), which has been ongoing since 2013.

InPursuant to the ~~Suit, the Plaintiffs allege that the Defendants engaged in a scheme to coerce the Plaintiffs into selling their valuable portfolio of~~Settlement Agreement, (i) 31 life insurance policies ~~to defendants~~with face totaling $163.5 million issued by Sun Life were canceled in exchange for ~~well below its true value. Pursuant to~~a lump sum payment of $36.1 million. The settlement included two policies held by the Company outside of White Eagle ~~Revolving Credit Facility, LNV agreed to lend $370~~with an aggregate face value of $12.0 million, 28 policies held by White Eagle with an aggregate face value of $141.5 million and one policy with a face value of $10.0 million in receivable for maturity for White Eagle. Of this amount, approximately $12.7 million was received by the Company, $13.4 million was paid to White Eagle and ~~in connection therewith received a 45% equity stake in White Eagle. That equity stake,~~$10.0 million was paid to Wilmington Trust for the maturity receivable, (ii) the Legal Action dismissed with prejudice, (iii) Sun Life agreed not to challenge the validity of or to seek to deny coverage (other than for non-payment of premiums) for certain life insurance policies issued by it and ~~LNV’s significant control over~~held by White Eagle ~~under~~that were specifically excluded from the ~~Credit Facility, creates a joint venture,~~settlement or have already matured, and gives rise to fiduciary duties to White Eagle and Emergent, on the part of LNV. The Plaintiffs further allege that LNV has been engaged in a concerted campaign to "squeeze" White Eagle and Emergent by improperly restricting their cash flow, in the hopes that White Eagle and Emergent will have no choice but to sell the valuable policy portfolio to LNV or one of its proxies, including Silver Point and/or GWG, at below its true value.

~~Global Settlement Agreement in Principle in Bankruptcies~~

On May 7, 2019, a global settlement in principle of the Chapter 11 Cases and the Suit was announced on the record to, and filed with, the Bankruptcy Court jointly by the Debtors and Defendants (the "Proposed Settlement"). The Proposed Settlement would be effected together with the plan of reorganization, in accordance with the following schedule: (x) the Proposed Settlement and plan of reorganization, and other relevant documents, would be filed with the Bankruptcy Court by May 24, 2019, (y) the parties would use their best efforts to have the Proposed Settlement approved by the Bankruptcy Court by June 7, 2019, and (z) the parties would use their best efforts to have a confirmation hearing for approval of the plan of reorganization by the Bankruptcy Court held on or before June 21, 2019.

~~On June 5, 2019, the Bankruptcy Court approved an agreement memorializing the Proposed Settlement (the "Settlement~~

~~Agreement") and a debtor-in-possession credit agreement (the "DIP Financing"). The plan of reorganization for the Chapter~~

~~11 Cases, which implements the Settlement Agreements and the DIP Financing (the "Plan of Reorganization") was confirmed by the Bankruptcy Court on June 19, 2019.~~

~~Subsequent Event~~

~~On September 16, 2019, the Bankruptcy Court entered an order and final decree closing the White Eagle Chapter 11 Case.~~

~~Repayment and Termination of the White Eagle Revolving Credit Facility~~

On August 16, 2019, the Company entered into the Subscription Agreement, in connection with the Commitment Letter, pursuant to which White Eagle sold to Palomino 72.5% of its limited partnership interests, consisting of(iv) Sun Life released all of the newly issued and outstanding Class A and Class D interests, and WEGP sold to an affiliate of Jade Mountain all of its general partnership interests (collectively, the " WE Investment"). Pursuant to the Subscription Agreement, Lamington received 27.5% of the limited partnership interests of White Eagle, consisting of all of the newly issued and outstanding Class B interests in exchange for all of its previously owned White Eagle limited partnership interests.

The proceeds of the WE Investment were used to satisfy in full (i) the White Eagle Revolving Credit Facility, and (ii) the DIP Financing extended by CLMG, as agent, and LNV, as lender, to White Eagle, each in connection with the termination of the White Eagle Revolving Credit Facility and the release of the related liens on the collateral thereunder pursuant to the Master Termination Agreement. The repayment and termination of the White Eagle Revolving Credit Facility and the termination of the DIP Financing, which had not been drawnclaims against ~~were in accordance with the Plan of Reorganization.~~

On August 16, 2019, Lamington also entered into (i) the Pledge Agreement pursuant to which it pledged the 27.5% limited partnership interests of White Eagle owned by it to Palomino and certain other secured parties in support of the payment and indemnification obligations described above, and (ii) the Assumption Agreement pursuant to which Lamington assumed all liabilities and obligations of White Eagle and WEGP as of the closing date of the Transactions, and Lamington, the Company and ~~WEGP agreed to terminate, waive~~Wilmington Trust, and ~~release any intercompany debt, obligations and liabilities of White Eagle to Lamington,~~ the Company and ~~WEGP. On August 16, 2019, Emergent entered into the Indemnification Agreement pursuant to which it indemnified~~ Wilmington Trust ~~National Association~~released all claims against claims and liabilities that may arise in relation to policies that have matured prior to the Closing Date but as to which Wilmington Trust, National Association has historically held title as securities intermediary.

Sun Life.

Other Litigation

Other litigation is defined as smaller claims or litigations that are neither individually nor collectively material. It does not include lawsuits that relate to collections.

The Company is party to various other legal proceedings that arise in the ordinary course of business, separate from normal course accounts receivable collections matters. Due to the inherent difficulty of predicting the outcome of these litigations and other legal proceedings, the Company cannot predict the eventual outcome of these matters, and it is reasonably possible that some of them could be resolved unfavorably to the Company. As a result, it is possible that the Company’s results of operations or cash flows in a particular fiscal period could be materially affected by an unfavorable resolution of pending litigation or contingencies. However, the Company believes that the resolution of these other proceedings will not, based on information currently available, have a material adverse effect on the Company’s financial position or results of operations.

(19) Stockholders’ Deficit/Equity

Shares of Common Stock under Omnibus Plan

The Company has reserved an aggregate of 12,600,000 shares of common stock under its Omnibus Plan, pursuant to which, as of ~~August~~May 31, ~~2019,~~2020, options to purchase 85,000 shares of common stock granted to existing employees were outstanding, 100,000 shares of stock appreciation rights had been granted to a director and were fully ~~vested~~ and outstanding, 633,215 shares of restricted stock had been granted to directors and were fully vested, ~~2,270,000~~3,270,000 shares of restricted stock units had been granted to certain employees, with a total of ~~1,083,333~~1,000,000 shares subject to vesting. Approximately ~~1,186,667~~2,270,000 shares have been vested since granted. There were ~~9,511,785~~8,511,785 securities remaining for future issuance under the Omnibus Plan as of ~~August~~May 31, ~~2019.~~2020.

Share Note Repurchase Program

On September 1, 2015, the Company announced that its Board of Directors authorized a $10.0 million share and note repurchase program. The program had a two-year expiration date and authorized the Company to repurchase up to $10.0 million of its common stock and/or its Convertible Notes due 2019. During 2015, the Company purchased 608,000 shares for a total cost of approximately $2.5 million, which is an average cost of $4.17 per share, including transaction ~~fees. As of~~fees, the amount is included in stockholder's equity on the consolidated balance sheet at May 31, 2020. The repurchase program was terminated during the year ended December 31, ~~2017, the repurchase program has terminated.~~

2017.

Warrants

In connection with a settlement of class action litigation arising in connection with the investigation by the U.S. Attorney's Office for District of New Hampshire ("USAO") into the Company's now legacy premium finance business (the "USAO Investigation"), the Company issued warrants to purchase 2,000,000 shares of the Company’s stock into an escrow account in April of 2014. The estimated fair value as of the measurement date of such warrants was $5.4 million, which is included in stockholders’ equity. The warrants were distributed in October 2014 and have a five-year term from the date they were distributed to the class participants with an exercise price of $10.75. The Company is obligated to file a registration statement to register the shares underlying the warrants with the SEC if shares of the Company’s common stock have an average daily trading closing price of at least $8.50 per share for a 45 day period. The warrants will be exercisable upon effectiveness of the registration statement.

On July 28, 2017, in connection with the recapitalization transaction, the Company issued common stock purchase warrants to certain investors to purchase up to an aggregate of 42,500,000 shares of the Company’s common stock at an exercise price of $0.20 per share (the "Warrant Shares"). The warrants shall vest and become exercisable as follows: (i) with respect to 17,500,000 Warrant Shares, immediately upon the issuance of the warrants, and (ii) with respect to the remaining 25,000,000 Warrant Shares, at later times tied to the conversion of the Company’s Convertible Notes and New Convertible Notes (each as defined below) outstanding on July 28, 2017 into shares of the Company’s common stock or, if earlier, upon the date that all Convertible Notes or New Convertible Notes are no longer outstanding. The warrants have an eight year term. The number of Warrant ~~are~~Shares is subject to anti-dilution adjustment provisions.

Recapitalization Transactions

On July 28, 2017, the Company consummated a series of integrated transactions to effect a recapitalization of the Company (the "Transaction Closing") pursuant to the Master Transaction Agreements.

Common Stock Purchase Agreement

In connection with the Transaction Closing, the Company entered into a Common Stock Purchase Agreement (the "Stock Purchase Agreement") by and among the Company, PJC, certain investors jointly designated by PJC and Triax Capital Advisors LLC, a New York limited liability company ("Triax"), to be party to the Stock Purchase Agreement (collectively, the "Common Stock Investors"), and certain Convertible Note Holders that were a party to the Stock Purchase Agreement (collectively, the "Convertible Note Holder Purchasers," and together with PJC and the Common Stock Investors, the "Purchasers"). Pursuant to the Stock Purchase Agreement, the Company issued and sold to the Purchasers 115,000,000 shares (the "Stock Purchase Agreement Shares") of the Company’s ~~Common Stock~~common stock, $0.01 par value at a price of $0.20 per share for an aggregate purchase price of $23.0 million, of which PJC and the Common Stock Investors purchased 75,000,000 Stock Purchase Agreement Shares for an aggregate purchase price of $15.0 million and the Convertible Note Holder Purchasers, pursuant to the previously announced rights offering which expired on July 26, 2017, purchased 40,000,000 Stock Purchase Agreement Shares for an

aggregate purchase price of $8.0 million, of which PJC purchased 19,320,038 shares in connection with the exercise of rights assigned to it by certain Convertible Note Holder Purchasers. The Stock Purchase Agreement contained customary representations, warranties, and covenants.

In August 2017, the Company entered into a Securities Purchase Agreement (the "Securities Purchase Agreement") by and between the Company and Brennan Opportunities Fund I LP ("Brennan"). Pursuant to the Securities Purchase Agreement, Brennan purchased from the Company 12,500,000 shares (the "Brennan Shares") of Common Stock at a price of $0.40 per share for an aggregate purchase price of $5.0 million.

Articles Amendment

Effective on July 17, 2017, the Company filed an Articles of Amendment to Articles of Incorporation (the "Articles Amendment") to increase the authorized Common Stock from 80,000,000 shares to 415,000,000 shares. As previously disclosed, the Articles Amendment was approved by the Company’s shareholders at the Company’s 2017 Annual Meeting. The adoption of the Articles Amendment results in a greater number of shares of Common Stock available for issuance.

