-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CLKVfTXPOuIerwYZTDKFbXwYvkqEZx9u/XZ7CH7WwEsiP6Asz7UZRTvO032KiSf4 gLBhdKTfD3kW+PHGHut8iQ== 0000935069-07-002149.txt : 20070831 0000935069-07-002149.hdr.sgml : 20070831 20070831160011 ACCESSION NUMBER: 0000935069-07-002149 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20070630 FILED AS OF DATE: 20070831 DATE AS OF CHANGE: 20070831 EFFECTIVENESS DATE: 20070831 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UBS CREDIT RECOVERY FUND LLC CENTRAL INDEX KEY: 0001174281 IRS NUMBER: 030454045 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-21117 FILM NUMBER: 071094582 BUSINESS ADDRESS: STREET 1: 1285 AVE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2127132000 MAIL ADDRESS: STREET 1: 1285 AVE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10019 FORMER COMPANY: FORMER CONFORMED NAME: UBS CREDIT & RECOVERY FUND LLC DATE OF NAME CHANGE: 20061201 FORMER COMPANY: FORMER CONFORMED NAME: UBS PW CREDIT & RECOVERY FUND LLC DATE OF NAME CHANGE: 20020524 N-CSRS 1 g38824credtrecov_ncsrs.txt UBS CREDIT & RECOVERY SAR 07 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-21117 --------- UBS Credit Recovery Fund L.L.C. --------------------------------------------------- (Exact name of registrant as specified in charter) 51W 52nd Street, 23rd Floor New York, NY 10019 --------------------------------------------------- (Address of principal executive offices) (Zip code) James Dwyer c/o UBS Financial Services, Inc. 51W 52nd Street, 23rd Floor New York, NY 10019 --------------------------------------------------- (Name and address of agent for service) registrant's telephone number, including area code: 212-882-5819 ------------ Date of fiscal year end: December 31 ----------- Date of reporting period: June 30, 2007 ------------- Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507. ITEM 1. REPORTS TO STOCKHOLDERS. The Report to Shareholders is attached herewith. UBS CREDIT RECOVERY FUND, L.L.C. FINANCIAL STATEMENTS (UNAUDITED) SEMI ANNUAL REPORT PERIOD FROM JANUARY 1, 2007 TO JUNE 30, 2007 UBS CREDIT RECOVERY FUND, L.L.C. FINANCIAL STATEMENTS (UNAUDITED) SEMI ANNUAL REPORT PERIOD FROM JANUARY 1, 2007 TO JUNE 30, 2007 CONTENTS Statement of Assets, Liabilities and Members' Capital .................... 1 Statement of Operations .................................................. 2 Statements of Changes in Members' Capital ................................ 3 Statement of Cash Flows .................................................. 4 Notes to Financial Statements ............................................ 5 Schedule of Portfolio Investments ........................................12 UBS CREDIT RECOVERY FUND, L.L.C. STATEMENT OF ASSETS, LIABILITIES AND MEMBERS' CAPITAL (UNAUDITED) - -------------------------------------------------------------------------------- JUNE 30, 2007 - -------------------------------------------------------------------------------- ASSETS Investments in Investment Funds, at value (cost $247,153,489) $354,394,752 Cash and cash equivalents 605,528 Advanced subscription in Investment Fund 15,500,000 Interest receivable 6,901 - -------------------------------------------------------------------------------- TOTAL ASSETS 370,507,181 - -------------------------------------------------------------------------------- LIABILITIES Payables: Credit facility payable 12,200,000 Investment management fee 426,608 Professional fees 89,064 Administrator fee 88,264 Administration fee 86,937 Other 20,518 - -------------------------------------------------------------------------------- TOTAL LIABILITIES 12,911,391 - -------------------------------------------------------------------------------- NET ASSETS $357,595,790 - -------------------------------------------------------------------------------- MEMBERS' CAPITAL Represented by: Net capital contributions $250,354,527 Accumulated net unrealized appreciation on investments 107,241,263 - -------------------------------------------------------------------------------- MEMBERS' CAPITAL $357,595,790 - -------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements. 1 UBS CREDIT RECOVERY FUND, L.L.C. STATEMENT OF OPERATIONS (UNAUDITED) - -------------------------------------------------------------------------------- PERIOD FROM JANUARY 1, 2007 TO JUNE 30, 2007 - -------------------------------------------------------------------------------- INVESTMENT INCOME Interest $ 56,867 - ------------------------------------------------------------------------------- TOTAL INVESTMENT INCOME 56,867 - ------------------------------------------------------------------------------- EXPENSES Investment management fee 2,176,549 Professional fees 386,427 Administrator fee 450,321 Administration fee 154,924 Interest expense 50,668 Other 128,038 - ------------------------------------------------------------------------------- TOTAL EXPENSES 3,346,927 - ------------------------------------------------------------------------------- NET INVESTMENT LOSS (3,290,060) - ------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN FROM INVESTMENTS Change in net unrealized appreciation/depreciation from investments 29,423,771 - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN FROM INVESTMENTS 29,423,771 - -------------------------------------------------------------------------------- NET INCREASE IN MEMBERS' CAPITAL DERIVED FROM OPERATIONS $26,133,711 - -------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements. 