SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended: ~~March~~June 3130, 2015

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

For the transition period from __________ to __________

Commission File Number 000-54945

SHENGDATECH LIQUIDATING TRUST

(Exact name of registrant as specified in its charter)

Nevada		~~30-6327638~~	30-6327638
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification Number)
(State or Other Jurisdiction of			(I.R.S. Employer
Incorporation or Organization)			Identification Number)
c/o Alvarez & Marsal Holdings, LLC, 425 Market Street, 18th Floor , San Francisco, California 94105
(Address of principal executive offices) (Zip Code)
	N/A
(Registrant’s telephone number, including area code)

c/o Alvarez & Marsal Holdings, LLC, 425 Market Street, 18th Floor , San Francisco, California 94105
(Address of principal executive offices) (Zip Code)
	N/A
(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes ¨ No

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

Large accelerated filer

Accelerated filer

Non-accelerated filer

(Do not check if smaller

reporting company)

Smaller reporting
company

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding as of ~~May~~August 121, 2015
Beneficial Interests in the Trust Established Under the Liquidating Trust Agreement		16,300

SHENGDATECH LIQUIDATING TRUST

FORM 10-Q

INDEX

		PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements		45
Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations		1011
Item 3. Qualitative and Quantitative Disclosures About Market Risk		1113
Item 4. Controls and Procedures		1213
Item 1. Legal Proceedings		1314
Item 1A. Risk Factors		1819
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		1819
Item 3. Defaults Upon Senior Securities		1819
Item 4. Mine Safety Disclosures		1819
Item 5. Other Information		1820
Item 6. Exhibits		1820
Signatures		1920

FORWARD-LOOKING STATEMENTS

This Report on Form 10-Q contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Reference is made in particular to the description of our plans and objectives for future operations, assumptions underlying such plans and objectives, and other forward-looking statements included in this report. Such statements may be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “believe,” “estimate,” “anticipate,” “intend,” “continue,” or similar terms, variations of such terms or the negative of such terms. Such statements are based on management’s current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements. Such statements address future events and conditions concerning, among others, capital expenditures, litigation, regulatory matters, liquidity and capital resources, and accounting matters. Actual results in each case could differ materially from those anticipated in such statements by reason of factors such as future economic conditions, legislative, regulatory and competitive developments in markets in which we operate, results of litigation, and other circumstances affecting our anticipated financial position.

As used in this Form 10-Q, “we,” “us,” and “our” refer to ShengdaTech Liquidating Trust which is also sometimes referred to as the “Trust.”

YOU SHOULD NOT PLACE UNDUE RELIANCE ON THESE FORWARD LOOKING ~~STATEMENTS~~

STATEMENTS

The forward-looking statements made in this report on Form 10-Q relate only to events or information as of the date on which the statements are made in this report on Form 10-Q. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this report and the documents that we reference in this report, including documents referenced by incorporation, completely and with the understanding that our actual future results may be materially different from what we expect or hope.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

SHENGDATECH LIQUIDATING TRUST

STATEMENT OF NET ASSETS AVAILABLE FOR LIQUIDATION

June 30, 2015 and December 31, 2014

(Liquidation Basis)

	March 31, 2015 (Unaudited)		December 31, 2014
	June 30, 2015 (Unaudited)		December 31, 2014
Assets
Cash and cash equivalents	$	1542,~~090,010~~970	$	1,775,609
Professional retainers		271,000		271,000
Other receivable		887,168		-
Other Receivables		2,759,535		-
Total assets		23,~~248~~573,~~178~~505		2,046,609
Liabilities
Payables and accrued liabilities		~~641~~648,~~494~~771		743,023
Estimated costs to complete liquidation		1,~~283~~875,~~248~~503		922,566
Total liabilities		12,~~924~~524,~~742~~274		1,~~655~~665,589
Net assets in liquidation	$	~~323~~1,~~436~~049,231	$	381,020

See accompanying notes to financial statements

SHENGDATECH LIQUIDATING TRUST

~~STATEMENTS~~STATEMENT OF ~~CHANGES~~LIQUIDATING ~~IN NET ASSETS IN LIQUIDATION~~ACTIVITIES

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2015 AND JUNE 30, 2014

(Liquidation Basis)

	For the three months ended						For the six months ended
	March 31, 2015 (Unaudited)			March 31, 2014 (Unaudited)
	June 30, 2015 (Unaudited)			June 30, 2014 (Unaudited)			June 30, 2015 (Unaudited)			June 30, 2014 (Unaudited)
(Decreases) Increases in net assets:
Increase in Other Receivable	$	887,168		$	-
Increase (decrease) in Other Trust Assets		1,872,367			(2,750,000	)		2,759,535			(2,750,000	)
Administrative expenses and professional fees paid		(685,599	)		(273,560	)
Administrative expenses and professional fees paid, net of recoveries		(547,040	)		1,631,431			(1,232,639	)		1,357,871
Accrued administrative expenses and professional fees		101,529			179,938
Changes in accrued administrative expenses and professional fees		(7,277	)		(68,438	)		94,252			111,501
Changes in estimated costs to complete liquidation		(~~360~~592,~~682~~255	)		~~207~~1,~~756~~187,007			(952,937	)		1,394,762
Increase (decrease) in net assets in liquidation		(57,584	)		114,134
Increase in net assets in liquidation		725,795			-			668,211			114,134
Net assets in liquidation - Beginning of the period		~~381~~323,~~020~~436			1,~~816~~930,~~796~~930			381,020			1,816,796
Net assets in liquidation – End of the period	$	~~323~~1,~~436~~049,231		$	1,930,930		$	1,049,231		$	1,930,930

See accompanying notes to financial statements

SHENGDATECH LIQUIDATING TRUST

NOTES TO FINANCIAL STATEMENTS

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

The ShengdaTech Liquidating Trust (the “Trust”) was formed pursuant to the First Amended Chapter 11 Plan of Reorganization (the “Plan”) of ShendgaTech, Inc. (the “Debtor” or “Company”). The Plan was confirmed on October 2, 2012 and became effective on October 17, 2012 (the “Effective Date”).

On the Effective Date, the Company automatically transferred to the Trust all of its right, title, and interest in and to all of the Trust Assets (defined to include all assets of the Company, including, without limitation, (i) cash in the Company’s bank account on the Effective Date, (ii) the Company’s equity interests in Faith Bloom Limited (“Faith Bloom”), a company formed under the laws of the British Virgin Islands, (iii) all claims held by the Company against Faith Bloom and Faith Bloom’s subsidiaries (the “PRC Subsidiaries”), (iv) the Company’s interest in certain directors and officers insurance policies, if transferable, and the proceeds thereof, (v) all Claims and causes of action held by the Company and (vi) any other assets of the Company that are recovered by the Trust and the proceeds thereof). The Trust will distribute the proceeds that are obtained from the Trust Assets to the Trust Beneficiaries (defined to include holders of Claims and Equity Interests under the Plan), in accordance with the distribution procedures and priorities set forth in the Plan.

Unlike an operating company, the Trust has no officers, directors or employees. Rather, the Trust is administered by the Liquidating Trustee, with consultation from the Liquidating Trust Advisory Board from time to time. The Trust does not engage in the conduct of a trade or business and is restricted from doing so based upon provisions of the Internal Revenue Code. The Trust also has no shareholders. It does have holders of beneficial interests in the Trust. Such holders include all creditors and former shareholders of the Company.