Change in Significant Holders

As a result of the consummation of the Master Transaction Agreements, on the date of the Transaction Closing, a change in significant holders of the Company's common stock occurred. PJC and Triax, together with certain of their affiliates,

acquired beneficial ownership of approximately 38.9% of the ~~then~~ outstanding Common Stock, based on their aggregate acquisition of 39,320,038 shares of Common Stock and warrants to purchase 27,150,000 shares of Common Stock. Other investors designated by PJC and Triax acquired beneficial ownership of approximately 43.6% of the ~~then~~ outstanding Common Stock, based on their aggregate acquisition of 55,000,000 shares of Common Stock and warrants to purchase 13,350,000 shares of Common Stock. Additionally, pursuant to the Board Designation Agreements, PJC and Triax designated two of seven directors to the Company’s Board, two other investors designated a third new director and a fourth new director, and a fifth new director was designated by a holder of New Convertible Notes, collectively resulting in a change in the majority of the Company’s Board.

(20) Income Taxes

The Company’s provision for income taxes from continuing operations is estimated to result in an effective tax rate of ~~15.99%~~12.40% as of ~~August~~May 31, ~~2019~~2020 and a total tax expense of approximately ~~$3.2~~$2.4 million for the ~~nine~~six months ended ~~August~~May 31, ~~2019.~~2020. The Company’s effective tax rate is principally impacted by expected income inclusions under the GILTI tax regime, limitations imposed on the use of historical ~~NOLs,~~net operating losses, and interest expense limitations under IRC Sec. 264(a)(4) that ~~are expected to~~ apply when determining tested income for the GILTI inclusion. ~~As a result~~The GILTI inclusion is driven in large part by the Company’s allocable share of taxable income from the WE Investment. The Company coordinates with the manager of the WE Investment ~~(described below),~~to obtain reasonable estimates of the ~~Company must now rely on information from the Manager in order to reasonably forecast and project taxable income related to its distributive~~Company’s share of ~~White Eagle.~~taxable results. As the ~~forecasted~~estimated allocable share of taxable income from the WE investment represents a significant portion of the Company’s expected taxable income, the Company is currently working with the Manager to obtain reasonable forecasts that can be used for purposes of applying the annual effective tax rate method to computing the overall tax provision. As such, in accordance with ASC 740 principles, the Company’s tax provision recorded to date is based on actual results through ~~August~~May 31, ~~2019.~~2020. The Company believes this approach most fairly represents its income tax provision as of ~~August~~May 31, ~~2019.~~2020.

Based on the Company’s evaluation, a deferred tax valuation allowance was established against its net deferred tax assets. In its evaluation, management considers taxable loss carryback availability, expectations of sufficient future taxable income, trends in earnings, existence of taxable income in recent years, the future reversal of temporary differences, and available tax planning strategies that could be implemented, if required. Valuation allowances are established based on the consideration of all available evidence using a more likely than not standard. This valuation allowance was determined to be necessary as an offset to the full amount of the federal and state deferred tax asset. During the ~~nine~~three months ended ~~August~~May 31, ~~2019,~~2020, the Company does not expect that position to change and therefore is not recording any income tax benefit.

~~For~~Impact of Tax Reform

Beginning with the tax ~~years beginning after December 31, 2017 under certain circumstances, Section 245A enacted by~~year ended November 30, 2019, the ~~TCJA eliminated U.S. federal income tax on dividends received from foreign subsidiaries of domestic corporations under~~Company became subject to the Global Intangible Lowed-Taxed Income regime (referred to as "GILTI"), which is a ~~new participation exemption. However, the TCJA also created a new~~ tax on certain foreign ~~income under new Section 951A. Specifically, for tax years beginning after December 31, 2017,~~ income earned in excess of a deemed return on tangible assets held by a ~~CFC (the excess referred to as "GILTI") must generally be~~controlled foreign corporation. The GILTI is included asin U.S. taxable income on a current basis by its U.S. ~~shareholders. In general, the gross income inclusion~~shareholders and can generally be offset by a deduction ~~in an amount~~of up to 50% of the income inclusion (through the end of 2025, thereafter the deduction is reduced to 37.5%) subject to certain limitations.

The Company changed the tax year of its U.S. parent (Emergent Capital, Inc.) from December 31st to November 30th coupled with a concurrent change to the tax year of Lamington, its wholly-owned Irish subsidiary. The change was timely made by filing Form 1128, ~~Application to Adopt, Change, or Retain a Tax Year~~, in accordance with Rev. Proc. 2006-45 and resulted in a short tax year ended November 30, 2017. The Company timely filed federal and state tax returns for the short period ended November 30, 2017. As a result of the change in tax year, the Company is subject to GILTI for its first tax year beginning on December 1, 2018. Based on the Company’s ~~life settlement assets~~partnership interest in White Eagle that is held ~~within Ireland,~~through Lamington (which represents its principal business asset), its allocable share of taxable income is subject to the ~~net income generated from these activities qualify entirely as GILTI.~~

On January 10, 2018 the FASB provided guidance on how to account for deferred tax assets and liabilities expected to reverse in future years as GILTI. The FASB provided that a Company may either (1) elect to treat taxes due on future U.S. inclusions of GILTI ~~as a current-period expense when incurred or (2) factor such amounts into the Company’s measurement of its deferred taxes.~~regime. For ASC 740 purposes, the Company adopted an accounting policy to treat any future GILTI inclusion as a current-period expense instead of providing for U.S. deferred taxes on all temporary differences related to future GILTI items.

Palomino Transaction

On August 16, 2019, the WE Investment was consummated whereby White Eagle, an indirectly-owned entity of the Company, sold to Palomino a 72.5% limited partnership interest in White Eagle, consisting of newly issued and outstanding Class A and Class D interests. Pursuant to the agreement, Lamington ~~received~~retained 27.5% of the limited partnership interests of White Eagle, consisting of all of the newly issued and outstanding Class B interests. For U.S. income tax purposes, this transaction was treated as a contribution by White Eagle of its assets and liabilities to a ~~newly formed~~newly-formed partnership in exchange

for the 27.5% interest in White Eagle’s capital and profits. The Company recognized no gain or loss as a result of the transaction.

The Company and its subsidiary companies are subject to U.S. federal income tax, as well as to income tax in Florida and other states and foreign jurisdictions in which it operates.

(21) Subsequent Events

~~On September 16, 2019,~~In accordance with FASB ASC 855, Subsequent Events, the ~~Bankruptcy Court entered an order and final decree closing~~Company has evaluated subsequent events after the ~~White Eagle Chapter 11 Case.~~

consolidated balance sheet date of May 31, 2020. With the exception of COVID-19 as discussed in Note 1 "Description of Business", there were no events identified that would require additional disclosures to prevent the Company’s unaudited consolidated financial statements from being misleading.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity, and cash flows of our Company as of and for the periods presented below and should be read in conjunction with the financial statements and accompanying notes included with this Quarterly Report on Form 10-Q. This discussion contains forward looking statements that are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those discussed in or implied by forward looking statements as a result of various factors. See "Forward Looking Statements."

Impact of COVID-19 on the Company’s Business

The outbreak of COVID-19, which is a rapidly evolving situation, has adversely impacted global commercial activities. The Company does not believe that there is any significant impact to the Financial Statements as of May 31, 2020 as a result of the COVID-19 pandemic. The Company is monitoring the developments relating to COVID-19 and is coordinating its operational response based on existing business continuity plans and on guidance from global health organizations, relevant governments, and general pandemic response best practices.

Business Overview

Incorporated in Florida, Emergent Capital, through its subsidiaries, owns two life insurance policies, also referred to as life settlements, with a fair value of $1.3 million and an aggregate death benefit of approximately $12.0 million at August 31, 2019. Additionally, through a subsidiary, the Companyindirectly owns a 27.5% equity investment, having an estimated fair value of approximately ~~$132.3~~$150.2 million at ~~August~~May 31, ~~2019,~~2020, in White Eagle Asset Portfolio, LP ("White Eagle"), which was previously a wholly-owned subsidiary of the Company that holds a portfolio of life settlements. The Company primarily earns income through change in fair value and ~~death benefits from these two polices and change in fair value and~~ distributions from its equity investment in White Eagle.

~~The Company has incurred substantial losses and reported negative cash flows from operating activities of $8.5 million for the nine months ended August~~ At May 31, 2019 and $32.6 million for the nine months ended August 31, 2018. As of August 31, 2019, we had approximately $8.8 million of cash and cash equivalents and certificates of deposit of $508,000; of this amount, approximately $8.8 million is available to pay premiums on the two unencumbered2020 there were 513 policies ~~for which such expenses will approximate $45,000~~ in ~~2019 and other overhead expenses.~~

~~Liquidity~~

The Company’s ability to continue as a going concern is dependent on its ability to meet its liquidity needs through a combination of factors including but not limited to, the receipt of distributions from its investment in its equity investment in White Eagle Asset Portfolio, strategic capital market raises and cash on hand.

As of the filing date of this Form 10-Q, we had approximately $26.8 million of cash and cash equivalents inclusive of certificates of deposit of $511,000. In considering our forecast for the next twelve months with the current cash balance as of the filing of this Form 10-Q, the Company has sufficient resources to meet its liquidity needs for the foreseeable future.

The accompanying consolidated financial statements are prepared on a going concern basis and do not include any adjustments that might result from uncertainty about the Company’s ability to continue as a going concern.

~~White Eagle Revolving Credit Facility Events~~

~~Repayment and Termination of~~ the White Eagle ~~Revolving Credit Facility~~portfolio with death benefits of approximately $2.4 billion and weighted average life expectancy calculated based on death benefit of the insureds in the policies was 6.7 years.

Equity Investment in White Eagle

On August 16, 2019, the Company entered into a subscription agreement (the "Subscription Agreement") with Lamington ~~Road~~ ("Class B Limited Partner"), White Eagle, WEGP ("Withdrawing General Partner"), and Palomino JV, L.P. ("Palomino" or "Class A Limited Partner"~~), in connection with the commitment letter signed on June 22, 2019 with Jade Mountain Partners, LLC ("Jade Mountain"~~), pursuant to which White Eagle sold to Palomino 72.5% of its limited partnership interests, consisting of all of the newly issued and outstanding Class A and Class D interests, and WEGP sold to an affiliate of Jade Mountain Partners, LLC ("Jade Mountain") (the "Manager") all of its general partnership interests (collectively, the "WE Investment") for a purchase price of approximately $366.2 million and $8.0 million for the Class A and Class D interests, respectively. Pursuant to the Subscription Agreement, Lamington received 27.5% of the limited partnership interests of White Eagle, consisting of all of the newly issued and outstanding Class B interests in exchange for all of its previously owned White

Eagle limited partnership interests with a value of approximately $138.9 million on the closing date.