2 UBS CREDIT RECOVERY FUND, L.L.C. STATEMENTS OF CHANGES IN MEMBERS' CAPITAL PERIOD FROM JANUARY 1, 2007 TO JUNE 30, 2007 (UNAUDITED) AND YEAR ENDED DECEMBER 31, 2006 - --------------------------------------------------------------------------------
UBS FUND ADVISOR, L.L.C. MEMBERS TOTAL - ------------------------------------------------------------------------------------------------------ MEMBERS' CAPITAL AT JANUARY 1, 2006 $20,145 $196,914,602 $196,934,747 INCREASE (DECREASE) FROM OPERATIONS Pro rata allocation: Net investment loss (241) (4,258,721) (4,258,962) Net realized gain from investments 341 3,000,352 3,000,693 Change in net unrealized appreciation/depreciation from investments 3,236 36,196,055 36,199,291 - ------------------------------------------------------------------------------------------------------- NET INCREASE IN MEMBERS' CAPITAL DERIVED FROM OPERATIONS 3,336 34,937,686 34,941,022 - ------------------------------------------------------------------------------------------------------- MEMBERS' CAPITAL TRANSACTIONS Proceeds from Members' subscriptions -- 58,960,902 58,960,902 Members' withdrawals -- (15,262,933) (15,262,933) Offering costs (1) (11,003) (11,004) - ------------------------------------------------------------------------------------------------------- NET INCREASE IN MEMBERS' CAPITAL FROM CAPITAL TRANSACTIONS (1) 43,686,966 43,686,965 - ------------------------------------------------------------------------------------------------------- MEMBERS' CAPITAL AT DECEMBER 31, 2006 $23,480 $275,539,254 $275,562,734 - ------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) FROM OPERATIONS Pro rata allocation: Net investment loss (95) (3,289,965) (3,290,060) Change in net unrealized appreciation/depreciation from investments 2,401 29,421,370 29,423,771 - ------------------------------------------------------------------------------------------------------- NET INCREASE IN MEMBERS' CAPITAL DERIVED FROM OPERATIONS 2,306 26,131,405 26,133,711 - ------------------------------------------------------------------------------------------------------- MEMBERS' CAPITAL TRANSACTIONS Proceeds from Members' subscriptions -- 56,328,196 56,328,196 Members' withdrawals -- (427,485) (427,485) Offering costs -- (1,366) (1,366) - ------------------------------------------------------------------------------------------------------- NET INCREASE IN MEMBERS' CAPITAL FROM CAPITAL TRANSACTIONS -- 55,899,345 55,899,345 - ------------------------------------------------------------------------------------------------------- MEMBERS' CAPITAL AT JUNE 30, 2007 $25,786 $357,570,004 $357,595,790 - -------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 3 UBS CREDIT RECOVERY FUND, L.L.C. STATEMENT OF CASH FLOWS (UNAUDITED) - -------------------------------------------------------------------------------- PERIOD FROM JANUARY 1, 2007 TO JUNE 30, 2007 - -------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net increase in Members' capital derived from operations $ 26,133,711 Adjustments to reconcile net increase in Members' capital derived from operations to net cash used in operating activities: Purchases of investments (47,916,757) Change in net unrealized appreciation/depreciation from investments (29,423,771) Changes in assets and liabilities: (Increase) decrease in assets: Advanced subscription in Investment Fund (15,500,000) Interest receivable 7,209 Other assets 445 Increase (decrease) in payables: Credit facility payable 12,200,000 Investment management fee 82,159 Professional fees (80,590) Administrator fee 16,999 Administration fee 34,951 Other (18,881) - -------------------------------------------------------------------------------- NET CASH USED IN OPERATING ACTIVITIES (54,464,525) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from Members' subscriptions 56,328,196 Members' withdrawals (15,690,418) Offering costs (1,366) - -------------------------------------------------------------------------------- NET CASH PROVIDED BY FINANCING ACTIVITIES 40,636,412 Net decrease in cash and cash equivalents (13,828,113) Cash and cash equivalents--beginning of period 14,433,641 - -------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS--END OF PERIOD $ 605,528 - -------------------------------------------------------------------------------- Supplemental cash flows disclosure: Interest paid $ 45,944 - -------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements. 