In accordance with the Trust Agreement and the Plan, the Trust, in its discretion, will pursue the Company’s outstanding litigation in the People’s Republic of China (the “PRC”); pursue any other litigation (including against the Company’s former officers, directors ~~and~~ and auditors); hold and ~~ultimately~~ sell, ~~the~~if possible, the Company’s shares in Faith Bloom; execute, process and facilitate available distributions to holders of claims (“Claims”) and equity interests (“Equity Interests”) under the Plan; and resolve disputed Claims and Equity Interests. The Trust remains subject to the jurisdiction of the Bankruptcy Court through the term of its existence.

BASIS OF PRESENTATION

The accompanying statement of net assets in liquidation at ~~March~~June 3130, 2015, which has been derived from unaudited interim financial statements which have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and footnotes required by accounting principles generally accepted in the United States of America (U.S. GAAP) for complete financial statements. The Trust believes all adjustments, normal and recurring in nature, considered necessary for a fair presentation have been included. The changes in net assets for the three and six months ended ~~March~~June 3130, 2015 are not necessarily indicative of the changes in net assets that ~~may~~ may be expected for the full year.

The Trust believes that, although the disclosures contained herein are adequate to prevent the information presented from being misleading, the accompanying interim financial statements should be read in conjunction with the Trust’s financial statements for the year ended December 31, 2014 included in Form 10-K filed on March 31, 2015.

These financial statements have been prepared based on the liquidation basis of accounting. Accordingly, the Trust is required to make estimates and assumptions that affect the reported amounts of assets at net realizable value and liabilities at anticipated settlement amounts, and the estimated costs of liquidating the assets and distributing the proceeds to holders of beneficial interests. These estimates are subject to change.

CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS

The Trust considers all highly liquid investments with original maturities of three months or less to be cash equivalents. ~~The Trust maintains one operating account with a balance in excess of federally insured limits. The balance at March 31, 2015 was entirely held in cash.~~

The Trust maintains one operating account with a balance in excess of federally insured limits. The balance at June 30, 2015 was entirely held in cash.

TRUST ASSETS

The net assets of the Trust are carried at estimated fair values. The primary assets of the Trust, which were transferred from the Debtor, are cash, shares in Faith Bloom, and contingent asset claims, such as claims against the former Directors and Officers of the Debtor, and claims against former accountants and other professionals. Because of the significant uncertainties associated with estimating the probability and timing of cash flows related to these claims, it is not practical to estimate their fair value until and unless actual settlements are reached. There can be no assurance that the Trust will realize any value of such contingent asset claims.

Faith Bloom, which is wholly owned, does not have operations and serves as a holding company and direct parent of the following entities formed under the laws of the PRC: Shandong Haize Nanomaterials Co., Ltd. (“Shandong Haize”), Shandong Bangsheng Chemical Co., Ltd. (“Shandong Bangsheng”), Shaanxi Haize Nanomaterials Co., Ltd. (“Shaanxi Haize”), Zibo Jiaze Nanomaterials Co., Ltd. (“Zibo Jiaze”) and Anhui Yuanzhong Nanomaterials Co., Ltd. (“Anhui Yuanzhong,” and together with Shandong Haize, Shandong Bangsheng, Shaanxi Haize, Zibo Jiaze, the “PRC Subsidiaries”). The Trust does not have control over the PRC Subsidiaries.

The Debtor’s and the Trust’s attempts to exercise control over the PRC Subsidiaries were previously thwarted by a deliberate and sustained pattern of conduct designed to limit the Trust’s legal and operational control over the PRC Subsidiaries. The Trust therefore commenced litigation in China to obtain legal control over the subsidiaries as well as to obtain possession of the books and records. The Trust has obtained judgments in each of the pending cases. The Trust has taken control of Shaanxi Haize, ~~and~~ is in the process of ~~working~~ completing a sale of Shaanxi Haize and is evaluating its options with counsel with respect to ~~enforce~~the enforcment of the other judgments. Because of the significant uncertainties associated with estimating the probability and timing of realizing value from the Faith Bloom equity (including the value generated through the sale of Shaanxi Haize and the value generated if any of the other factories are recovered), it is not practical to estimate its fair value.

The fair value of Trust assets is reassessed at least quarterly and adjustments to estimated fair values are reflected in the period in which they become known.

OTHER LIQUIDATION LIABILITEIS

Accounts payable and accrued liabilities are reflected at their estimated settlement amounts which, in the opinion of the Trust, approximate their fair value.

ESTIMATED COSTS TO COMPLETE LIQUIDATION AND LITIGATION

The estimated costs to complete liquidation and litigation represent the estimated cash costs of operating the Trust through ~~November~~March 3031, ~~2015~~2016. These costs, which include litigation costs, professional fees, and other related costs, are estimated based on various assumptions. ~~The estimated liquidation date has been extended to November 30, 2015 based on status of various asset recovery and litigation actions in China.~~ Given that there is inherent uncertainty in the estimation process, actual results could be materially different.

INCOME TAXES

The Trust is treated as a grantor trust and not a corporation. Accordingly, any income or loss of the Trust will not be taxable to the Trust but will be taxable to the holders of beneficial interests in the Trust, as if such holders had themselves realized the income or loss from their pro rata interest in the Trust assets.

USE OF ESTIMATES

Management of the Trust has made certain estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. Under the liquidation basis of accounting, assets and liabilities have been recorded at their estimated fair values. Given there is inherent uncertainty in the valuation process, the amounts actually realized or settled could be materially different from those reflected in the accompanying Management of the Trust has made certain estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. Under the liquidation basis of accounting, assets and liabilities have been recorded at their estimated fair values. Given there is inherent uncertainty in the valuation process, the amounts actually realized or settled could be materially different from those reflected in the accompanying consolidated financial statements.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

As of ~~May~~August 14, 2015, the Financial Accounting Standards Board (“FASB”) issued up to ASU 2015-07 06, which are not expected to have a material impact on the consolidated financial statements upon adoption.

2. CASH AND CASH EQUIVALENTS

The Trust maintains a majority of its ~~cash~~ cash balance in a single operating account in the United States in excess of federally insured limits. As of ~~March~~June 3130, 2015, the ~~cash~~ cash balance was $1542,~~090,010~~970. Of this balance, $1464,~~011,643~~603 was generally available cash held in the United States and $78,367 was held by Faith Bloom in accounts in the PRC over which Faith Bloom and the Trust have control.

3. PROFESSIONAL RETAINERS

The Trust has retained a number of professional services firms to assist with its duties and obligations. As of ~~March~~June 3130, 2015, three of these professional services firms kept retainers pursuant to their engagement letters totaling $271,000. These retainers will either be used to offset future professional fees and expenses or will be returned to the Trust.

4. OTHER ~~RECEIVABLE~~TRUST ASSETS

The net assets of the Trust are carried at estimated fair values.