The ~~proceeds~~consummation of the ~~WE Investment were used to satisfy~~transaction under the Subscription Agreement resulted in ~~full (i)~~ the Company being a minority owner in White Eagle ~~Revolving Credit Facility ,~~ and ~~(ii) DIP Financing extended by CLMG Corp.,~~ as ~~Administrative Agent ("CLMG"),~~a result the entity is treated as ~~agent, and LNV, LNV Corporation, as Lender ("LNV"), to~~an equity investment, activities for our investment in White Eagle each in connection with the termination of the White Eagle Revolving Credit Facility and the release of the related liens on the collateral thereunder pursuant to a Master Termination Agreement dated as of August 16 2019 among WEGP, Lamington, White Eagle, Markley Asset Portfolio, LLC, CLMG, as administrative agent, LNV, as initial lender, Wilmington Trust, National Association, in its capacities as securities intermediary, custodian and agent, and Palomino (the "Master Termination Agreement"). The repayment and termination of the White Eagle Revolving Credit Facility and the termination of the DIP Financing, which had not been drawn against, were in accordance with the Plan of Reorganization for Lamington, WEGP and White Eagle approved by the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") with respect to the previously announced voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code of Lamington, WEGP and White Eagle (the "Chapter 11 Cases").

The WE Investment was consummated, and the White Eagle Revolving Credit Facility was paid off in full and terminated, on August 16, 2019. The payoff totaled $402.5 million, which included payment directly to CLMG by Palomino of $374.2 million and payment to CLMG by White Eagle of $28.3 million, collectively sufficient to repay, under the White Eagle Revolving Credit Facility, the outstanding principal of $368.0 million, accrued and unpaid interest of $21.3 million plus, under the Plan of Reorganization, an early payment amount due to LNV of $7.4 million and lender-allowed claims of $5.8 million. Of the $374.2 million purchase price, $8.0 million was allocated to the Class D interests which amount is to be repaid in accordance with the distribution terms of the amended and restated Limited Partnership Agreement of White Eagle.

~~White Eagle received proceeds of approximately $366.2 million towards the sale of 72.5% of its life settlement and recognize gains of approximately $21.3 million which~~ is included in ~~gains on sale~~Note 11 "Investment in Limited Partnership" of ~~life settlements in the condensed and consolidated financial statements.~~

~~See Note 5, "Condensed and Consolidated Financial Statements for Entities in Bankruptcy", to~~ the accompanying consolidated financial statements for further information.

During the ~~nine~~six months ended ~~August~~May 31, 2020, approximately $4.0 million was received by the Company for the minimum Class B interest monthly distribution. This amount is included in change in fair value of investment in limited partnership, net of distributions on the consolidated statements of operations.

During the six months ended May 31, 2020, the portfolio experienced maturities of 20 policies with face value of approximately $90.1 million and approximately $75.2 million was collected.

Litigation Settlement and Disposal of Life Settlement

On December 4, 2019 ~~White Eagle experienced maturity~~the Company and certain of 18its subsidiaries entered into a Settlement Agreement and Mutual Release (the "Settlement Agreement") with Sun Life Assurance Company of Canada ("Sun Life") and Wilmington Trust, N.A. as securities intermediary ("Wilmington Trust").

Pursuant to the Settlement Agreement, 31 life insurance policies with face ~~amounts~~ totaling ~~$100.4~~$163.5 million ~~resulting~~issued by Sun Life were canceled in exchange for a ~~net gain~~lump sum payment of $36.1 million. The settlement included two policies held by the Company outside of White Eagle with an aggregate face value of $12.0 million, 28 policies held by White Eagle with an aggregate face value of $141.5 million and one policy with a face value of $10.0 million in receivable for maturity for White Eagle. Of this amount, approximately $12.7 million was received by the Company, $13.4 million was paid to White Eagle and $10.0 million was paid to Wilmington Trust for the maturity receivable. With this settlement, the Company no longer owns any life insurance policies directly.

Liquidity

The Company has incurred substantial losses and reported negative cash flows from operating activities of $4.4 million for the six months ended May 31, 2020 and $6.2 million for the six months ended May 31, 2019. As of May 31, 2020, we had approximately $21.3 million of cash and cash equivalents and certificates of deposit of $515,000.

As of the filing date of this Form 10-Q, we had approximately $20.9 million of cash and cash equivalents inclusive of certificates of deposit of $517,000. The Company's 8.5% Senior Secured Notes with outstanding principal of approximately ~~$70.3 million. The gains related to these maturities are included in income from changes in the fair value of life settlements in the deconsolidated subsidiaries statements of operations~~$47.6 million becomes due on July 15, 2021. In considering our forecast for the ~~nine~~next twelve months ~~ended August 31, 2019. Proceeds from maturities totaling $92.5 million were received during~~and the ~~nine months ended August 31, 2019 and were used solely for the purposes permitted under the budget approved by the Bankruptcy Court including~~expected repayment of this debt, these facts, aggregated with the ~~outstanding debt under~~current cash balance as of the ~~White Eagle Revolving Credit Facility.~~filing for this Form 10-Q, create a substantial doubt of the Company’s ability to meet its financial needs. In considering the factors above, management plans to continue to operate our business while it pursues its restructuring plan. Management expects that, in connection with its proposed restructuring, the 8.5% Senior Secured Notes may be converted into a security with a later maturity date or otherwise refinanced.

~~See Note 12, "White Eagle Revolving Credit Facility", to the~~The accompanying consolidated financial statements ~~for further information.~~are prepared on a going concern basis and do not include any adjustments that might result from uncertainty about the Company’s ability to continue as a going concern.

~~Investment in Limited Partnership Events~~

In connection with the Investment, the White Eagle Limited Partnership Agreement of White Eagle was amended and restated (the "A&R LPA") to provide for the issuance of the Class A, B and D limited partnership interests, and for funding of an "Advance Facility" to maintain reserves sufficient to fund premiums, certain operating expenses of White Eagle and certain minimum payments to Lamington as the holder of the Class B interest holders. Pursuant to the A&R LPA, holders of Class A

interests are entitled to receive distributions on the amounts paid or contributed by them in relation to the Investment and funding of the Advance Facility after payment of premiums on the portfolio policies and other fees and expenses. The A&R LPA provides generally that holders of the Class A and Class B Interests receive distributions of proceeds of the assets of White Eagle based on their 72.5% and 27.5% ownership, respectively, after certain expenses and reserves are funded (including such minimum payments to Lamington totaling approximately $8.0 million per year for the first three (3) years and $4.0 million for the subsequent seven (7) years, provided that, commencing after year three (3), such minimum payments will be utilize to satisfy the Class D Return of $8.0 million, which was advanced at closing, plus the greater of $2.0 million or 11% per annum on such $8.0 million to the extent necessary to fully repay such Class D Return. The minimum payments to the Company will occur regardless of maturities with payments through the premium/expense reserve account when there are no maturity proceeds available for distribution as described below). However, the A&R LPA also provides that all payments to holders of the Class B interests (other than such minimum payments to Lamington during the first eight (8) years following the Closing Date) are fully subordinated to payments in respect of the minimum returns to holders of the Class A and Class D interests (including repayment of all amounts advanced in respect of the Advance Facility) and to any indemnification payments, if any, due to such holders and related indemnified persons pursuant to the indemnities afforded them in and in relation to the A&R LPA, Subscription Agreement, Master Termination Agreement and related documents. As of the closing of the Investment, Lamington Bermuda resigned as manager of the portfolio and was replaced by Jade Mountain or an affiliate thereof.

On August 16, 2019, Lamington also entered into (i) a pledge agreement (the "Pledge Agreement") pursuant to which it pledged the 27.5% limited partnership interests of White Eagle owned by it to Palomino and certain other secured parties in support of the payment and indemnification obligations described above, and (ii) an assumption agreement among White Eagle, Lamington, the Company and WEGP (the "Assumption Agreement") pursuant to which Lamington assumed all liabilities and obligations of White Eagle and WEGP as of the closing date of the Transactions, and Lamington, the Company and WEGP agreed to terminate, waive and release any intercompany debt, obligations and liabilities of White Eagle to Lamington, the Company and WEGP. On August 16, 2019, Emergent entered into an indemnification agreement (the "Indemnification Agreement") pursuant to which it indemnified Wilmington Trust, National Association against claims and liabilities that may arise in relation to policies that have matured prior to the Closing Date but as to which Wilmington Trust, National Association has historically held title as securities intermediary.

On August 16, 2019, Lamington's capital contribution to White Eagle was an estimated fair value of approximately $138.9 million. The Company performed a valuation at August 31, 2019 resulting in a value of approximately $132.3 million.

Critical Accounting Policies

Critical Accounting Estimates

The preparation of the financial statements requires us to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. We base our judgments, estimates and assumptions on historical experience and on various other factors that are believed to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions and conditions. We evaluate our judgments, estimates and assumptions on a regular basis and make changes accordingly. We believe that the judgments, estimates and assumptions involved in the accounting for income taxes, the valuation of life settlements and the valuation of ~~the debt owing under the White Eagle Revolving Credit Facility~~investment in limited partnership have the greatest potential impact on our financial statements and accordingly believe these to be our critical accounting estimates.

Fair Value Measurement Guidance

We follow ASC 820, Fair Value Measurements and Disclosures, which defines fair value as an exit price representing the amount that would be received if an asset were sold or that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the guidance establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. Level 1 relates to quoted prices in active markets for identical assets or liabilities. Level 2 relates to observable inputs other than quoted prices included in Level 1. Level 3 relates to unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Our investments in life insurance policies, investment in limited partnership and White Eagle Revolving Credit Facility debt are considered Level 3 as there is currently no active market where we are able to observe quoted prices for identical assets/liabilities and our valuation model incorporates significant inputs that are not observable. See Note 16, "Fair Value Measurements" of the notes to Consolidated Financial Statements for a discussion of our fair value measurement.

Fair Value Option

We have elected to account for life settlements using the fair value method. The fair value of the asset is the estimated amount that would be received to sell an asset in an orderly transaction between market participants at the measurement date. We calculate the fair value of the asset using a present value technique to estimate the fair value of its life settlements. The Company currently uses a probabilistic method of valuing life insurance policies, which the Company believes to be the preferred valuation method in the industry. The most significant assumptions are the estimates of life expectancy of the insured and the discount rate. See Note 10, "Life Settlements (Life Insurance Policies)" and Note 16, "Fair Value Measurements" of the notes to consolidated financial statements for further information.

We have elected to account for the investment in limited partnership using the fair value method. We calculate the fair value of the investment using a present value technique to estimate the fair value the limited partnership investment. The most significant assumptions are the estimates of life expectancy of the insured for the life insurance policies that are held by the partnership, the stipulated rate of return by the Class A Holder of the partnership, repayment of advances made by the Class A holder on the Company's behalf, distributions to the Company and the discount rate. See Note 11, "Investment in Limited Partnership" and Note 16, "Fair Value Measurements" of the notes to consolidated financial statements for further information.

We have elected to account for the debt under the White Eagle Revolving Credit Facility, which includes the interest in policy proceeds to the lender, using the fair value method. The fair value of the debt is the estimated amount that would have to be paid to transfer the debt to a market participant in an orderly transaction. We calculated the fair value of the debt using a discounted cash flow model taking into account the stated interest rate of the credit facility and probabilistic cash flows from the pledged policies. Considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, our estimates are not necessarily indicative of the amounts that we, or holders of the instruments, could realize in a current market exchange. The most significant assumptions are the estimates of life expectancy of the insured and the discount rate. The use of assumptions and/or estimation methodologies could have a material effect on the estimated fair values.