4 UBS CREDIT RECOVERY FUND, L.L.C. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- PERIOD FROM JANUARY 1, 2007 TO JUNE 30, 2007 - -------------------------------------------------------------------------------- 1. ORGANIZATION UBS Credit Recovery Fund, L.L.C. (the "Fund"), formerly known as UBS Credit & Recovery Fund, L.L.C., was organized as a limited liability company under the laws of Delaware on April 30, 2002. The Fund is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as a closed-end, non-diversified, management investment company. The Fund's investment objective is to maximize total return over the long-term. The Fund is a multi-manager fund that seeks to achieve its objective by deploying its assets primarily among a select group of portfolio managers who invest in debt and, to a lesser extent, equity securities ("Obligations"), to take advantage of market opportunities and pricing inefficiencies between the perceived value of an Obligation and its market value. Generally, such portfolio managers conduct their investment programs through unregistered investment funds (collectively, the "Investment Funds"), in which the Fund invests as a limited partner or member along with other investors. The Fund commenced operations on August 1, 2002. The Fund's Board of Directors (the "Directors") has overall responsibility to manage and control the business affairs of the Fund, including the exclusive authority to oversee and to establish policies regarding the management, conduct and operation of the Fund's business. The Directors have engaged UBS Fund Advisor, L.L.C. ("UBSFA", the "Adviser" and, when providing services under the Administration Agreement, the "Administrator"), a Delaware limited liability company, to provide investment advice regarding the selection of Investment Funds and to be responsible for the day-to-day management of the Fund. The Adviser is a direct wholly-owned subsidiary of UBS Americas, Inc., which is a wholly-owned subsidiary of UBS AG, and is registered as an investment adviser under the Investment Advisers Act of 1940, as amended. Initial and additional applications for interests by eligible investors may be accepted at such times as the Adviser may determine and are generally accepted monthly. The Fund reserves the right to reject any application for interests in the Fund. The Fund from time to time may offer to repurchase interests pursuant to written tenders to Members. These repurchases will be made at such times and on such terms as may be determined by the Directors, in their complete and exclusive discretion. The Adviser expects that it will recommend to the Directors that the Fund offer to repurchase interests from Members once each year, at year end. Members can only transfer or assign their membership interests or a portion thereof (i) by operation of law pursuant to the death, bankruptcy, insolvency or dissolution of a Member, or (ii) with the written approval of the Directors, which may be withheld in their sole and absolute discretion. 2. SIGNIFICANT ACCOUNTING POLICIES A. PORTFOLIO VALUATION Net asset value of the Fund is determined by or at the direction of the Adviser as of the close of business at the end of any fiscal period in accordance with the valuation principles set forth below or as may be 5 UBS CREDIT & RECOVERY FUND, L.L.C. NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) - -------------------------------------------------------------------------------- PERIOD FROM JANUARY 1, 2007 TO JUNE 30, 2007 - -------------------------------------------------------------------------------- 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) A. PORTFOLIO VALUATION (CONTINUED) determined from time to time pursuant to policies established by the Directors. The Fund's investments in Investment Funds are subject to the terms and conditions of the respective operating agreements and offering memoranda, as appropriate. The Fund's investments in the Investment Funds are carried at fair value as determined by the Fund's pro-rata interest in the net assets of each Investment Fund. All valuations utilize financial information supplied by each Investment Fund and are net of management and performance incentive fees or allocations payable to the Investment Funds' managers or pursuant to the Investment Funds' agreements. The Fund's valuation procedures require the Adviser to consider all relevant information available at the time the Fund values its portfolio. The Adviser and/or the Directors will consider such information and consider whether it is appropriate, in light of all