U.S. Federal Income Tax Matters

Set forth below is a brief discussion of certain U.S. federal income tax consequences to certain securityholders of Emergent Capital, Inc. (“Emergent”) who acquired securities in Lamington Road Designated Activity Company (“Lamington”) that should be treated as equity for U.S. federal income tax purposes in connection with the liquidation of Emergent (each, a “Former Emergent Securityholder”).

This summary does not discuss all U.S. federal income or other tax consequences that may be applicable to a Former Emergent Securityholder in connection with a distribution from Lamington nor does it discuss the U.S. federal income tax consequences to persons subject to special tax regimes.  Each Former Emergent Securityholder should consult with its own tax advisor regarding the U.S. federal, state, local and non-U.S. tax treatment to it from having owned securities of Emergent.

Emergent prior to its liquidation, included its gross taxable income for U.S. federal income tax purposes on a flow-through basis certain income from Lamington, its Irish subsidiary, referred to as “global intangible low-taxed income” (“GILTI”).  As a consequence of the inclusion of such GILTI in its gross income, had it not liquidated, Emergent would have been entitled to receive tax-free distributions from Lamington up to the amount of such prior GILTI inclusions. Such distributions, which are permitted to be received free of U.S. federal income tax, generally are referred to as “previously-taxed income” (“PTI”) and the amount of PTI which Emergent would have been entitled to receive as of immediately prior to its liquidation is referred to herein as the “PTI Amount”.

Although there is no direct authority on the matter, and hence it cannot be free from doubt, in connection with its liquidation, Emergent obtained a valuation for purposes of enabling the PTI to be allocated among the three classes of Lamington securities outstanding: the Class A Notes, the Class B Notes, and the “profit participating notes” held through the owner trust.  This allocation was done based on a third-party valuation advisor’s relative fair market values of the securities in each class as of April 7, 2021(i.e., the date of Emergent’s liquidation).  As a result of Emergent’s liquidation and distribution of Lamington securities, Former Emergent Securityholders should succeed to a portion of the PTI Amount.

Set forth below is the amount of PTI which should be allocated to each security of Lamington based on such relative valuation:

Class A: $519.00 per $1,000 face of Lamington Security

Class B: $404.00 per $1,000 face of Lamington Security

Profit Participating Notes: $0.045 per share

Please note that the above per security denominations are valid only for Lamington securities issued and outstanding as of April 7, 2021.  Lamington securityholders who acquire Lamington securities issued after such date, including pursuant to any payment-in-kind distributions made after April 7, 2021, would not have any PTI allocation with respect to such securities.   

Emergent will not provide any additional information regarding the amount of PTI allocated to any Former Emergent Securityholder or the Former Emergent Securityholder’s remaining share of the PTI Amount. As such, each Former Emergent Securityholder should keep records of the amount of distributions which it receives from Lamington that are attributable to PTI.  

This summary was prepared as of the date set forth above.  Emergent undertakes no responsibility to update this summary, including to reflect any change in law or fact.  As noted above, each Former Emergent Securityholder should consult with its own tax advisor regarding the U.S. federal, state, local and non-U.S. tax treatment to it from receiving distributions from Lamington.