Income Recognition

Our primary sources of income are in the form of changes in fair value of life settlements, gains on life settlements, net, change in fair value of investment in limited partnership and distributions from limited partnership. Our income recognition policies for this source of income is as follows:

Changes in Fair Value of Life Settlements~~—When~~-When we acquire certain life insurance policies, we initially record these investments at the transaction price, which is the fair value of the policy for those acquired upon relinquishment or the amount paid for policies acquired for cash. The fair value of the investment in insurance policies is evaluated at the end of each reporting period. Changes in the fair value of the investment based on evaluations are recorded as changes in fair value of life settlements in our consolidated statement of operations. The fair value is determined on a discounted cash flow basis that incorporates current life expectancy assumptions. The discount rate incorporates current information about market interest rates, the credit exposure to the insurance company that issued the life insurance policy and our estimate of the risk premium an investor in the policy would require. The Company recognizes income from life settlement maturities on the date we are in receipt of death notice or verified obituary of the insured. This income is the difference between the death benefits and fair values of the policy at the time of maturity.

Change in Fair Value of Investment in Limited Partnership —- ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities requires that a reporting entity should account for its equity investments that are not consolidated or accounted for under the equity method at fair value, with changes to fair value recorded in current earnings. White Eagle previously valued its life settlement policies at fair value whose valuation are based on inputs that are both significant to the fair value measurement and unobservable. The Company now holds an equity investment of 27.5% in White Eagle whose only assets are these life ~~settlement.~~settlements. Additionally, the investment includes a mezzanine financing which the Company assumed at closing which repayment by, and ultimate distributions to, the Company are based on a prescribed waterfall with a guaranteed 11% return to the majority owner partner. ~~Given the nature of this ownership, fair value is not readily redeemable and inputs are not observable.~~ The Company recognizes income from monthly distribution from the limited partnership as prescribed by the Subscription Agreement.

Deferred Debt Costs

Deferred debt costs include costs incurred in connection with acquiring and maintaining debt arrangements. These costs are directly deducted from the carrying amount of the liability in the consolidated balance sheets, are amortized over the life of the related debt using the effective interest method and are classified as interest expense in the accompanying consolidated statement of operations. These deferred costs are related to the Company's ~~8.5% Convertible Notes,~~ 5% Convertible Notes and 8.5% Senior Secured Notes. The Company did not recognize any deferred debt costs on the White Eagle Revolving Credit Facility given all costs were expensed due to electing the fair value option in valuing the White Eagle Revolving Credit Facility.

Income Taxes

We account for income taxes in accordance with ASC 740, Income Taxes. Under ASC 740, deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of enacted tax laws. Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year. In providing for deferred taxes, we consider tax regulations of the jurisdictions in which we operate, estimates of future taxable income and available tax planning strategies. If tax regulations, operating results or the ability to implement tax-planning strategies varies, adjustments to the carrying value of the deferred tax assets and liabilities may be required. Valuation allowances are based on the "more likely than not" criteria of ASC 740.

The accounting for uncertain tax positions guidance under ASC 740 requires that we recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. We recognize interest and penalties (if any) on uncertain tax positions as a component of income tax expense.

On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act ("TCJA"). Effective for tax years beginning after December 31, 2017, under certain circumstances, Section 245A enacted by the TCJA eliminated U.S. federal income tax on dividends received from foreign subsidiaries of domestic corporations under a new participation exemption. However, the TCJA also created a new tax on certain taxed foreign income under new Section 951A. Specifically, income earned in excess of a deemed return on tangible assets held by a controlled foreign corporation (such excess referred to as Global Intangible Low-Taxed Income ("GILTI") ) must now generally be included as U.S. taxable income on a current basis by its U.S. shareholders. Based on the Company’s life settlement assets held through Lamington’s ownership share in the WE Investment, management expects the net income generated from these activities to qualify entirely as GILTI effective for its tax year beginning December 1, 2018. On January 10, 2018, the FASB provided guidance on how to account for deferred tax assets and liabilities expected to reverse in future years as GILTI. The FASB provided that a company may either (1) elect to treat taxes due on future U.S. inclusions of GILTI as a current-period expense when incurred or (2) factor such amounts into the Company’s measurement of its deferred taxes. For its reporting period ended December 31, 2017, the Company adopted an accounting policy to treat any future GILTI inclusion as a current-period expense instead of providing for U.S. deferred taxes on all temporary differences related to future GILTI items.

Stock-Based Compensation

We have adopted ASC 718, Compensation—Stock Compensation. ASC 718 addresses accounting for share-based awards, including stock options, restricted stock, performance shares and warrants, with compensation expense measured using fair value and recorded over the requisite service or performance period of the award. The fair value of equity instruments will be determined based on a valuation using an option pricing model that takes into account various assumptions that are subjective. Key assumptions used in the valuation will include the expected term of the equity award taking into account both the contractual term of the award, the effects of expected exercise and post-vesting termination behavior, expected volatility, expected dividends and the risk-free interest rate for the expected term of the award. Compensation expense associated with performance shares is only recognized to the extent that it is probable the performance measurement will be met.

Held-for-sale and discontinued operations

~~The Company reports~~We report a business as held-for-sale when management has approved or received approval to sell the business and is committed to a formal plan, the business is available for immediate sale, the business is being actively marketed, the sale is anticipated to occur during the ensuing year and certain other specified criteria are met. A business classified as held-for-sale is recorded at the lower of its carrying amount or estimated fair value less cost to sell. If the carrying amount of the business exceeds its estimated fair value, a loss is recognized. Depreciation is not recorded on assets of a business classified as held-for-sale. Assets and liabilities related to a business classified as held-for-sale are segregated in the Consolidated Balance Sheet and major classes are separately disclosed in the notes to the Consolidated Financial Statements commencing in the period in which the business is classified as held-for-sale. ~~The Company reports~~We report the results of operations of a business as discontinued operations if the business is classified as held-for-sale, the operations and cash flows of the business have been or will be eliminated from the ongoing operations of the Company as a result of a disposal transaction and ~~the Company~~we will not have any significant continuing involvement in the operations of the business after the disposal transaction. The results of discontinued operations are reported in Discontinued Operations in the Consolidated Statement of Operations for current and prior periods commencing in the period in which the business meets the criteria of a discontinued operation, and include any gain or loss recognized on closing or adjustment of the carrying amount to fair value less cost to sell. During the fourth quarter of 2013, ~~the Company~~we sold substantially all of our structured settlements business. The remaining balance of $2.4 million was written off as a result of ongoing restructuring plans in the fourth quarter of fiscal 2019 as the Company decided not to continue to pursue this line of investment. As a result, ~~the Company has~~we have classified ~~its~~our structured settlement operating results as discontinued operations.

Foreign Currency

The Company owns certain foreign subsidiaries formed under the laws of Ireland, Bahamas and Bermuda. These foreign subsidiaries utilize the U.S. dollar as their functional currency. The foreign subsidiaries' financial statements are denominated in U.S. dollars and therefore, there are no translation gains and losses resulting from translating the financial statements at exchange rates other than the functional currency. Any gains and losses resulting from foreign currency transactions (transactions denominated in a currency other than the subsidiaries' functional currency) are included in income. These gains and losses are immaterial to the Company's financial statements.

~~Deconsolidation~~Reorganization and Consolidation

On November 14, 2018 (the "Petition Date"), Lamington Road Designated Activity Company (formerly known as Lamington Road Limited), the Company’s wholly-owned indirect Irish subsidiary ("Lamington" or "Lamington Road DAC"), and White Eagle General Partner, LLC, the Company’s wholly-owned indirect Delaware subsidiary ("WEGP"), filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). Lamington is the limited partner and owns 99.99%, and WEGP is the general partner and owns 0.01%, of White Eagle. In its capacity as general partner, WEGP manages the affairs of White Eagle.

Lamington and its ~~subsidiaries’~~subsidiaries' (White Eagle and WEGP) filing ~~for reorganization~~of the Chapter 11 Cases was a reconsideration event for Emergent Capital to reevaluate whether consolidation of Lamington and its subsidiaries (White Eagle, WEGP and Lamington Road Bermuda ~~Limited~~Limited) (collectively, and ~~together~~ with Lamington, the ~~“Deconsolidated~~"Deconsolidated Entities") continued to be appropriate. Under ASC 810,Consolidation, specifically ASC 810-10-15, consolidation of a majority-owned subsidiary is precluded where control does not rest with the majority owners, for instance, where the subsidiary is in legal reorganization or bankruptcy. Accordingly, when a subsidiary files for bankruptcy, it is appropriate for the parent to deconsolidate the subsidiary. Under ASC 810, this loss of control would likely trigger a gain or loss for the parent as the parent would remeasure its retained noncontrolling investment at fair value. We assessed the inherent uncertainties associated with the outcome of the Chapter 11 reorganization process and the anticipated duration thereof, and concluded that it was appropriate to deconsolidate Lamington and its subsidiaries effective on the Petition Date. ~~Effective August 17, 2019, the entities were deemed to have emerged from bankruptcy and were no longer deconsolidated.~~

On June 19, 2019, the Bankruptcy Court entered an order confirming the Plan of Reorganization for the Chapter 11 Cases. The Plan of Reorganization implemented the Settlement Agreement and the DIP Financing. In addition, the Plan of Reorganization provided for the payment of all other allowed third party creditor claims in full, including allowed professional fees and taxes. The effective date of the Plan of Reorganization was June 19, 2019.

On August 16, 2019, the White Eagle Revolving Credit Facility was paid in full and terminated, additionally, payment was made to all White Eagle vendors and intercompany liabilities were contributed by Emergent. Lamington and WEGP had pledged their respective interests in White Eagle to secure its obligations under the White Eagle Revolving Credit Facility. With the termination of the facility, this pledge was released. There were no outstanding third party liabilities for either Lamington or WEGP at August 16, 2019 besides intercompany obligations to Emergent. Pursuant to ASC 810, Consolidation, management took the position that given that all third party claims had been satisfied in the case, consolidation of Lamington and WEGP as of August 17, 2019 was appropriate. However, the consummation of the transaction under the Subscription Agreement resulted in the Company being a minority owner in White Eagle, the entity was not reconsolidated but rather treated as an equity investment.

On September 16, 2019, ~~subsequent to the quarter end,~~ the Bankruptcy Court entered an order and a final decree closing the White Eagle Chapter 11 ~~Case. The~~Case and the Lamington and WEGP ~~case~~cases were ~~not yet dismissed as of the filing date of this Form 10-Q.~~

Although the final decree was filed after the quarter end, August 16, 2019 is considered to be the reconsideration date which is the date all material unresolved conditions precedent to the plan becoming binding are resolved. This date is also considered the consolidation date for both Lamington and WEGP given the pledge of their interest in White Eagle was also terminated and there were no outstanding third party liabilities pending.