relevant circumstances, to value such a position at its net asset value as reported or whether to adjust such value. The underlying investments of each Investment Fund are accounted for at fair value as described in each Investment Fund's financial statements. (See Schedule of Portfolio Investments) Distributions received or withdrawals from Investment Funds, whether in the form of cash or securities, are first applied as a reduction of the investment's cost. B. INCOME RECOGNITION Interest income is recorded on the accrual basis. Realized gains and losses from the Investment Fund transactions are calculated on the identified cost basis. C. FUND COSTS The Fund bears all expenses incurred in its business, including, but not limited to, the following: all costs and expenses related to portfolio transactions and positions for the Fund's account; legal fees; accounting and auditing fees; custodial fees; costs of computing the Fund's net asset value; costs of insurance; registration expenses; certain organization costs; due diligence, including travel and related expenses; expenses of meetings of Directors and Members; all costs with respect to communications to Members; and other types of expenses approved by the Directors. Offering costs are charged to capital as incurred. D. INCOME TAXES No provision for the payment of Federal, state or local income taxes has been provided, since the Fund is not subject to income tax. Each Member is individually required to report on its own tax return its distributive share of the Fund's taxable income or loss. 6 UBS CREDIT & RECOVERY FUND, L.L.C. NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) - -------------------------------------------------------------------------------- PERIOD FROM JANUARY 1, 2007 TO JUNE 30, 2007 - -------------------------------------------------------------------------------- 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of monies invested in a PNC Bank, NA account which pays money market rates and are accounted for at cost plus accrued interest, which is included in interest receivable on the Statement of Assets, Liabilities and Members' Capital. F. REPURCHASE AGREEMENTS From time to time the Fund may enter into repurchase agreements. In connection with such transactions it is the Fund's policy that its Custodian take possession of the underlying collateral securities, the fair value of which exceeds the principal amount of the repurchase transaction, including accrued interest, at all times. If the seller defaults, and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. As of June 30, 2007, there were no outstanding repurchase agreements. G. USE OF ESTIMATES The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires the Adviser to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Adviser believes that the estimates utilized in preparing the Fund's financial statements are reasonable and prudent; however, actual results could differ from these estimates. 3. RELATED PARTY TRANSACTIONS The Adviser provides investment advisory services to the Fund pursuant to an Investment Management Agreement. Pursuant to that agreement, the Fund pays the Adviser a monthly fee (the "Investment Management Fee") at the annual rate of 1.45% of the Fund's net assets, excluding assets attributable to the Adviser and the Administrator. The Administrator provides certain administrative services to the Fund, including, among other things, providing office space and other support services. In consideration for such services, the Fund pays the Administrator a monthly fee (the "Administrator Fee") at an annual rate of 0.30% of the Fund's net assets, excluding assets attributable to the Administrator's and the Adviser's capital account. The Administrator Fee is paid to the Administrator out of the Fund's assets and debited against the Members' capital accounts, excluding net assets attributable to the Administrator and the Adviser's capital account. A portion of the Investment Management Fee and the Administrator Fee is paid by UBSFA to its affiliates. UBS Financial Services Inc. ("UBS FSI"), a wholly-owned subsidiary of UBS Americas, Inc., acts as a placement agent for the Fund, without special compensation from the Fund, and will bear its own costs 7 UBS CREDIT & RECOVERY FUND, L.L.C. NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) - -------------------------------------------------------------------------------- PERIOD FROM JANUARY 1, 2007 TO JUNE 30, 2007 - -------------------------------------------------------------------------------- 3. RELATED PARTY TRANSACTIONS (CONTINUED) associated with its activities as placement agent. Placement fees, if any, charged on contributions are debited against the contribution amounts, to arrive at a net subscription amount. The placement fee does not constitute assets of the Fund. The