As of ~~December~~June 3130, ~~2014,~~ the Trust continues to hold 100% of the equity in Faith Bloom. Faith Bloom, which is wholly owned, does not have operations and serves as a holding ~~company~~ company and direct parent of the PRC Subsidiaries. While all of the PRC Subsidiaries but Shandong Bangsheng are believed to be ~~operating~~ operating entities manufacturing a specialty additive known as nano-precipitated calcium carbonate, the Trust does not have control ~~over~~ over the PRC Subsidiaries, with the exception of Shaanxi Haize.

The Debtor and the Trust’s attempts to exercise control over the PRC Subsidiaries were previously thwarted by a deliberate and sustained pattern of conduct designed to limit the Trust’s legal and operational control over the PRC Subsidiaries. The Trust therefore commenced litigation in China to obtain legal control over the subsidiaries as well as to obtain possession of the books and records. The Trust has obtained judgments in each of the pending cases. The Trust has taken control of Shaanxi Haize, is in the process of completing a sale of Shaanxi Haize and is in the process of working with counsel to ~~enforce~~evaluate its options with respect to the enforcement of the other judgments. Because of the significant uncertainties associated with estimating the probability and timing of realizing value from the Faith Bloom equity (including the value generated through the sale of Shaanxi Haize and the value generated if any of the other factories are recovered), it is not practical to estimate its fair value.

On November 3, 2014, Faith Bloom gained physical possession of the Shaanxi Haize plant as a result of the Xianyang Court’s enforcement action. On February 2, 2015, Faith Bloom executed an Equity Transfer Agreement with Mr. Wang Xiaohong, ~~a third party~~ pertaining to the transfer of 100% of the equity interest of Shaanxi Haize held by Faith Bloom (the “Transaction”). ~~The total potential value of the Transaction, if finalized is RMB 15.2 million, before selling expenses.~~ It is uncertain whether the Transaction will be consummated given ongoing judicial enforcement action against Shaanxi Haize assets. Related to the Transaction, the Trust’s counsel holds a ~~non-refundable~~sales ~~deposit~~proceeds of ~~RMB5.5~~RMB11 million (the equivalent of USD$~~887~~1,~~168~~759,535) which is reflected asin Other ~~Receivable~~Receivables as of ~~March~~June 3130, 2015.

In connection with a recent settlement reached with certain of the insurance carriers that provided officer and director insurance coverage to ShengdaTech, Inc., the Trust will receive a settlement payment of $1,000,000 from such insurance carriers to settle certain coverage disputed and to reimburse the Trust for defense costs. A significant portion of this $1,000,000 will be used to pay outstanding legal fees and expenses incurred by the Trust’s counsel in pursuing litigation and defending litigation covered by such insurance policies. The $1,000,000 is reflected in Other Receivables on the Statement of Net Assets Available for Liquidation and the estimates for the associated outstanding legal fees and expenses are included in the estimated cost to complete liquidation.

5. PAYABLES AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities of $~~641~~648,~~494~~771 at ~~March~~June 3130, 2015 consist primarily of incurred but unpaid professional fees and expenses.

6. ESTIMATED COSTS TO COMPLETE LIQUIDATION AND LITIGATION

As of ~~March~~June 3130, 2015, the estimate of costs to complete the liquidation of the Trust Assets is $1,~~283~~875,~~248~~ 503 and such amount represents the estimated costs of operating the Trust through ~~November~~March 3031, ~~2015~~2016. These costs, which include litigation costs, professional fees, and other related costs, are estimated based on various assumptions. Given that there is inherent uncertainty in the estimation process, actual results could be materially different.

7. DISTRIBUTIONS

The Trust has not made any distributions since its inception on October 17, 2012.

8. CASH RECEIPTS AND DISBURSEMENTS

On the Effective Date, the Trust received cash in the amount of $4,928,564 (which excludes the $78,367 held by Faith Bloom). Since then the Trust received $2,750,000 in proceeds from settling a claim against KPMG Hong Kong. Between October 17, 2012 (inception) and ~~March~~June 3130, 2015, the Trust paid ~~out~~ out $67,~~676~~223,~~920~~961 to various Trust creditors including, $56,~~626~~173,~~442~~483 for Trust operating expenses and $1,050,478 for final fee applications of professionals retained in the Debtor’s Chapter 11 case and other opening Trust liabilities.

9. RELATED PARTY TRANSACTIONS

Alvarez & Marsal North America LLC (“A&M”) serves as financial advisor to the Trust. Michael Kang, the Liquidating Trustee, is a Managing Director at A&M. From Inception through ~~March~~June 3130, 2015, A&M has been paid $1,~~117~~399,~~766~~926 and has estimated unpaid fees and expenses of of $~~240~~75,000 which is included in payables and accrued liabilities.

10. SUBSEQUENT EVENTS

The Company has considered all events occurring through the date the financial statements have been issued, and has determined that there are no such events that are material to the financial statements.

910

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

The following discussion should be read in conjunction with our financial statements and notes thereto included elsewhere in this quarterly report. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results, or other developments. Forward-looking statements are based upon estimates, forecasts, and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by us, or on our behalf. We disclaim any obligation to update forward-looking statements.

Overview of Trust

The Trust was established pursuant to the First Amended Chapter 11 Plan of Reorganization, as Modified (the “Plan”), dated as of August 30, 2012, of ShengdaTech, Inc. (“SDTH” or the “Debtor”), which was confirmed by order of the United States Bankruptcy Court for the District of Nevada. The Trust became effective on October 17, 2012, the Plan’s effective date (the “Effective Date”). Any capitalized terms used herein and not otherwise defined will have those meanings set forth in the Plan.

The Trust is created on behalf of, and for the benefit of, the Liquidating Trust Beneficiaries, with an initial term of three years, subject to extension with approval of the Bankruptcy Court, and is intended to qualify as a “liquidating trust” for federal income tax purposes. The Liquidating Trust Beneficiaries are the holders of claims and equity interests under the Plan. The beneficial interests in the Trust (the “Trust Interests”) are not transferable except by will, intestate succession or operation of law.

The Plan provides that the Trust will wind-down the Debtor’s affairs and make periodic and final distributions of the proceeds of the Liquidating Trust Assets in accordance with the terms of the Plan. As set forth in the Plan, the Liquidating Trust Assets include all of the assets of the Debtor, including, without limitation, (i) cash in the Debtor’s bank account on the Effective Date, (ii) the Debtor’s equity interests in its wholly-owned subsidiary, Faith Bloom Limited (“Faith Bloom”), (iii) all claims held by the Debtor against Faith Bloom and Faith Bloom’s subsidiaries, Shandong Haize Nanomaterials Co., Ltd., Shandong Bangsheng Chemical Co., Ltd., Shaanxi Haize Nanomaterials Co., Ltd., Zibo Jiaze Nanomaterials Co., Ltd. and Anhui Yuanzhong Nanomaterials Co., Ltd (the “PRC Subsidiaries”), (iv) the Debtor’s interest in certain directors and officers insurance policies, if transferable, and the proceeds thereof, (v) all claims and causes of action held by the Debtor, and (vi) any other assets of the Debtor that are recovered by the Trust and the proceeds thereof.