~~ASU 2016-01,~~ ~~Recognition and Measurement of Financial Assets and Financial Liabilities~~ was effective for calendar year-end public business entities in 2018. Under the new guidance, a reporting entity should account for its equity investments that are not consolidated or accounted for under the equity method at fair value, with changes to fair value recorded in current earnings. Lamington's main subsidiary, White Eagle, carries its life settlements policies and debt under the White Eagle Revolving Credit Facility at fair value, these valuations are basedclosed on ~~inputs that are both significant to the fair value measurement and unobservable. As a result, the Company adopted ASU 2016-01 to value its investment in Lamington during the eleven months ended~~ November ~~30, 2018. The calculation was performed consistent with ASC 820,~~ ~~Fair Value Measurement~~ ~~with changes in fair value recorded in current earnings.~~25, 2019.

Related Party Relationship

Upon filing for Chapter 11 and the subsequent deconsolidation, transactions with Lamington are no longer eliminated in consolidation and are treated as related party transactions for Emergent ~~Capital up to~~Capital. On August ~~16, 2019.~~17, 2019 Lamington was reconsolidated and its transactions were eliminated in consolidation. See Note 5 "Condensed and Consolidated Financial Statements For Entities in Bankruptcy" for all transactions between Emergent Capital and Lamington.

Accounting Changes

Note 3, "Recent Accounting Pronouncements," of the Notes to Consolidated Financial Statements discusses accounting standards adopted in ~~2019,~~2020, as well as accounting standards recently issued but not yet required to be adopted and the expected impact of these changes in accounting standards. Any material impact of adoption is discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations and in the Notes to the Consolidated Financial Statements.

Leases

At lease inception, the Company determines whether an arrangement is or contains a lease. Operating leases are included in operating lease right-of-use ("ROU") assets and operating lease liabilities in the consolidated financial statements. ROU assets represent the Company’s right to use leased assets over the term of the lease. Lease liabilities represent the Company’s contractual obligation to make lease payments over the lease term. For operating leases, ROU assets and lease liabilities are recognized at the commencement date. The lease liability is measured as the present value of the lease payments over the lease term. The Company uses the rate implicit in the lease if it is determinable. When the rate implicit in the lease is not

determinable, the Company uses its incremental borrowing rate at the commencement date of the lease to determine the present value of the lease payments. Operating ROU assets are calculated as the present value of the remaining lease payments plus unamortized initial direct costs plus any prepayments less any unamortized lease incentives received. Lease terms may include renewal or extension options to the extent they are reasonably certain to be exercised. The assessment of whether renewal or extension options are reasonably certain to be exercised is made at lease commencement.

Selected Operating Data (dollars in thousands):


		Three Months Ended August 31,				Nine Months Ended August 31,				Three Months Ended May 31,				Six Months Ended May 31,
		2019		2018		2019		2018		2020		2019		2020		2019
End of Period — Policies Owned — Consolidated
Number of policies owned										—		2		—		2
Average age of insured										—		78.2		—		78.2
Average death benefit per policy										$	—	$	6,000	$	—	$	6,000
Average Life Expectancy — Calculated LE (Years)										—		11.8		—		11.8
Aggregate Death Benefit										$	—	$	12,000	$	—	$	12,000
Aggregate fair value										$	—	$	1,255	$	—	$	1,255
Monthly premium — average per policy										$	—	$	7.3	$	—	$	7.3
	��
White Eagle Portfolio — Deconsolidated
End of Period — Policies Owned
Number of policies owned		2		591		2		591		—		574		—		574
Average age of insured		78.4		84.1		78.4		84.1		—		84.8		—		84.8
Average death benefit per policy		$	6,000	$	4,739	$	6,000	$	4,739	$	—	$	4,718	$	—	$	4,718
Average Life Expectancy — Calculated LE (Years)		11.6		7.9		11.6		7.9		—		8.7		—		8.7
Aggregate Death Benefit		$	12,000	$	2,800,613	$	12,000	$	2,800,613	$	—	$	2,707,976	$	—	$	2,707,976
Aggregate fair value		$	1,254	$	575,837	$	1,254	$	575,837	$	—	$	475,551	$	—	$	475,551
Monthly premium — average per policy		$	7.7	$	13.8	$	7.7	$	13.8	$	—	$	15.5	$	—	$	15.5

Period Maturities
Number of policies matured		—		3		—		15		—		8		—		12
Average age of insured at maturity		—		89.2		—		89.2		—		85.8		—		85.5
Average life expectancy - Calculated LE (Years)		—		2.7		—		2.7
Average Life Expectancy — Calculated LE (Years)										—		7.4		—		6.9
Aggregate death benefit		$	—	$	14,250	$	—	$	68,185	$	—	$	45,605	—		$	68,606
Gains on maturity		$	—	$	7,115	$	—	$	35,114	$	—	$	34,608	—		$	50,301
Proceeds collected		$	—	$	20,500	$	—	$	52,304	$	—	$	18,342	—		$	32,342

White Eagle Portfolio - Deconsolidated*
Period Maturities
Investment in Limited Partnership
End of Period — Policies Owned
Number of policies owned										513		—		513		—
Average age of insured										85.7		—		85.7		—
Average death benefit per policy										$	4,699	$	—	$	4,699	$	—
Average Life Expectancy — Calculated LE (Years)										6.7		—		6.7		—
Aggregate death benefit*										$	2,410,376	$	—	$	2,410,376	$	—
Monthly premium — average per policy										$	16.9	$	—	$	16.9	$	—

Period Maturities*
Number of policies matured		6		—		18		—		11		—		20		—
Average age of insured at maturity		87.4		—		86.1		—		88.6		—		88.5		—
Average life expectancy - Calculated LE (Years)		3.6		—		5.9		—
Average Life Expectancy — Calculated LE (Years)										4.2		—		3.9		—
Aggregate death benefit		$	31,768	$	—	$	100,374	$	—	$	43,200	$	—	$	90,100	$	—
Gains on maturity		$	19,999	$	—	$	70,300	$	—	$	24,664	$	—	$	48,439	$	—
Proceeds collected		$	60,163	$	—	$	92,505	$	—	$	43,150	$	—	$	90,050	$	—

*~~Information for deconsolidation is included up~~Subject to ~~August 16, 2019~~waterfall distribution as described in Note 11, Investment in Limited Partnership

Results of Operations

The following is our analysis of the results of operations for the periods indicated below. This analysis should be read in conjunction with our financial statements, including the related notes to the financial statements.

On September 7, 2018, the Board of Directors adopted resolutions to change the Company’s fiscal year end, and therefore the Company and its direct and indirect subsidiaries changed their fiscal year ends, from December 31 to November 30, effective immediately. The Company filed a Transition Report on Form 10-KT in accordance with SEC rules and regulations for the fiscal period ended November 30, 2018 covering transactions from January 1, 2018 to November 30, 2018. This Form 10-Q cover the period June 1, 2019 to August 31, 2019 compared to June 1, 2018 to August 31, 2018. As ~~a result, the Form 10-Q will not be comparable to the results filed for the third quarter of 2018 covering July 1, 2018 to September 30, 2018.~~

~~Additionally, as~~ a result of our subsidiaries' Chapter 11 Cases, Lamington's and its subsidiaries' (White Eagle, WEGP and Lamington Road Bermuda Limited), financial results are included in the Company’s consolidated results through November 13, 2018, the day prior to the Petition Date. However, ASC 810, Consolidation ~~require~~ requires that an entity whose financial statements were previously consolidated with those of its parent that files for protection under the U.S. Bankruptcy Code, whether solvent or insolvent, generally must be prospectively deconsolidated from the parent and presented as an equity investment. Therefore, our 2019 results are not comparable with 2018, and the post-petition results are not included in our consolidated results for the nine months ended August 31, 2019 which ended August 16, 2019. The results of White Eagle represented the Company's core

business, and although the results are deconsolidated, the Company ~~will analyze~~analyzed significant activities for the deconsolidated subsidiaries up to the point of deemed closure of the bankruptcy case of August 16, 2019. Effective August 17, 2019, Lamington and WEGP are no longer deconsolidated.

On September 16, 2019, the Bankruptcy Court entered an order and final decree closing the White Eagle Chapter 11 Case, and on November 25, 2019, the Bankruptcy Court entered an order and final decree closing both of the Lamington and WEGP chapter 11 cases.

Our results of operations are discussed below in three parts: (i) our consolidated results of continuing operations for ~~2019~~2020 compared to ~~2018,~~2019, (ii) our results of deconsolidated subsidiaries for 2019, ~~up to August 16, 2019,~~ and (iii) our results of discontinued operations ~~2019~~2020 compared to ~~2018.~~

2019.

Results of Continuing Operations - Consolidated Subsidiaries

Three Months Ended ~~August~~May 31, ~~2019~~2020 Compared to Three Months Ended ~~August~~May 31, ~~2018~~2019

Net income from continued operations for the quarter ended ~~August~~May 31, ~~2019~~2020 was ~~$80.2~~$4.7 million as compared to a net loss of ~~$2.3~~$25.9 million for the same period last year. The following is our analysis for the period.


	Three Months Ended August 31,												Three Months Ended May 31,
	2019			2018			Change			% Change			2020		2019			Change			% Change
Income	$	86,858		$	5,557		$	81,301		1,463	%	increase	$	9,101	$	(18,754	)	$	27,855		(149	)%	increase
Expenses	6,662			4,756			1,906			40	%	increase	4,449		3,896			553			14	%	increase
(Benefit) provision for income taxes	(5		)	3,094			(3,099		)	(100	)%	decrease
Provision (benefit) for income taxes													—		3,218			(3,218		)	—	%	decrease
Net income (loss)	$	80,201		$	(2,293	)	$	82,494		(3,598	)%	decrease	$	4,652	$	(25,868	)	$	30,520		(118	)%	increase

Income for the three months ended May 31, 2020, includes approximately $2.0 million which represents distribution for investment in limited partnership. As a result of the WE Investment, the Company receives minimum class B interest monthly distributions equal to (i) for each month commencing prior to the third anniversary of the Effective Date, the greater of $667,000 and 1/12th of 1.50% of the Net Asset Value as determined by the most recent valuation report obtained on or prior to such Distribution Date and (ii) for each month commencing on or after the third anniversary of the Effective Date and prior to the tenth anniversary of the Effective Date, the greater of $333,000 and 1/12th of 0.75% of the net asset value as determined by the most recent valuation report obtained on or prior to such Distribution Date. The amount is included in change in fair value of investment in limited partnership, net of distributions on the consolidated statements of operations which shows an overall gain of approximately $9.0 million.

Income from continuing operations for the three months ended ~~August~~May 31, 2019 was a loss, which was significantly impacted by the consolidation of Lamington and related subsidiaries due to the deemed closure of the Chapter 11 Cases on August 16, 2019 with the repayment and termination of the White Eagle Revolving Credit Facility. Income for 2018 mainly includes net gain on maturity of $7.1 million which is attributable to three policies maturity.