net increase (or decrease) in Members' capital derived from operations (net income or loss) is allocated to the capital accounts of all Members on a pro-rata basis, other than the Investment Management Fee and the Administrator Fee which are similarly allocated to all Members other than the Adviser and the Administrator as described above. Each Director of the Fund receives an annual retainer of $7,500 plus a fee for each meeting attended. All Directors are reimbursed by the Fund for all reasonable out of pocket expenses. Total amounts expensed by the Fund related to Directors for the period January 1, 2007 to June 30, 2007 were $17,009. Other investment partnerships sponsored by UBS Americas or its affiliates may also maintain investment interests in the Investment Funds owned by the Fund. 4. ADMINISTRATION AND CUSTODIAN FEES PFPC Trust Company (an affiliate of PNC Bank, NA) serves as the custodian (the "Custodian") of the Fund's assets and provides custodial services for the Fund. PFPC Inc. (also an affiliate of PNC Bank, NA) serves as Accounting and Investor Servicing Agent to the Fund and in that capacity provides certain administrative, accounting, record keeping, tax and Member related services. PFPC Inc. receives a monthly fee primarily based upon (i) the average net assets of the Fund subject to a minimum monthly fee, and (ii) the aggregate net assets of the Fund and certain other investment funds sponsored or advised by UBS Americas, Inc. or its affiliates. Additionally, the Fund reimburses certain out of pocket expenses incurred by PFPC Inc. 5. CREDIT FACILITY Effective July 1, 2006, the Fund, along with other UBS sponsored funds, entered into a $200,000,000 committed, unsecured revolving line of credit with Harris Trust and Savings Bank. Under the most restrictive arrangement, the Fund may borrow an amount that combined with the other borrowings of the Fund would not exceed 20% of its net assets. The Fund's borrowing capacity is also limited to the portion of the unused line of credit at any point in time. The Fund is only liable under the line of credit to the extent of its own borrowing there under. The interest rate on the borrowing is based on the Federal Funds rate plus 150 basis points per annum. The expiration date of such credit agreements is July 31, 2007. The committed facility also requires a fee to be paid by the Fund, on a pro rata basis, based on the amount of the aggregate commitment which has not been utilized of 25 basis points per annum. For the period January 1, 2007 to June 30, 2007 the Funds' average interest rate paid on borrowings were 6.73% per annum and the average borrowings outstanding were $1,502,376. The Fund had $12,200,000 borrowings outstanding at June 30, 2007. Interest expense for the period from January 1, 2007 to June 30, 2007 was $50,668, of which $4,724 was payable at June 30, 2007. See Subsequent Event for further information. 8 UBS CREDIT & RECOVERY FUND, L.L.C. NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) - -------------------------------------------------------------------------------- PERIOD FROM JANUARY 1, 2007 TO JUNE 30, 2007 - -------------------------------------------------------------------------------- 6. SECURITIES TRANSACTIONS Aggregate purchases of Investment Funds for the period January 1, 2007 to June 30, 2007, amounted to $47,916,757. The cost of investments for Federal income tax purposes is adjusted for items of taxable income allocated to the Fund from the Investment Funds. The allocated taxable income is reported to the Fund by the Investment Funds on Schedule K-1. 7. INVESTMENTS As of June 30, 2007, the Fund had investments in Investment Funds, none of which were related parties. The Fund's investments are summarized below based on the investment objectives of the specific Investment Funds at June 30, 2007. Investment Objective Cost Fair Value -------------------- ------------ ------------- Diversified Credit $129,459,296 $ 185,632,399 Distressed Securities 39,840,027 57,126,835 Capital Structure Arbitrage 44,115,235 63,257,079 Direct Loans 33,738,931 48,378,439 ------------ ------------- Total $247,153,489 $ 354,394,752 ============ ============= The agreements related to investments in Investment Funds provide for compensation to the general partners/managers in the form of management fees of between 1% and 2% (per annum) of net assets and performance incentive fees or allocations of 20% of net profits earned. 8. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK In the normal course of business, the Investment Funds in which the Fund invests trade various financial instruments and enter into various investment activities with off-balance sheet risk. These include, but are not limited to, short selling activities, writing option contracts, contracts for differences, equity swaps, distressed investing, merger arbitrage and convertible arbitrage. The Fund's risk of loss in these Investment Funds is limited to the value of these investments as reported by the Fund. 9. INDEMNIFICATION In the ordinary course of business, the Fund may enter into contracts or agreements that contain indemnifications or warranties. Future events could occur that lead to the execution of these provisions against the Fund. Based on its history and experience, management feels the likelihood of such an event is remote. 9 UBS CREDIT & RECOVERY FUND, L.L.C. NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) - -------------------------------------------------------------------------------- PERIOD FROM JANUARY 1, 2007 TO JUNE 30, 2007 - -------------------------------------------------------------------------------- 10. NEW ACCOUNTING PRONOUNCEMENTS On September 20, 2006, the FASB released Statement of Financial Accounting Standards No. 157 "Fair Value Measurements" ("FAS 157"). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurements. The application of FAS 157 is required for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. At this time, management is evaluating the implications of FAS 157 and its impact on the financial statements has not yet been determined. 10 UBS CREDIT & RECOVERY FUND, L.L.C. NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) - -------------------------------------------------------------------------------- PERIOD FROM JANUARY 1, 2007 TO JUNE 30, 2007 - -------------------------------------------------------------------------------- 11. FINANCIAL HIGHLIGHTS The following represents the ratios to average net assets and other supplemental information for the periods indicated:
PERIOD FROM PERIOD FROM AUGUST 1, 2002 JANUARY 1, (COMMENCEMENT OF 2007 TO JUNE OPERATIONS) 30, 2007 YEARS ENDED DECEMBER 31, THROUGH YEAR ENDED UNAUDITED 2006 2005 2004 2003 2002 --------- ---- ---- ---- ---- ---- Ratio of net investment loss to average net assets *** (2.21)%* (1.78)% (1.93)% (1.97)% (2.03)% (3.06)%* Ratio of total expenses to average net assets *** 2.25%* 1.99% 2.09% 2.00% 2.09% 3.20%* Portfolio turnover rate -- 7.60% 24.36% 6.71% -- -- Total return** 9.04% 15.58% 4.36% 9.96% 18.81% 2.52% Average debt ratio*** 0.50% -- 1.09% -- N/A N/A Net asset value at end of period $357,595,790 $275,562,734 $196,934,747 $146,190,291 $105,976,358 $32,210,622 * Annualized. ** Total return assumes a purchase of an interest in the Fund at the beginning of the period and a sale of the Fund interest on the last day of the period noted and does not reflect the deduction of placement fees, if any, incurred when subscribing to the Fund. Total returns for a period of less than a full year are not annualized. An individual member's ratios and return may vary from the above based on the timing of capital transactions. *** The average net assets used in the above ratios are calculated using pre-tender net assets.
12. SUBSEQUENT EVENT The Fund, along with other UBS sponsored funds, renewed its $200,000,000 unsecured revolving line of credit with Bank of Montreal--Chicago Branch, which is the Illinois branch of the parent to Harris Trust and Savings Bank.." The expiration date of such credit agreement is July 31, 2008. 11 UBS CREDIT RECOVERY FUND, LLC SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) - -------------------------------------------------------------------------------- JUNE 30, 2007 - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ REALIZED/ % OF UNREALIZED FAIR MEMBER'S GAIN/(LOSS) LOCK COST VALUE CAPITAL FROM INVESTMENTS LIQUIDITY UP** - ------------------------------------------------------------------------------------------------------------------------------------ Ahab Partners, L.P. $ 9,000,000 $ 16,193,379 4.53% $ 1,481,842 Quarterly Aspen Partners, L.P. Series A 536,732 3,007,273 0.84 (231,061) Annually Camulos Master Fund L.P. 15,500,000 18,890,836 5.28 1,265,903 Quarterly X Canyon Value Realization Fund, L.P. 12,400,000 18,067,983 5.05 939,884 Annually Claren Road Credit Partners, L.P. 30,000,000 31,201,528 8.73 861,016 Quarterly X Cyrus Credit Opportunities Fund II, L.P. 17,400,000 21,232,153 5.94 740,337 Annually Harbinger Capital Partners Fund I, L.P. 16,150,000 31,303,267 8.75 6,122,936 Quarterly X Harbinger Capital Partners Special Situations Fund, L.P. 5,250,000 9,064,911 2.53 2,750,939 Annually X Highland Crusader Fund L.P. 13,500,000 18,106,788 5.06 1,701,871 Quarterly Highland Credit Strategies Fund LTD 11,500,000 18,505,706 5.18 2,408,256 Quarterly Indus Structured Finance Fund, L.P. 2,916,757 2,770,919 0.77 (145,838) Annually X Marathon Special Opportunity Fund, L.P. 13,500,000 21,446,048 6.00 1,488,638 Annually Marathon Structured Finance Fund, L.P. 14,550,715 18,653,693 5.22 578,753 Quarterly X Marathon Structured Finance Fund, L.P. (side