On July 17, 2015, the U.S. Bankruptcy Court for the District of Nevada approved the Trust’s motion to approve the settlement agreement (the “D&O Settlement”) related to the “Oaktree Capital Management L.P. et al. v. Ironshore Indemnity, Inc., et al.” matter. Pursuant to the D&O Settlement, Federal and Ironshore (the “Insurance Carriers”) will pay a total of $7.9 million for the following (a) $1 million to the Liquidating Trust for payment of litigation costs (“Defense Costs”) incurred by the Liquidating Trust and to the extent any monies remain after payment of Defense Costs to fund the ongoing administration of the Trust or to the holders of Allowed Class 4 Claim; (b) $2.4 million to the Miller Trust Plaintiffs, and (c) $4.5 million to the Oaktree Plaintiffs. In exchange for the Payments, the Insurance Carriers, the Trust and the defendants in the Miller Trust and Oaktree litigations receive complete releases. See Part II, Item 1 – “Legal Proceedings” for a full description of this matter.

The Plan establishes, among other things, that the Trust will pursue litigation against the PRC Subsidiaries and prosecute certain other causes of action, hold and ultimately sell Faith Bloom’s shares in the PRC Subsidiaries, pursue any objections to claims or equity interests, execute the provisions governing distributions to holders of allowed claims or allowed equity interests and facilitate the process for resolving disputed claims or disputed equity interests filed against the Debtor.

Discussion and Analysis

Reference is made to the Financial Statements of the Trust as of ~~March~~June 3130, 2015 and for the three and six month periods ending ~~March~~June 3130, 2015 and ~~March 31,~~June 30, 2014 and the related notes thereto (the “Trust Financial Statements”), which are attached to this Quarterly Report on Form 10-Q. The following information concerning the Trust’s financial performance and condition should be read in conjunction with the Trust Financial Statements.

This discussion and analysis of the Trust’s net assets in liquidation and changes in net assets in liquidation are based upon the Trust Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America and in accordance with the liquidation basis of accounting. During preparation of these consolidated financial statements, the Trust is required to make estimates and assumptions that affect the reported amounts of assets at estimated fair value, the reported liquidation liabilities, the estimated liquidating costs, the resolution of current and potential litigation and the fair value of and related disclosure of contingent assets and liabilities. On an on-going basis, the Trust evaluates and updates its estimates and assumptions. The Trust bases its estimates and assumptions on historical experience and on various other assumptions that the Trust believes are reasonable under the circumstances. The basis for making judgments about the fair value of assets and liquidation liabilities is not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Comparison of three months ended ~~March~~June 3130, 2015 and 2014

For the three months ended ~~March~~June 3130, 2015, the Trust incurred costs of $~~584~~547,~~070~~040 versus net cash received of $931,~~621~~631,431 during the three months ended June ~~March 31~~30, 2014. The increase in overall costs incurred is due primarily to the payment of fees related to on going work to recover Trust ~~trust assets~~Assets. For the three months ended ~~March~~June 3130, 2015, net assets in liquidation ~~decreased~~increased by $57725,~~584~~795 and ended the period at $~~323~~1,~~436~~049,231, compared to the three months ended ~~March~~June 3130, 2014 when net assets in liquidation ~~increased~~remained ~~$114,134~~unchanged and ended the period at $1,930,930.

During the three month periods ended ~~March~~June 3130, 2015 and ~~March~~June 3130, 2014, the Trust made payments on costs to complete the liquidation and did not make ~~any~~ any distributions to holders of Trust Interests.

AsComparison of ~~March~~six ~~31,~~months ~~2015, the~~ended ~~Trust’s cash and cash equivalents totaled $1,090,010 and the Trust had assets valued at $887,168. At the same date, the~~June ~~Trust had accrued liabilities of $641~~30,~~494~~ 2015 and ~~estimated costs to complete the liquidation of $1,283,248.~~2014

For the six months ended June 30, 2015, the Trust incurred costs of $1,232,639 versus net cash received of $1,357,871 during the six months ended June 30, 2014. The increase in overall costs incurred is due primarily to the payment of fees related to on going work to recover Trust Assets. For the six months ended June 30, 2015, net assets in liquidation increased by $668,211 and ended the period at $1,049,231, compared to the six months ended June 30, 2014 when net assets in liquidation increased $114,134 and ended the period at $1,930,930.

During the six month period ended June 30, 2015 and June 30, 2014, the Trust made payments on costs to complete the liquidation and did not make any distributions to holders of Trust Interests.

As of June 30, 2015, the Trust’s cash and cash equivalents totaled $542,970, it held retainers paid to professionals of $271,000 and had other receivables valued at $2,759,535. At the same date, the Trust had accrued liabilities of $648,771 and estimated costs to complete the liquidation of $1,875,503.

Off-Balance Sheet Arrangements

We have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to its shares and classified as shareholder’s equity or that are not reflected in its consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to it or engages in leasing, hedging or research and development services with it.

Critical Accounting Estimates

Management has made certain estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. Under the liquidation basis of accounting, assets and liabilities have been recorded at their estimated fair values. Given that there is inherent uncertainty in the valuation process, the amounts actually realized or settled could be materially different from those reflected in the accompanying consolidated financial statements.

Recently Issued Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective accounting standards if currently adopted could have a material effect on the accompanying financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our Trustee (who is our Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer), of the effectiveness of the design of our disclosure controls and procedures (as defined by Exchange Act Rules 13a-15(e) or 15d-15(e)) as of ~~March~~June 3130, 2015, pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were not effective as of ~~March~~June 3130, 2015 in ensuring that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s (the “SEC”) rules and forms. This conclusion is based on findings that constituted material weaknesses. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s interim financial statements will not be prevented or detected on a timely basis.

In performing the above-referenced assessment, our management identified the following material weaknesses:

We did not perform an entity level risk assessment to evaluate the implication of relevant risks on financial reporting, including the impact of potential fraud-related risks and the risks related to non-routine transactions, if any, on our internal control over financial reporting. Lack of an entity-level risk assessment constituted an internal control design deficiency which resulted in more than a remote likelihood that a material error would not have been prevented or detected, and constituted a material weakness.

ii)

We have not achieved the optimal level of segregation of duties relative to key financial reporting functions.

Our management feels the weaknesses identified above have not had any material effect on our financial results.

Our management team will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and is committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Changes in Internal Controls Over Financial Reporting

There were no changes in our internal controls over financial reporting that occurred during the quarterly period ended ~~March~~June 3130, 2015 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within any company have been detected.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

Shaanxi Haize Nanomaterials Co., Ltd. (“Shaanxi Haize”)

On December 22, 2011, Faith Bloom, through its Chinese counsel, the Jun He Law Offices (“Jun He”), filed a Statement of Claims with the Intermediate People’s Court of Xianyang, Shaanxi Province (the “Xianyang Court”). Defendants listed in the Statement of Claims include Li Fu, the former general manager and former legal representative of Shaanxi Haize, Ma Zhaowei, a former director of Shaanxi Haize, Chen Xukui, a former director of Shaanxi Haize and Li Shujin, a former director of Shaanxi Haize (Li Fu, Ma Zhaowei, Chen Xukui, and Li Shujin collectively, the “Shaanxi Haize Defendants”).