~~Approximately $96.7 million included in income represents an increase of our investment in deconsolidated subsidiaries, the amount is reflected in current earnings as~~a negative change in fair value of investment in deconsolidated subsidiaries. On September 16, 2019, subsequent to the quarter end, the Bankruptcy Court entered an order and a final decree closing the White Eagle Chapter 11 Case. The Lamington and WEGP case were not yet dismissed as of the filing date of this Form 10-Q. However pursuant to ASC 810, ~~Consolidation~~, management took the position that given that all third party claims had been satisfied in the case, consolidation of Lamington and WEGP as of August 17, 2019 was appropriate. The Company further evaluated its investment at August 16, 2019 and recognized a gainsubsidiaries of approximately ~~$96.7 million, which amount is reflected in current earnings as change in~~$18.8 million. The fair value of ~~investment in deconsolidated subsidiaries. The amount is associated with gains incurred by~~$77.2 million had inherent estimates including, but not limited to, when Lamington ~~for~~and related subsidiaries would have emerged from bankruptcy, the ~~period up to August 16, 2019 in considering~~estimated discount rate, and the ~~proceeds received through~~value of the ~~transactions for~~debt under the ~~subscription agreement, the actual payoff of the~~then White Eagle Revolving Credit Facility, ~~and all~~as well as other ~~third party claims.~~factors inherent in the valuation process.

Total expenses from continuing operations for the three months ended ~~August~~May 31, ~~2019~~2020 were mainly comprised of interest expense of ~~approximately~~ $1.3 ~~million on the 5% Convertible Notes, $1.5~~ million on the 8.5% Senior Secured Notes, ~~and $22,000~~$1.2 million on the ~~8.5%~~5% Convertible ~~Notes.~~Notes, professional fees of $559,000 and personnel cost of $435,000.

Total expenses from continuing operations for the three months ended ~~August~~May 31, ~~2018~~2019 were mainly comprised of interest expense of approximately $1.5 million on the ~~White Eagle Revolving Credit Facility of $5.8 million,~~8.5% Senior Secured Notes, $1.3 million on the 5% Convertible Notes ~~$828,000 on the 8.5% Senior Secured Notes~~ and ~~$46,000~~$25,000 on the 8.5% Convertible ~~Notes; offset by a change in the fair value gain~~Notes.

Our income for the ~~White Eagle Revolving Credit Facility~~three months ended May 31, 2019 was impacted by income tax expense of ~~$7.0~~approximately $3.2 million.

See Note 20, "Income Taxes," to the accompanying consolidated financial statements for further information.

Change in fair value of life settlements (in thousands)

Three Months Ended August 31,
2019 2018 Change % Change
Change in fair value of life settlements $ (42 ) $ 5,404
$ (5,446 ) (101 )% decrease



	Three Months Ended May 31,
	2020		2019		Change			% Change
Change in fair value of life settlements	$	—	$	4	$	(4	)	(100	)%	decrease

~~During the three months ended August~~As of May 31, ~~2018, three life insurance~~2019, we owned two policies with ~~face amounts totaling $14.3 million matured. The net gain of these maturities was $7.1 million and is recorded as a change in~~an estimated fair value of $1.3 million. With the settlement of the Sun Life litigation we no longer own any life settlements in the consolidated statements of operations for the three months ended August 31, 2018. Of these maturities all served as collateral under the White Eagle Revolving Credit Facility. Proceeds from maturities totaling $20.6 million were received during the three months ended August 31, 2018. Approximately $12.8 million in policy proceeds were utilized to repay interest and credit facility expenses under the White Eagle Revolving Credit Facility during the three months ended August 31, 2018. There were no maturities for the consolidated entities for the three months ended August 31, 2019.

Other items impacting the change in fair value include updated life expectancies procured by the Company in respect to the insureds' lives and maturities. The updated life expectancy reports implied that in aggregate, the insureds’ health increased, therefore, lengthening their life expectancies relative to the prior life expectancies.

settlements. Of these two policies owned as of ~~August~~May 31, 2019, all were previously premium financed and ~~are~~were valued using discount rates that range from 13.25% to ~~15.25%~~14.75%.

~~As of August 31, 2019, we owned 2 policies with an estimated fair value of $1.3 million compared to 2 policies with an estimated fair value of $1.2 million at November 30, 2018.~~

See Note 16, "Fair Value Measurements," to the accompanying consolidated financial statements for further information.

Change in fair value of investment in limited partnership (in thousands)

Three Months Ended August 31,
2019 2018 Change % Change
Change in fair value of investment in limited partnership $ (5,821 ) $ —
$ (5,821 ) 100 % decrease



	Three Months Ended May 31,
	2020		2019		Change		% Change
Change in fair value of investment in limited partnership, net of distributions	$	9,000	$	—	$	9,000	100	%	increase

~~On August 16, 2019, Lamington's capital contribution to White Eagle was an estimated fair value of approximately $138.9 million.~~ The Company performed a valuation at ~~August~~May 31, ~~2019~~2020 resulting in a value of approximately ~~$132.3~~$150.2 million using an estimated discount rate if approximately ~~15.03%~~14.03%. This resulted in a change in fair value of approximately ~~$5.8~~$9.0 million, net of distributions of approximately $2.0 million for the three months ended ~~August~~May 31, ~~2019.~~2020.

See Note 16, "Fair Value ~~Measurement"~~Measurements", to the accompanying consolidated financial statements for further information.

Expenses (in thousands)


	Three Months Ended August 31,											Three Months Ended May 31,
	2019		2018			Change			% Change			2020		2019		Change			% Change
Interest expense	$	2,832	$	7,979		$	(5,147	)	(65	)%	decrease	$	2,473	$	2,775	$	(302	)	(11	)%	decrease
Change in fair value of White Eagle Revolving Credit Facility	—		(7,037		)	7,037			(100	)%	decrease
SG&A expenses	3,830		3,814			16			—	%	increase	1,976		1,121		855			76	%	increase
Total Expenses	$	6,662	$	4,756		$	1,906		40	%	increase	$	4,449	$	3,896	$	553		14	%	increase

Interest expense (in thousands)


	Three Months Ended August 31,										Three Months Ended May 31,
	2019		2018		Change			% Change			2020		2019		Change			% Change
White Eagle Revolving Credit Facility	$	—	$	5,844	$	(5,844	)	(100	)%	decrease
8.5% Convertible Notes	22		46		(24		)	(52	)%	decrease	$	—	$	25	$	(25	)	(100	)%	decrease
5% Convertible Notes	1,281		1,259		22			2	%	increase	1,166		1,275		(109		)	(9	)%	decrease
8.5% Senior Secured Notes	1,526		828		698			84	%	increase	1,307		1,471		(164		)	(11	)%	decrease
Other	3		2		1			50	%	increase	—		4		(4		)	(100	)%	decrease
Total Interest Expense	$	2,832	$	7,979	$	(5,147	)	(65	)%	decrease	$	2,473	$	2,775	$	(302	)	(11	)%	decrease



Florida		30-0663473
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)



	Page No.
PART I — FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)	5
Consolidated Balance Sheets as of ~~August~~May 31, ~~2019~~2020 and November 30, ~~2018~~2019	5
Consolidated Statements of Operations for the three and ~~nine~~six months ended ~~August~~May 31, ~~2019~~2020 and ~~2018~~2019	6
Consolidated Statements of Stockholders' ~~Deficit/Equity~~Deficit /Equity for the ~~nine~~six months ended ~~August~~May 31, ~~2019~~2020 and ~~2018~~2019	7
Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~August~~May 31, ~~2019~~2020 and ~~2018~~2019	8
Notes to Consolidated Financial Statements	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	6252
Item 3. Quantitative and Qualitative Disclosures About Market Risk	8272
Item 4. Controls and Procedures	8373

PART II — OTHER INFORMATION

Item 1. Litigation	8473
Item 1A. Risk Factors	8473
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	8473
Item 3. Defaults Upon Senior Securities	8473
Item 4. Mine Safety Disclosures	8473
Item 5. Other Information	8473
Item 6. Exhibits	8574


	August 31, 2019			November 30, 2018*			May 31, 2020			November 30, 2019*
	(Unaudited)						(Unaudited)
	(In thousands except share data)						(In thousands except share data)
ASSETS
Assets
Cash and cash equivalents	$	8,780		$	1,209		$	21,284		$	24,283
Certificates of deposit	508			500			515			511
Prepaid expenses and other assets	844			657			1,674			377
Operating lease asset (Note 18)							72			—
Deposits - other	1,377			1,377			1,377			1,377
Life settlements, at estimated fair value	1,254			1,172			—			1,297
Receivable for maturity of life settlements	17,768			—
Fixed assets, net	28			78			—			18
Investment in limited partnership, at estimated fair value (Note 11)	132,334			—			150,200			137,849
Investment in deconsolidated subsidiaries, at estimated fair value (Note 4)	—			128,795
Investment in affiliate	2,384			2,384
Deferred tax asset	—			576
Total assets	$	165,277		$	136,748		$	175,122		$	165,712
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Accounts payable and accrued expenses	$	2,093		$	2,446		$	951		$	1,651
Other liabilities	100			194			40			86
Interest payable - 8.5% Convertible Notes (Note 13)	—			37
8.5% Convertible Notes, net of discount and deferred debt costs (Note 13)	—			1,173
Operating lease liability (Note 18)							66			—
Interest payable - 5.0% Convertible Notes (Note 14)	169			1,116			1,007			1,116
5.0% Convertible Notes, net of discount and deferred debt costs (Note 14)	70,697			69,742			64,097			71,022
Interest payable - 8.5% Senior Secured Notes (Note 15)	1,091			628			865			854
8.5% Senior Secured Notes, net of deferred debt costs (Note 15)	44,042			34,170			46,207			45,675
Current tax liability	2,642			—			2,623			3,195
Total liabilities	120,834			109,506			115,856			123,599
Commitments and Contingencies (Note 18)
Stockholders’ Equity
Common stock (par value $0.01 per share, 415,000,000 authorized at August 31, 2019 and November 30, 2018; 158,659,803 issued and 158,051,803 outstanding as of August 31, 2019; 158,733,928 issued and 158,125,928 outstanding as of November 30, 2018)	1,587			1,587
Preferred stock (par value $0.01 per share, 40,000,000 authorized; 0 issued and outstanding as of August 31, 2019 and November 30, 2018)	—			—
Treasury Stock, net of issuance cost (608,000 shares as of August 31, 2019 and November 30, 2018)	(2,534		)	(2,534		)
Common stock (par value $0.01 per share, 415,000,000 authorized at May 31,2020 and November 30, 2019; 159,263,140 issued and 158,655,140 outstanding as of May 31, 2020; 158,365,275 issued and 157,757,275 outstanding as of November 30, 2019)							1,593			1,584
Preferred stock (par value $0.01 per share, 40,000,000 authorized; 0 issued and outstanding as of May 31, 2020 and November 30, 2019)							—			—
Treasury Stock, net of issuance cost (608,000 shares as of May 31, 2020 and November 30, 2019)							(2,534		)	(2,534		)
Additional paid-in-capital	334,488			334,198			334,620			334,576
Accumulated deficit	(289,098		)	(306,009		)	(274,413		)	(291,513		)
Total stockholders’ equity	44,443			27,242			59,266			42,113
Total liabilities and stockholders’ equity	$	165,277		$	136,748		$	175,122		$	165,712