pocket) 449,285 449,285 0.13 - Quarterly Pardus European Special Opportunities Fund, L.P. 13,500,000 18,564,282 5.19 1,558,704 Quarterly Quadrangle Debt Recovery Fund, L.P. 6,750,000 17,175,080 4.80 889,328 Quarterly Styx Partners, L.P. 14,000,000 20,576,400 5.75 946,059 Annually Subprime Credit Strategies Fund II, L.P. 3,000,000 5,928,142 1.66 2,662,441 Quarterly X Trilogy Financial Partners, L.P. 25,500,000 33,892,481 9.48 1,399,815 Quarterly X Whitebox Hedged High Yield Fund, L.P. 9,500,000 14,597,793 4.08 1,079,393 Monthly Whitebox Hedged High Yield Fund, LTD 12,250,000 14,766,805 4.13 924,555 Monthly ------------ ------------ ----- ----------- TOTAL $247,153,489 $354,394,752 99.10% $29,423,771 ============ ============ ===== =========== ** The Investment Fund provides for periodic redemptions. As of June 30, 2007, the Fund was subject to lock up provisions of up to three years from the initial investment.
The preceding notes are an integral part of these financial statements. 12 ITEM 2. CODE OF ETHICS. Not applicable. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this form. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. (a) Not applicable. (b) There has been no change, as of the date of this filing, in any of the portfolio managers identified in response to paragraph (a)(1) of this Item in the registrant's most recently filed annual report on Form N-CSR. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant's board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item. ITEM 11. CONTROLS AND PROCEDURES. (a) The registrant's principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)). (b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant's second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a)(1) Not applicable. (a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. (a)(3) Not applicable. (b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (registrant) UBS Credit Recovery Fund L.L.C. ------------------------------------------------------------------- By (Signature and Title)* /s/ Douglas Lindgren ------------------------------------------------------- Douglas Lindgren, Principal Executive Officer (principal executive officer) Date August 24, 2007 ---------------------------------------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title)* /s/ Douglas Lindgren ------------------------------------------------------- Douglas Lindgren, Principal Executive Officer (principal executive officer) Date August 24, 2007 ---------------------------------------------------------------------------- By (Signature and Title)* /s/ Robert Aufenanger ------------------------------------------------------- Robert Aufenanger, Principal Accounting Officer (principal financial officer) Date August 24, 2007 ---------------------------------------------------------------------------- * Print the name and title of each signing officer under his or her signature. EX-99.CERT 2 g38824credrecov_cert.txt CERTIFICATION 302 CERTIFICATION PURSUANT TO RULE 30A-2(a) UNDER THE 1940 ACT AND SECTION 302 OF THE SARBANES-OXLEY ACT I, Douglas Lindgren, certify that: 1. I have reviewed this report on Form N-CSR of UBS Credit Recovery Fund L.L.C.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 24, 2007 /s/ Douglas Lindgren --------------- --------------------------------------------- Douglas Lindgren, Principal Executive Officer (principal executive officer) CERTIFICATION PURSUANT TO RULE 30A-2(a) UNDER THE 1940 ACT AND SECTION 302 OF THE SARBANES-OXLEY ACT I, Robert Aufenanger, certify that: 1. I have reviewed this report on Form N-CSR of UBS Credit Recovery Fund L.L.C.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 24, 2007 /s/ Robert Aufenanger ---------------------- ----------------------------------------------- Robert Aufenanger, Principal Accounting Officer (principal financial officer) EX-99.906CERT 3 g38824credrecov_cert906.txt CERTIFICATION 906 CERTIFICATION PURSUANT TO RULE 30A-2(b) UNDER THE 1940 ACT AND SECTION 906 OF THE SARBANES-OXLEY ACT I, Douglas Lindgren, Principal Executive Officer of UBS Credit Recovery Fund L.L.C. (the "Registrant"), certify that: 1. The Form N-CSR of the Registrant (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: August 24, 2007 /s/ Douglas Lindgren ---------------------- --------------------------------------------- Douglas Lindgren, Principal Executive Officer (principal executive officer) I, Robert Aufenanger, Principal Accounting Officer of UBS Credit Recovery Fund L.L.C. (the "Registrant"), certify that: 1. The Form N-CSR of the Registrant (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: August 24, 2007 /s/ Robert Aufenanger ---------------------- ----------------------------------------------- Robert Aufenanger, Principal Accounting Officer (principal financial officer) -----END PRIVACY-ENHANCED MESSAGE-----