The Statement of Claims’ demands for relief are: (i) the immediate cessation of the Shaanxi Haize Defendants’ infringement of Shaanxi Haize’s interests; (ii) transfer of all Shaanxi Haize’s seals, licenses (including business license), financial records, lists of assets, certificates of ownership, employment records, and other records to Faith Bloom; (iii) the Shaanxi Haize Defendants’ assistance in amending records maintained at the applicable Administrations of Industry and Commerce (the “AIC”), including assistance in the registration of a new general manager and legal representative appointed by Faith Bloom; and (iv) litigation costs.

The hearing before the Xianyang Court took place on January 24, 2013 and a verdict was issued on April 24, 2013. The verdict held in favor of Faith Bloom on demands (i), (ii) and (iii), referenced above. In early June 2013, Jun He was notified by the Xianyang Court of Li Fu’s appeal of the Xianyang Court’s verdict. The appellate hearing took place before the Shaanxi Province Highest People’s Court on October 9, 2013. As a result of Li Fu’s failure to appear, however, the appellate hearing was held on December 10, 2013. Subsequent to the December 10, 2013 appellate hearing, Li Fu withdrew his appeal, making the Xianyang Court’s verdict enforceable. On November 3, 2014, Faith Bloom gained physical possession of the Shaanxi Haize plant as a result of the Xianyang Court’s enforcement action. On February 2, 2015, Faith Bloom executed an Equity Transfer Agreement with Mr. Wang Xiaohong pertaining to the transfer of 100% of the equity interest of Shaanxi Haize held by Faith Bloom (the “Transaction”). It is uncertain whether the Transaction will be consummated given ongoing judicial enforcement action against Shaanxi Haize assets.

Shandong Haize Nanomaterials Co., Ltd. (“Shandong Haize”)

On March 19, 2012, Faith Bloom, through Jun He, filed a Statement of Claims against Du Lei, the former general manager and former legal representative of Shandong Haize, with the Intermediate People’s Court of Tai’an, Shandong Province (the “Tai’an Court”).

The Statement of Claims’ demands for relief are: (i) the immediate cessation of Du Lei’s illegal possession and control of Shandong Haize’s chops, licenses and certificates; (ii) the return of Shandong Haize’s chops, certificates, and licenses to Faith Bloom; (iii) Du Lei’s assistance in amending records maintained at the applicable AIC, including assistance in the registration of a new general manager and legal representative appointed by Faith Bloom; and (iv) litigation costs.

On May 22, 2013, Du Lei filed a petition in the Tai’an Court challenging the Tai’an Court’s jurisdiction over the matter. Du Lei’s petition was rejected by the Tai’an Court on June 27, 2013. In August 2013, Jun He received notice of Du Lei’s appeal of the Tai’an Intermediate People’s Court’s finding that it has proper jurisdiction over the case to the Shandong Province Highest People’s Court. On March 24, 2014, the Shandong Province Highest People’s Court found that the Tai’an Court has original jurisdiction over the matter. The hearing before the Tai’an Court took place on May 23, 2014 and a verdict was issued on June 16, 2014. The verdict held in favor of Faith Bloom on demands (ii) and (iii) referenced above. Du Lei appealed the Tai’an Court’s verdict. An appellate hearing before the Shandong Province Highest People’s Court took place on December 22, 2014, which resulted in the Shandong Province Highest People’s Court affirming the Tai’an Court’s verdict. Faith Bloom is working through its Chinese counsel to enforce the verdict.

Shandong Bangsheng Chemical Co., Ltd. (“Shandong Bangsheng”)

On March 19, 2012, Faith Bloom, through Jun He, filed a Statement of Claims against Chen Xukui, the former general manager and former legal representative of Shandong Bangsheng, with the Tai’an Court.

The Statement of Claims’ demands for relief are: (i) the immediate cessation of Chen Xukui’s illegal possession and control of Shandong Bangsheng’s chops, licenses and certificates; (ii) the return of Shandong Bangsheng’s chops, certificates, and licenses to Faith Bloom; (iii) Chen Xukui’s assistance in amending records maintained at the applicable AIC, including assistance in the registration of a new general manager and legal representative appointed by Faith Bloom; and (iv) litigation costs.

On May 22, 2013, Chen Xukui filed a petition in the Tai’an Court challenging the Tai’an Court’s jurisdiction over the matter. Chen Xukui’s petition was rejected by the Tai’an Court on June 27, 2013. In August 2013, Jun He received notice of Chen Xukui’s appeal of the Tai’an Court’s finding that it has proper jurisdiction over the case to the Shandong Province Highest People’s Court. On March 24, 2014, the Shandong Province Highest People’s Court found that the Tai’an Court has original jurisdiction over the matter. The hearing before the Tai’an Court took place on May 23, 2014 and a verdict was issued on June 16, 2014. The verdict held in favor of Faith Bloom on demands (ii) and (iii) referenced above. Chen Xukui appealed the Tai’an Court’s verdict. An appellate hearing before the Shandong Province Highest People’s Court took place on December 22, 2014, which resulted in the Shandong Province Highest People’s Court affirming the Tai’an Court’s verdict. Faith Bloom is working through its Chinese counsel to enforce the verdict.

Zibo Jiaze Nanomaterials Co., Ltd. (“Zibo Jiaze”)

On July 27, 2012, Faith Bloom, through Jun He, filed a Statement of Claims with the Zibo New and High Tech Zone Court, Shandong Province (the “Zibo Court”). Defendants listed in the Statement of Claims include Xu Xiqing, the former executive director of Zibo Jiaze, Chi Fei, the former general manager and legal representative of Zibo Jiaze, and Zhao Tonglei, the former supervisor of Zibo Jiaze (Xu Xiqing, Chi Fei, and Zhao Tonglei collectively, the “Zibo Jiaze Defendants”).

The Statement of Claims’ demands for relief are: (i) the return of all Zibo Jiaze’s seals, licenses (including business license), and records to Faith Bloom; (ii) the Zibo Jiaze Defendants’ assistance in amending records maintained at the applicable AIC, including assistance in the registration of a new general manager, legal representative, and supervisor appointed by Faith Bloom; and (iii) litigation costs.

The hearing before the Zibo Court took place on May 24, 2013 and a verdict was issued on August 10, 2013. The verdict held in favor of Faith Bloom on demands (i) and (ii) referenced above. The Zibo Jiaze Defendants appealed the Zibo Court verdict. A hearing before the Zibo Intermediate People’s Court, the appellate court, took place on March 10, 2014. The Zibo Intermediate People’s Court affirmed the Zibo Court’s verdict on June 3, 2014. Faith Bloom is working through its Chinese counsel to evaluate its options to enforce the verdict.

Anhui Yuanzhong Nanomaterials Co., Ltd.(“Anhui Yuanzhong”)

On December 23, 2011, Faith Bloom, through Jun He, filed a Statement of Claims against Chen Bo, the former general manager and legal representative of Anhui Yuanzhong, with the Hefei New and High Tech Zone Court, Anhui Province (the “Hefei Court”).

The Statement of Claims’ demands for relief are: (i) the immediate cessation of Chen Bo’s infringement of Anhui Yuanzhong’s interests; (ii) transfer of all Anhui Yuanzhong’s seals, licenses (including business license), financial records, lists of assets, certificates of ownership, employment records, and other records to Faith Bloom; (iii) Chen Bo’s assistance in amending records maintained at the applicable AIC, including assistance in the registration of a new general manager, legal representative, and executive director appointed by Faith Bloom; (iv) transferring control of all the assets of Anhui Yuanzhong, including but not limited to bank deposits, cash, machinery, equipment, raw materials, spare parts, products, vehicles, buildings, and other relevant assets to Faith Bloom; and (v) litigation costs.