	For the Three Months Ended August 31,						For the Nine Months Ended August 31,						Three Months Ended May 31,					Six Months Ended May 31,
	2019			2018			2019			2018			2020		2019			2020			2019
	(in thousands, except share and per share data)												(in thousands, except share and per share data)
Income
Change in fair value of life settlements (Notes 10 & 16)	$	(42	)	$	5,404		$	(37	)	$	19,299		$	—	$	4		$	—		$	6
Change in fair value of investment in limited partnership	(5,821		)	—			(5,821		)	—
Change in fair value of investment in limited partnership, net of distributions (Notes 11 and 16)													9,000		—			16,351			—
Change in fair value of investment in deconsolidated subsidiaries (Notes 4 & 16)	90,710			—			37,941			—			—		(18,804		)	—			(52,769		)
Gain on life settlements, net (Note 10)													—		—			743			—
Other income	2,011			153			2,028			396			101		46			10,817			93
Total income	86,858			5,557			34,111			19,695			9,101		(18,754		)	27,911			(52,670		)
Expenses
Interest expense	2,832			7,979			8,370			23,398			2,473		2,775			4,867			5,538
Change in fair value of White Eagle Revolving Credit Facility (Notes 12 & 16)	—			(7,037		)	—			(11,663		)
Extinguishment of debt													—		—			(2,815		)	—
Personnel costs	694			800			1,001			2,460			435		138			2,389			307
Legal fees	1,448			552			2,117			3,478			203		725			1,112			720
Professional fees	1,142			1,875			1,470			4,497			559		(57		)	1,416			278
Insurance	270			193			666			592			524		217			841			396
Other selling, general and administrative expenses	276			394			399			1,407			255		98			520			200
Total expenses	6,662			4,756			14,023			24,169			4,449		3,896			8,330			7,439
Income (loss) from continuing operations before income taxes	80,196			801			20,088			(4,474		)	4,652		(22,650		)	19,581			(60,109		)
(Benefit) provision for income taxes	(5		)	3,094			3,213			(136		)
Provision (benefit) provision for income taxes													—		3,218			2,428			3,218
Net income (loss) from continuing operations	$	80,201		$	(2,293	)	$	16,875		$	(4,338	)	$	4,652	$	(25,868	)	$	17,153		$	(63,327	)
Discontinued Operations:
Income (loss) from discontinued operations before income taxes	70			(17		)	36			(14		)	10		(16		)	(53		)	(33		)
(Benefit) provision for income taxes	—			—			—			—
Provision (benefit) provision for income taxes													—		—			—			—
Net income (loss) from discontinued operations	70			(17		)	36			(14		)	10		(16		)	(53		)	(33		)
Net income (loss)	$	80,271		$	(2,310	)	$	16,911		$	(4,352	)	$	4,662	$	(25,884	)	$	17,100		$	(63,360	)
Basic income (loss) per common share:
Continuing operations	$	0.51		$	(0.01	)	$	0.11		$	(0.03	)	$	0.03	$	(0.16	)	$	0.11		$	(0.40	)
Discontinued operations	$	—		$	—		$	—		$	—		$	—	$	—		$	—		$	—
Net income (loss) - basic	$	0.51		$	(0.01	)	$	0.11		$	(0.03	)	$	0.03	$	(0.16	)	$	0.11		$	(0.40	)
Diluted income (loss) per share:
Continuing operations	$	0.41		$	(0.01	)	$	0.10		$	(0.03	)	$	0.02	$	(0.16	)	$	0.09		$	(0.40	)
Discontinued operations	$	—		$	—		$	—		$	—		$	—	$	—		$	—		$	—
Net income (loss) - diluted	$	0.41		$	(0.01	)	$	0.10		$	(0.03	)	$	0.02	$	(0.16	)	$	0.09		$	(0.40	)
Weighted average shares outstanding:
Basic	156,968,470			158,305,635			156,949,425			157,919,215			157,648,168		156,960,046			157,608,707			156,939,797
Diluted	195,979,957			158,305,635			194,867,908			157,919,215			175,581,286		156,960,046			204,522,043			156,939,797



Title of each class	Trading Symbol(s)	Name of each exchange on which registered



~~Title of each class~~	~~Trading Symbol(s)~~	~~Name of each exchange on which registered~~


Nine Months Ended August 31, 2018
Six Months Ended May 31, 2019																			Six Months Ended May 31, 2019
	Common Stock				Treasury Stock					Additional Paid-in Capital			Accumulated Deficit			Total			Common Stock				Treasury Stock					Additional Paid-in Capital		Accumulated Deficit			Total
	Shares		Amount		Shares		Amount			Additional Paid-in Capital			Accumulated Deficit			Total			Shares		Amount		Shares		Amount			Additional Paid-in Capital		Accumulated Deficit			Total
	(in thousands, except share data)																		(in thousands, except share data)
Balance, December 1, 2017	156,515,399		$	1,565	(608,000	)	$	(2,534	)	$	333,631		$	(143,718	)	$	188,944
Balance, December 1, 2018																			158,733,928		$	1,587	(608,000	)	$	(2,534	)	$	334,198	$	(306,009	)	27,242
Net income/(loss)																			—		—		—		—			—		(37,476		)	(37,476		)
Stock-based compensation																			—		—		—		—			98		—			98
Balance, February 28, 2019																			158,733,928		$	1,587	(608,000	)	$	(2,534	)	$	334,296	$	(343,485	)	$	(10,136	)
Net income/(loss)	—		—		—		—			—			4,851			4,851			—		—		—		—			—		(25,884		)	(25,884		)
Stock-based compensation	2,000,000		20		—		—			121			—			141							—		—			97		—			97
Retirement of common stock	(40,000	)			—		—			(91		)	—			(91		)	(74,125	)	—		—		—			—		—			—
Balance, February 28, 2018	158,475,399		$	1,585	(608,000	)	$	(2,534	)	$	333,661		$	(138,867	)	$	193,845
Net income/(loss)	—		—		—		—			—			(6,893		)	(6,893		)
Stock-based compensation	150,000		1		—		—			122			—			123
Issue of common stock, net	25,000		—		—		—			9			—			9
Balance, May 31, 2018	158,650,399		$	1,586	(608,000	)	$	(2,534	)	$	333,792		$	(145,760	)	$	187,084
Net income/(loss)	—		—		—		—			—			(2,310		)	(2,310		)
Stock-based compensation	400,000		4		—		—			207			—			211
Retirement of common stock	(21,941	)			—		—			(4		)	—			(4		)
Balance, August 31, 2018	159,028,458		$	1,590	(608,000	)	$	(2,534	)	$	333,995		$	(148,070	)	$	184,981
Balance, May 31, 2019																			158,659,803		$	1,587	(608,000	)	$	(2,534	)	$	334,393	$	(369,369	)	$	(35,923	)



	As reported under previous accounting guidance		As reported under ASU 2016-02		Effect of change
Balance Sheet - November 30, 2019
Assets
Prepaid and other assets	$	377	353		24
Operating lease assets	—		132		132
Total assets	$	165,712	$	165,868	$	156

Liabilities
Other liabilities	$	86	39		(47		)
Operating lease liability	—		203		203
Total liabilities	123,599		123,755		156

Total stockholders' equity	42,113		42,113		—

Total liabilities and stockholders' equity	$	165,712	$	165,868	$	156

Net effect	$	—	$	—	$	—


Investment in Lamington at December 1, 2018	$	128,795	$	128,795
Increase in basis investment (see below)			1,151
Less: Change in fair value	37,941		(52,769		)
Investment in Lamington at August 16, 2019	$	166,736
Investment in Lamington at May 31, 2019			$	77,177


			Change in Fair Value							Increase/Decrease in Basis		Change in Fair Value
	November 30, 2018		December 1, 2018 to August 16, 2019			August 16, 2019		November 30, 2018		Six Months Ended May 31, 2019					May 31, 2019
Equity investment	$	66,251	$	(45,847	)	$	20,404	$	66,251	$	—	$	(66,251	)	$	—
Promissory notes	56,596		89,736			146,332		56,596		—		13,482			70,078
Other liabilities	5,948		(5,948		)	—		5,948		1,151		—			7,099
Total investment	$	128,795	$	37,941		$	166,736	$	128,795	$	1,151	$	(52,769	)	$	77,177


	August 31, 2019		November 30, 2018		May 31, 2020		May 31, 2019
	(Unaudited)				(Unaudited)
	(In thousands except share data)				(In thousands except share data)
ASSETS
Assets
Cash and cash equivalents	$	—	$	33,719	$	—	$	8,703
Prepaid expenses and other assets	—		68		—		606
Investment in life settlements, at estimated fair value	—		505,235		—		475,551
Receivable for maturity of life settlements	—		27,700		—		46,190
Total assets	$	—	$	566,722	$	—	$	531,050

LIABILITIES AND STOCKHOLDERS' DEFICIT/EQUITY
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued expenses	—		1,410		$	—	$	8,501
Other liabilities (subject to compromise)*	—		5,997		—		7,588
Revolving Credit Facility debt, at estimated fair value	—		346,671		—		394,570
Promissory notes payable (subject to compromise)*	—		137,813		—		146,393
Promissory notes interest payable (subject to compromise)*	—		8,580
Total liabilities	—		500,471		—		557,052

Share Capital (1 share of $1 authorized and issued)	—		—		—		—
Additional paid in capital	—		60,602		—		60,602
Accumulated deficit/retained earnings	—		5,649		—		(86,604		)
Total stockholders' deficit/equity	—		66,251		—		(26,002		)
Total liabilities and stockholders' equity	$	—	$	566,722	$	—	$	531,050



	Not Primary Beneficiary				Not Primary Beneficiary
	Non-consolidated VIE				Non-consolidated VIE- White Eagle
	Total Assets		Maximum Exposure To Loss		Total Assets		Maximum Exposure To Loss
August 31, 2019	$	2,384	$	2,384	$	132,334	$	132,334
November 30, 2018	$	2,384	$	2,384	$	—	$	—


	For the Three Months Ended August 31,					For the Nine Months Ended August 31,					Three Months Ended May 31,					Six Months Ended May 31,
	2019(1)		2018(2)			2019(3)		2018(4)			2020(1)		2019(2)			2020(3)			2019(2)
Income (loss) per share:
Numerator:
Net income (loss) from continuing operations	$	80,201	$	(2,293	)	$	16,875	$	(4,338	)	$	4,652	$	(25,868	)	$	17,153		$	(63,327	)
Net income (loss) from discontinued operations	70		(17		)	36		(14		)	10		(16		)	(53		)	(33		)
Numerator for basic EPS - net income (loss) attributable to common stockholders	$	80,271	$	(2,310	)	$	16,911	$	(4,352	)	$	4,662	$	(25,884	)	$	17,100		$	(63,360	)
Add back convertible notes interest	1,095		—			3,270		—			—					1,993			—
Numerator for diluted earnings per share - net income (loss) attributable to common stockholders	$	81,296	$	(2,293	)	$	20,145	$	(4,338	)	$	4,652	$	(25,868	)	$	19,146		$	(63,327	)
Basic income (loss) per common share:
Basic income (loss) from continuing operations	$	0.51	$	(0.01	)	$	0.11	$	(0.03	)	$	0.03	$	(0.16	)	$	0.11		$	(0.40	)
Basic income (loss) from discontinued operations	—		—			—		—			—		—			—			—
Basic income (loss) per share available to common shareholders	$	0.51	$	(0.01	)	$	0.11	$	(0.03	)	$	0.03	$	(0.16	)	$	0.11		$	(0.40	)
Diluted income (loss) per common share:
Diluted income (loss) from continuing operations	$	0.41	$	(0.01	)	$	0.10	$	(0.03	)	$	0.02	$	(0.16	)	$	0.09		$	(0.40	)
Diluted income (loss) from discontinued operations	—		—			—		—			—		—			—			—
Diluted income (loss) per share available to common shareholders	$	0.41	$	(0.01	)	$	0.10	$	(0.03	)	$	0.02	$	(0.16	)	$	0.09		$	(0.40	)
Denominator:
Basic	156,968,470		158,305,635			156,949,425		157,919,215			157,648,168		156,960,046			157,608,707			156,939,797
Diluted	195,979,957		158,305,635			194,867,908		157,919,215			175,581,286		156,960,046			204,522,043			156,939,797


(1)	The computation of diluted EPS does not include 85,000 shares of common stock underlying options, 100,000 shares ofunderlying stock appreciation rights and ~~2,000,000~~33,918,483 shares of common stock ~~underlying warrants,~~issuable upon conversion of the 5% Convertible Notes as the effect of their inclusion would have been anti-dilutive.