The Statement of Claims was accepted by the Hefei Court on the filing date, formally commencing the litigation process. Around the same time, defendant Chen Bo filed an appeal challenging the Hefei Court’s jurisdiction over the action. On May 24, 2012, the Intermediate People’s Court of Hefei, Anhui Province, affirmed the Hefei Court’s finding that the Hefei Court had jurisdiction over the action.

The hearing before the Hefei Court took place on November 12, 2012 and a verdict was issued on December 13, 2012. The verdict held in favor of Faith Bloom on demands (i) and (v), referenced above, and held partially in favor of Faith Bloom on demands (ii) and (iii), referenced above. On April 3, 2013, Jun He was notified by the Hefei Court of Chen Bo’s appeal of the Hefei Court’s verdict. ~~The~~ The hearing before the Intermediate People’s Court of Hefei took place on September 4, 2013. The Intermediate People’s Court of Hefei has yet to issue a verdict on the appeal. The Intermediate People’s Court of Hefei, the appellate court, ~~affirmed~~ affirmed the Hefei Court’s verdict on December 16, 2013. Faith Bloom is working through its Chinese counsel to evaluate its options to enforce the verdict.

ShengdaTech Liquidating Trust v. Hansen, Barnett & Maxwell, P.C. (“Hansen”), Baker Tilly International Limited (“Baker Tilly”), KPMG International Cooperative (“KPMG Int’l”), and KPMG LLP (“KPMG”) (collectively, the “Auditor Defendants”).

On August 15, 2013, the Trust, through its counsel Grant & Eisenhofer P.A., filed a complaint (the “Complaint”) against the Auditor Defendants as an adversary proceeding in the United States Bankruptcy Court for the District of Nevada arising out of the Auditor Defendants’ audits and reviews of the Company’s financial statements from 2007 through 2010. In its Complaint, the Trust asserts claims for professional negligence and malpractice against all of the Auditor Defendants and breach of contract and fraudulent transfer against Hansen. The Complaint seeks a judgment awarding (i) compensatory damages in an amount to be proven at trial, (ii) prejudgment interest at the maximum allowable rate, (iii) disgorgement of all fees the Auditor Defendants received in connection with the subject audit and reviews, and (iv) costs of the suit including reasonable attorneys’ and experts’ fees and disbursements. Since filing the complaint, Baker Tilly has been dismissed as a defendant.

On September 18, 2013, Defendants KPMG Int’l and KPMG filed a joint motion for withdrawal of the reference (“Motion to Withdraw”) on the grounds, among others, that this case purportedly invokes non-core claims. On November 25, 2013, the Court granted the motion to withdraw and the case was transferred to the Nevada district court (the “Nevada District Court”).

On October 22, 2013, the Auditor Defendants filed separate motions to dismiss the Complaint claiming that it is deficient as a matter of law.

On January 7, 2014, the Trust and KPMG HK, KPMG and KPMG Int’l (collectively, the “KPMG Parties”) engaged in mediation proceedings which resulted in a settlement in principle (the “Settlement”) between the Trust and the KPMG Parties. As of February 28, 2014, the Trust and the KPMG Parties entered into a “Settlement Agreement and Release Agreement” (the “Settlement Agreement”) documenting the terms of the Settlement. Under the provision of the Settlement Agreement, KPMG HK will pay the Trust $2,750,000 in exchange for a release of the Trust’s claims against the KPMG Parties. The Settlement Agreement was subject to approval of the Nevada District Court under Rule 9019 of the Bankruptcy Code and the entry of a bar order (“Bar Order”) consistent with the Nevada state bar order provisions. On or around March 15, 2014, the parties filed a joint motion (the “Joint Motion”) to approve the Settlement Agreement and enter the Bar Order. On May 22, 2014, the Court entered an order granting the Joint Motion, approving the settlement, entering the Bar Order and dismissing the KPMG Parties. Pursuant to the terms of the Settlement, on or around June 9, 2014, KPMG HK paid the Liquidating Trust $2.75 million.

On May 28, 2014, the Trust filed an Amended Complaint substantively identical to the Complaint. On June 16, 2014, Hansen filed a motion to dismiss the Amended Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Hansen’s motion to dismiss asserts that the Trust’s claims are barred by the doctrine of in pari delicto, statutes of limitation and Nevada’s comparative negligence statute. On July 3, 2014, the Trust filed an opposition to the motion to dismiss and on July 14, 2014, Hansen filed its reply in support. On September 9, 2014, the Court granted Hansen’s motion to dismiss the Amended Motion without prejudice as to the Trust’s claims for professional negligence, malpractice and breach of contract. In so doing, the Court rejected Hansen’s arguments that the claims were barred by statutes of limitation or the doctrine of in pari delicto, but found that the Trust had failed to plead sufficient facts to adequately state a claim for relief. The Court also dismissed with prejudice the Trust’s claim of fraudulent transfer against Hansen.

The Trust intends to amend its Complaint and continue pursuing its claims against Hansen.

ShengdaTech Liquidating Trust v. KPMG Hong Kong (“KPMG HK”)

On August 15, 2013, the Trust, through its counsel Grant & Eisenhofer P.A., made a demand against KPMG HK for non-binding mediation of its claims that KPMG HK committed (i) professional negligence, (ii) malpractice and (iii) breached its contractual obligations to the Company pursuant to engagement letters between the Company and KPMG HK for audit and other services.

On or around March 15, 2014, the parties filed a joint motion (the “Joint Motion”) to approve the Settlement Agreement and enter the Bar Order. On May 22, 2014, the Court entered an order granting the Joint Motion, approving the settlement, entering the Bar Order and dismissing the KPMG Parties. Pursuant to the terms of the Settlement, on or around June 9, 2014, KPMG HK paid the Liquidating Trust $2.75 million.

ShengdaTech Liquidating Trust v. Chen, et al.

On August 20, 2013, the Trust, through its counsel Maupin, Cox & LeGoy, filed a complaint (the “Complaint”) against Andrew Chen, Xiangzhi Chen and Anhui Guo (collectively, the “Officer Defendants”) arising from certain actions or non-actions they took to the detriment of the Company while serving as executive officers of the Company. In the Complaint, the Trust asserts claims against the Officer Defendants for (i) breaches of their fiduciary duty, (ii) waste of corporate assets, (iii) conversion and (iv) unjust enrichment and seeks judgment for compensatory, general and special damages in an amount to be determined at trial and litigation costs, including attorneys’ fees. Counsel for the Trust has been unable to serve the Complaint on the Officer Defendants.

In re ShengdaTech, Inc. Securities Litigation

On October 28, 2013, Plaintiffs Schaul and Yaw, through lead counsel Robbins Geller Rudman & Dowd L.L.P., filed their third amended putative class action complaint (the “Third Amended Complaint”) in the United States District Court for the Southern District of New York on behalf of all purchasers of the common stock of ShengdaTech between May 6, 2008 and March 15, 2010, against (i) the Company, (ii) certain of the Company’s former officers and directors including Messrs. Mudd and Saidman (the “Independent Directors”), and (iii) the Company’s former auditor, KPMG HK. The Third Amended Complaint arises out of alleged misrepresentations in the Company’s SEC filings and other public statements made during the class period and asserts a claim against the Company for the alleged violation of Section 10(b) of the Securities Exchange Act and Rule 10b-5 promulgated thereon. While Plaintiffs claim damages against the defendants in an amount to be determined at trial, Plaintiffs’ concede that any recovery against the Company under the Plan is limited to available insurance coverage and proceeds.

On November 25, 2013, the Independent Directors and KPMG HK moved to dismiss (“Motions to Dismiss”) the Third Amended Complaint on the grounds, among others, that it failed to state cognizable claims against them. The Motions to Dismiss the Third Amended Complaint were fully briefed as of January 13, 2014. On July 1, 2014, the Court denied KPMG HK’s Motion to Dismiss without prejudice to renewal. On August 12, 2014, the Court granted the Independent Directors’ motion to dismiss the Third Amended and Consolidated Complaint. On October 24, 2014, Plaintiffs moved (“Plaintiffs’ Rule 60(b) Motion”) for relief from judgment under Rule 60(b)(1) and (2) and for leave to amend their complaint under Rule 15(a) and (d) against the Independent Directors. Defendants responded to Plaintiffs’ Rule 60(b) Motion on January 9, 2015. Plaintiffs’ replied in support of their Rule 60(b) Motion on January 16, 2015. The Court has not yet ruled on the Plaintiffs’ Rule 60(b) Motion.17

On November 25, 2013, the Independent Directors and KPMG HK moved to dismiss (“Motions to Dismiss”) the Third Amended Complaint on the grounds, among others, that it failed to state cognizable claims against them. The Motions to Dismiss the Third Amended Complaint were fully briefed as of January 13, 2014. On July 1, 2014, the Court denied KPMG HK’s Motion to Dismiss without prejudice to renewal. On August 12, 2014, the Court granted the Independent Directors’ motion to dismiss the Third Amended and Consolidated Complaint. On October 24, 2014, Plaintiffs moved (“Plaintiffs’ Rule 60(b) Motion”) for relief from judgment under Rule 60(b)(1) and (2) and for leave to amend their complaint under Rule 15(a) and (d) against the Independent Directors. On May 28, 2015, the Court denied Plaintiffs’ Rule 60(b) Motion and motion for leave to file an amended complaint.

On January 8, 2014, the Company filed its Answer to the allegations raised against it in the Third Amended Complaint. In its Answer, the Company denied all material allegations of wrongdoing against it and raised certain affirmative defenses.

On March 27, 2015, Plaintiffs and KPMG HK executed a Stipulation and Agreement of Settlement (the “Stipulation”) to resolve all claims between them that were or could have been raised in the litigation. On April 22, 2015, Plaintiffs filed a Motion for Preliminary Approval of Partial Class Action Settlement (the “Motion for Preliminary Approval of Partial Settlement”) and related papers including a memorandum in support, a form of notice and the Stipulation. On ~~April~~June 248, 2015, the Court ~~entered~~preliminarily anapproved ~~order~~the ~~setting~~Stipulation and the settlement set forth therein and set the settlement hearing onto determine, among other things, whether the ~~Motion for~~Stipulation ~~Preliminary~~will ~~Approval~~be offinally ~~Partial~~approved and ~~Settlement~~a judgment entered thereon for ~~May~~September 1417, 2015. The Stipulation does not resolve Plaintiffs’ complaint against ~~the~~ the Company or its former officers or directors.

~~Discovery~~On isJuly ~~stayed~~10, ~~pending~~2015, the Company and Plaintiffs informed the Court that the parties anticipated filing a ~~decision~~notice onof dismissal of this action as against the Company once there was a final order finally adjudicating the Class 5 Proof of Claim, which was filed on behalf of the Plaintiffs’ ~~Rule~~and ~~60(b)~~the ~~Motion~~putative class in the bankruptcy proceedings. No ~~trial~~As a result, on July 13, 2015, the Court entered an order dismissing the Company without prejudice, provided any application to restore the Company as a plaintiff be made within thirty days, which date may be extended for good cause. On July 17, 2015, the Bankruptcy Court entered an order approving the Class 5 settlement, and, on July 21, 2015, the Court entered the notice of entry of order approving the Class 5 settlement. The order approving the Class 5 settlement has not been ~~set~~appealed.

10.	Oaktree Capital Management L.P. et al. v. Ironshore Indemnity, Inc., et al.

Beginning in 2012, bondholders of the Company initiated various individual lawsuits against former directors and officers of the Company relating to the ShengdaTech bankruptcy proceedings. In October,, 2014, Miller Investment Trust, plaintiffs in one such lawsuit, reached a settlement in principal with certain of the former directors and officers of the Company which would have potentially impacted proceeds payable pursuant to (a) an insurance policy issued by Ironshore Indemnity, Inc. (the “Ironshore Policy”), and (b) an insurance policy issued by Federal Insurance Company (the “Federal Policy”).

On October 14, 2014, Oaktree Capital Management, L.P., on behalf of certain of its managed accounts; Oaktree (Lux.) Funds – Oaktree Convertible Bond Fund; Oaktree High Income Convertible Fund, L.P.; Oaktree High Income Convertible Fund II, L.P.; Oaktree Non-U.S. Convertible Fund, L.P.; Oaktree TT Multi-Strategy Fund, L.P.; OCM Global Convertible Securities Fund; OCM International Convertible Trust; OCM Non-U.S. Convertible Securities Fund; Lazard Asset Management LLC, on behalf of its managed accounts; HFR CA Lazard Rathmore Master Trust; AG OFCON LTD.; Zazove Associates LLC, on behalf of certain of its managed funds and accounts; CNH CA Master Account, L.P.; CNH Diversified Opportunities Master Account, L.P.; Advent Claymore Convertible Securities and Income Fund II; AQR Capital Management, LLC; AQR Convertible Opportunities Bond UCITS Fund; AQR Delta Master Account, L.P.; AQR Opportunistic Premium Offshore Fund L.P.; AQR Diversified Arbitrage Fund; and Delaware Public Employees’ Retirement System (collectively, the “Plaintiffs”) filed a declaratory judgment action as an adversary action in the ShengdaTech bankruptcy proceedings in the U.S. Bankruptcy Court for the District of Nevada against Ironshore Indemnity, Inc.; Federal Insurance Company, A. Carl Mudd, Sheldon B. Saidman, Miller Investment Trust, Jura Limited, and The Randi and Clifford Lane Foundation (the “Defendants”). Plaintiffs were among the bondholders who had previously initiated individual lawsuits against the Company’s directors and officers relating to ~~the~~ ShengdaTech ~~bankruptcy proceedings~~.

In their Complaint, Plaintiffs seek declaratory judgments that (a) the Ironshore Policy and its proceeds are property of the Trust (Count I); (b) the Federal Policy and its proceeds are property of the Trust (Count II); and (c) the implementation of a settlement reached in connection with a separate action (the “Miller Action”) would violate Section 11.2(b) of the Plan or the post-confirmation injunction (Count III). The Complaint further seeks an injunction preventing the disbursement of proceeds from either the Ironshore Policy or Federal Policy (collectively, the “Insurance Policies”) pursuant to the settlement reached in the Miller Action (Count IV).