Remaining Life Expectancy (In Years)*	Number of Life Settlement Contracts	Fair Value		Face Value
0-1	6	$	24,221	$	28,796
1-2	12	30,828		46,390
2-3	31	72,343		126,402
3-4	37	57,874		139,447
4-5	46	77,719		217,450
Thereafter	454	242,251		2,217,430
Total	586	$	505,236	$	2,775,915



Remainder of 2019	$	45
2020	191
2021	222
2022	254
2023	286
Thereafter	4,989
	$	5,987


Common Stock Options	Number of Shares	Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value		Number of Shares	Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding Balance, December 1, 2018	85,000	$	6.94	1.50	$	—
Outstanding Balance, December 1, 2019							85,000	$	6.94	0.55	$	—
Options granted	—	—		—			—	—		—
Options exercised	—	—		—			—	—		—
Options forfeited	—	$	—	—			—	$	—	—
Options expired	—	—		—			—	—		—
Options outstanding, August 31, 2019	85,000	$	6.94	0.75	$	—
Exercisable at August 31, 2019	85,000	$	6.94	0.75
Unvested at August 31, 2019	—	—		—	$	—
Options outstanding, May 31, 2020							85,000	$	6.94	0.02	$	—
Exercisable at May 31, 2020							85,000	$	6.94	0.02
Unvested at May 31, 2020							—	—		—	$	—



Common Unvested Shares	Number of Shares
Outstanding Balance, December 1, ~~2018~~2019	~~1,400,000~~333,333
Granted	—1,000,000
Vested	(~~316,667~~333,333	)
Forfeited	—
Outstanding ~~August~~May 31, ~~2019~~2020	~~1,083,333~~1,000,000


													Three Months Ended May 31,						Six Months Ended May 31,
	Three Months Ended August 31,						Nine Months Ended August 31,						2020			2019			2020			2019
	2019			2018			2019			2018			(in thousands)
Total income	$	—		$	—		$	—		$	17		$	—		$	—		—			—
Total expenses	(70		)	18			(36		)	32			(10		)	16			53			33
Income (loss) before income taxes	70			(18		)	36			(15		)	10			(16		)	(53		)	(33		)
(Benefit) provision for income taxes	—			—			—			—			—			—			—			—
Net income (loss) from discontinued operations, net of income taxes	$	70		$	(18	)	$	36		$	(15	)	$	10		$	(16	)	$	(53	)	$	(33	)



Remaining Life Expectancy (In Years)	Number of Life Settlement Contracts	Fair Value		Face Value
0-1	—	$	—	$	—
1-2	—	—		—
2-3	—	—		—
3-4	—	—		—
4-5	—	—		—
Thereafter	2	1,254		12,000
Total	2	$	1,254	$	12,000



	Three Months Ended May 31, 2020		Six Months Ended May 31, 2020
Beginning balance	$	4,836	$	4,195

Distributions received
Collections account	46,114		72,981
Total distribution received	$	46,114	$	72,981

Less Payments:
Premiums and expenses	26,726		50,952
Class B monthly distribution	2,000		4,000
Total payments	$	28,726	$	54,952

Balance at May 31, 2020	$	22,224	$	22,224



~~Collection Account~~	~~Three Months Ended August 31, 2019~~		~~Nine Months Ended August 31, 2019~~
~~Priority~~	~~Amount~~				~~Use of Proceeds~~
~~First~~	$	—	$	—	~~Premium/Expense Reserve Account - to cover next three months of premiums and expense~~
~~Second~~	—		—		Class A Minimum Return Cumulative Amount*
~~Third~~	—		—		~~Minimum Class B Interest Monthly Distribution~~
~~Fourth~~	—		—		~~Re-balancing the Total Return Distributions with 72.5% to the Class A Limited Partner and 27.5% to Class B Limited Partner~~
~~Fifth~~	—		—		~~72.5% to the Class A Limited Partner and 27.5% to the Class B Limited Partner~~
	$	—	$	—



Collection Account	Three Months Ended May 31, 2020		Six Months Ended May 31, 2020
Priority	Amount				Use of Proceeds
First	$	46,114	$	72,981	Premium/Expense Reserve Account - to cover next three months of premiums and expense
Second	9,969		9,969		Class A Minimum Return Cumulative Amount*
Third	—		—		Minimum Class B Interest Monthly Distribution
Fourth	—		—		Re-balancing the Total Return Distributions with 72.5% to the Class A Limited Partner and 27.5% to Class B Limited Partner
Fifth	—		—		72.5% to the Class A Limited Partner and 27.5% to the Class B Limited Partner
	$	56,083	$	82,950



	Three Months Ended May 31, 2020		Six Months Ended May 31, 2020
Balance at start	$	27,500	$	13,726
Maturities	43,150		90,050
Less: proceeds received	42,100		75,226
Receivable at May 31, 2020	$	28,550	$	28,550



Year	Expected Premiums
2020	$	51,399
2021	103,815
2022	99,449
2023	93,168
2024	87,883
Thereafter	570,730
	$	1,006,444



LTV	Premiums, Interest & Other Fees	Principal	Distribution to White Eagle - 55%	Lender Participation - 45%
N/A	100%	—%	—%	—%
>65%	N/A	100%	—%	—%
50-65%	N/A	70%	16.5%	13.5%
35-50%	N/A	55%	24.8%	20.3%
0-35%	N/A	45%	30.3%	24.8%



Collection account balance at December 1, 2018	$	28,059
Face value collected in current quarter	60,163
Face value collected in prior quarters	32,342
Other collections *	2,575
	$	123,139

Expenses paid from the collection account Post-Petition
Premiums paid 2019	$	(65,905	)
Interest expenses	(28,331		)
Payment toward principal	(1,804		)
White Eagle credit facility expenses	(9,304		)
Refund of premium payments advanced by parent	(3,000		)
Lender allowed claim-Beal	(5,839		)
Transfers of remaining funds to Lamington	(8,956		)
	$	(123,139	)

Collection account balance at August 16, 2019**	$	—



	Three Months Ended August 31, 2018		Nine Months Ended August 31, 2018
Clause	Amount				Use of Proceeds
First:	$	84	$	251	Custodian and Securities Intermediary
Second:	—		—		White Eagle - Ongoing Maintenance Cost Reimbursable
Third:	—		—		Administrative Agent - Protective Advances
Fourth:	26		43		Administrative Agent - Administrative Agent Fee and Legal Expense Reimbursement
Fifth:	5,844		16,716		Administrative Agent - Accrued and Unpaid Interest
Sixth:	6,854		26,397		Administrative Agent - Required Amortization
Seventh:	—		—		Administrative Agent - Amortization Shortfall
Eighth:	—		340		Administrative Agent - Participation Interest
Ninth:	—		—		Reserved - $0
Tenth:	—		—		Administrative Agent Aggregate Unpaid Participation Interest
Eleventh:	—		—		Administrative Agent - Remaining Available Amount After Clause First to Tenth
Twelfth:	—		—		Wilmington Trust - Custodian and Securities Intermediary - Unpaid Fees
Thirteenth:	—		416		Borrower - Any Remaining Available Amount After Clause First to Twelfth
Total Distributions	$	12,808	$	44,163


	Level 1		Level 2		Level 3		Total Fair Value		Level 1		Level 2		Level 3		Total Fair Value
Assets:
Investment in limited partnership	$	—	$	—	132,334		$	132,334	$	—	$	—	$	150,200	$	150,200
Investment in life settlements	—		—		1,254		1,254
	$	—	$	—	$	133,588	$	133,588	$	—	$	—	$	150,200	$	150,200



Life Expectancy Months Adjustment	Value		Change in Value
+6	$	1,051	$	(203	)
-	$	1,254	$	—
-6	$	1,466	$	212



Carrier - Consolidated	Percentage of Total Fair Value		Percentage of Total Death Benefit		Moody’s Rating	S&P Rating
Sun Life Assurance Company of Canada	100	%	100	%	Aa3	AA



Weighted Average Rate Calculated Based on Death Benefit - Consolidated	Rate Adjustment		Value		Change in Value
14.42%	(0.50	)%	$	1,308	$	54
14.92%	—		$	1,254	$	—
15.42%	0.50	%	$	1,202	$	(52	)


Weighted Average Rate	Rate Adjustment		Value		Change in Value			Rate Adjustment		Value		Change in Value
13.53%								(0.50	)%	$	154,198	$	3,998
14.03%								—		$	150,200	$	—
14.53%	(0.50	)%	$	136,057	$	3,723		0.50	%	$	146,358	$	(3,842	)
15.03%	—		$	132,334	$	—
15.53%	0.50	%	$	128,766	$	(3,568	)



Life Settlements - Consolidated:
Balance, December 1, 2019	$	1,297
Sale of policies	(2,040		)
Gain on sale of life settlement	743
Change in fair value	—
Premiums paid	—
Balance, May 31, 2020	$	—
Changes in fair value included in earnings for the period relating to assets held at May 31, 2020	$	—


Life Settlements - Consolidated: :
Life Settlements - Consolidated:
Balance, December 1, 2018	$	1,172		$	1,172
Purchase of policies	—			—
Change in fair value	(37		)	6
Matured/lapsed/sold policies	—
Matured/lapsed/sold polices				—
Premiums paid	118			77
Balance, August 31, 2019	$	1,253
Changes in fair value included in earnings for the period relating to assets held at August 31, 2019	$	(37	)
Balance, May 31, 2019				$	1,255
Changes in fair value included in earnings for the period relating to assets held at May 31, 2019				$	6


Life Settlements - Deconsolidated:
Balance, December 1, 2018	$	505,235		$	505,235
Purchase of policies	—			—
Change in fair value	(16,841		)	(29,825		)
Receivable for maturity of life settlement write off (Note 18)	17,800
Policies sold	(344,845		)
Receivable for maturity of life settlement write off				17,800
Policies matured	(100,373		)	(68,606		)
Premiums paid	69,827			50,947
Transfer to investment in limited partnership	(130,803		)
Balance, August 31, 2019	—
Changes in fair value included in earnings for the period relating to deconsolidated assets held at August 31, 2019	$	—
Balance at, May 31, 2019				$	475,551
Changes in fair value included in earnings for the period relating to deconsolidated assets held at May 31, 2019				$	69,907

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