Plaintiffs filed a Motion for Preliminary Injunction (“Injunction Motion”) in the case on October 15, 2014. Defendants responded to the Injunction Motion on October 22, 2014. Plaintiffs replied in support of the Injunction Motion on October 24, 2014. On November 4, 2014, Defendants sought leave to file a joint sur-reply to Plaintiffs’ reply in support of the Injunction Motion, which request was granted on November 12, 2014.

On November 12, 2014, the Trust filed a motion to intervene in the adversary action as a plaintiff and a joinder to the Injunction Motion. The Court granted the Trust’s motion to intervene and determined that the Trust had standing and was the proper party to pursue the adversary action.

On December 2, 2014, the Court entered a preliminary injunction order enjoining disbursements under the Federal or Ironshore Policies, which expired on February 12, 2015. In doing so, the Court found that the Trust had met the standards for a preliminary injunction including that the Trust had a likely chance to succeed on the merits of the claim that the insurance proceeds were property of the Trust. Thereafter, the Court extended the preliminary injunction to and including March 16, 2015. By agreement of the parties, the Court thereafter extended the preliminary injunction to and including June 17, 2015.

17In May, 2015, the parties entered into a settlement agreement (the “D&O Settlement”) related to the Insurance Policies and certain litigation that was potentially covered by the Insurance Policies. Under the D&O Settlement, Federal and Ironshore will pay a total of $7.9 million for the following (a) $1 million to the Liquidating Trust for payment of Defense Costs incurred by the Liquidating Trust and to the extent any monies remain after payment of Defense Costs to fund the ongoing administration of the Trust or to the holders of Allowed Class 4 Claim; (b) $2.4 million to the Miller Trust Plaintiffs and (c) $4.5 million to the Oaktree Plaintiffs. In exchange for the Payments, the Insurance Carriers, the Trust and the defendants in the Miller Trust and Oaktree litigations receive complete releases. For a more complete description of the terms of the settlement, the Trust refers to the D&O Settlement itself which is being filed herewith and whose terms are incorporated herein.

On May 15, 2015, the Trust filed a motion to approve the D&O Settlement. On June 2, 2014, the Plaintiffs in the In re Securities Litigation discussed in paragraph 9 above, filed an objection. On June 16, 2015, the Bankruptcy Court held a hearing on the approval of the D&O Settlement motion and the objection thereto. On July 17, 2015, the Court entered an order granting the Trust’s motion to approve the D&O Settlement and findings of fact and conclusions of law in connection therewith. In approving the settlement, the Bankruptcy Court, among other things, found that the D&O settlement was within a range of reasonableness, is fair, reasonable, in the best interests of the Trust’s Beneficiaries, and satisfied the requirements for approval set forth in applicable case law. The order granting the motion to approve the D&O settlement has not been appealed.

Item 1A. Risk Factors.

Not applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosure.

Not applicable.

Item 5. Other Information.

~~None~~In May, 2015, the parties to the “Oaktree Capital Management L.P. et al. v. Ironshore Indemnity, Inc., et al.” matter entered into a settlement agreement (the “D&O Settlement”) related to the Insurance Policies and certain litigation that was potentially covered by the Insurance Policies. Under the D&O Settlement, Federal and Ironshore will pay a total of $7.9 million for the following (a) $1 million to the Liquidating Trust for payment of Defense Costs incurred by the Liquidating Trust and to the extent any monies remain after payment of Defense Costs to fund the ongoing administration of the Trust or to the holders of Allowed Class 4 Claim; (b) $2.4 million to the Miller Trust Plaintiffs and (c) $4.5 million to the Oaktree Plaintiffs. In exchange for the Payments, the Insurance Carriers, the Trust and the defendants in the Miller Trust and Oaktree litigations receive complete releases. For a more complete description of the terms of the settlement, the Trust refers to the D&O Settlement itself which is being filed herewith and whose terms are incorporated herein.

Item 6. Exhibits.

Exhibit No.		Description
2.1		First Amended Chapter 11 Plan of Reorganization (incorporated by reference to our Registration Statement on Form 10 filed on April 30, 2013).
2.2		First Amended Disclosure Statement for the First Amended Chapter 11 Plan of Reorganization (incorporated by reference to our Registration Statement on Form 10 filed on April 30, 2013).
4.1		Liquidating Trust Agreement, dated as of October 17, 2012 (incorporated by reference to our Registration Statement on Form 10 filed on April 30, 2013).
10.1		~~Equity~~Settlement ~~Transfer~~ Agreement and Release, dated ~~February~~May 52015 by and among the ShengdaTech Liquidating Trust (the “Liquidating Trust”), ~~2015~~A. Carl Mudd (“Mudd”), ~~between~~Sheldon ~~Faith~~B. ~~Bloom~~Saidman ~~Limited~~(“Saidman” and Mrtogether with Mudd, the “Independent Directors”), Federal Insurance Company, (“Federal”), Ironshore Indemnity, Inc. ~~Wang~~(“Ironshore”), ~~Xiaohong~~the Miller Investment Trust, Jura Limited (~~incorporated~~“Jura”), bythe ~~reference~~Randi toand ~~our~~Clifford ~~Annual~~Lane ~~Report~~Foundation (the “Lane Foundation” and collectively with the Miller Investment Trust and Jura, the “Miller Trust Plaintiffs”) and Oaktree Capital Management, L.P., on ~~Form~~behalf 10of certain of its managed accounts; Oaktree (Lux.) Funds – Oaktree Convertible Bond Fund; Oaktree High Income Convertible Fund, L.P.; Oaktree High Income Convertible Fund II, L.P.; Oaktree Non-KU.S. ~~filed~~Convertible Fund, L.P.; Oaktree TT Multi-Strategy Fund, L.P.; OCM Global Convertible Securities Fund; OCM International Convertible Trust; OCM Non-U.S. Convertible Securities Fund; Lazard Asset Management LLC, on ~~March~~behalf 31of its managed accounts; HFR CA Lazard Rathmore Master Trust; AG OFCON LTD.; Zazove Associates LLC, ~~2015)~~on behalf of certain of its managed funds and accounts; CNH CA Master Account, L.P.; CNH Diversified Opportunities Master Account, L.P.; Advent Claymore Convertible Securities and Income Fund II; AQR Capital Management, LLC; AQR Convertible Opportunities Bond UCITS Fund; AQR Delta Master Account, L.P.; AQR Opportunistic Premium Offshore Fund L.P.; AQR Diversified Arbitrage Fund; and Delaware Public Employees’ Retirement System (the “Oaktree Plaintiffs”)
31.1		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act*
31.2		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act*
32.1		Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act.*
32.2		Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act.*
101.1		Interactive Data File*

* Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SHENGDATECH LIQUIDATING TRUST
Dated: May 14, 2015	/s/ Michael Kang
Dated: August 13, 2015	/s/ Michael Kang
	By:	Michael Kang
	By: Michael Kang
	Its:	Trustee (Principal Financial Officer and Principal Accounting Officer)
	Its: Trustee (Principal Financial Officer and Principal Accounting Officer)

1920

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