CONTINGENCIES AND COMMITMENTS |
3 Months Ended | ||||||||||||
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Mar. 31, 2025 | |||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | |||||||||||||
| CONTINGENCIES AND COMMITMENTS |
Commitments and Letters of Credit As of March 31, 2025, we had the following commitments outstanding: •We have various contracts for the use of information technology hardware and software, including cloud computing arrangements, that we use in the normal course of business. Our aggregate commitment under these contracts was $75 million, of which we expect $37 million, $27 million, $9 million, and $2 million will be paid in the remainder of 2025, 2026, 2027, and 2028, respectively. •We have remaining commitments of $32 million to purchase vacation ownership units located in Bali, Indonesia in two separate transactions, contingent upon completion of construction to agreed-upon standards within specified timeframes, for use in our Vacation Ownership segment. •We expect to complete the acquisition of 32 vacation ownership units in 2025 pursuant to one of these commitments, and to make remaining payments with respect to these units when specific construction milestones are completed as follows: $10 million in the remainder of 2025 and $1 million in 2026. •We expect to complete the acquisition of 26 vacation ownership units in 2026 pursuant to the other commitment, and to make remaining payments with respect to these units when specific construction milestones are completed as follows: $6 million in the remainder of 2025, $14 million in 2026, and $1 million in 2027. •We have remaining commitments of $80 million to purchase vacation ownership units located in Thailand, in two separate transactions for use in our Vacation Ownership segment. •We expect to complete the acquisition of 52 vacation ownership units in 2025 pursuant to one of these commitments, subject to performance of agreed-upon pre-closing obligations by the seller, and to make the remaining payment of $43 million with respect to these units in the second quarter of 2025. •We expect to complete the acquisition of 60 vacation ownership units in 2026 pursuant to the other commitment, contingent upon completion of construction to agreed-upon standards within specified timeframes, and to make remaining payments with respect to these units when specific construction milestones are completed as follows: $4 million in the remainder of 2025, $31 million in 2026, and $2 million in 2027. •We have a commitment of $122 million to purchase property and vacation ownership units located in Nashville, Tennessee, contingent upon completion of construction to agreed-upon standards within specified timeframes, for use in our Vacation Ownership segment. We expect to complete the acquisition of 168 vacation ownership units in 2027, and we expect to make payments when specific construction milestones are completed as follows: $14 million in 2026, and $108 million in 2027. •We have a commitment to acquire real estate in Waikiki, Hawaii for use in our Vacation Ownership segment via our involvement with a VIE. Refer to Footnote 14 “Variable Interest Entities” for information about this commitment, including purchases that occurred during the first quarter of 2024 pursuant to this commitment, and for additional information about our activities relating to the VIE involved in this commitment. As of March 31, 2025, we had $11 million of letters of credit outstanding under our Revolving Corporate Credit Facility (as defined in Footnote 11 “Debt”), of which $10 million were related to and in lieu of reserves required for our outstanding securitization transactions completed during the first quarter of 2024 and the fourth quarter of 2023. In addition, as of March 31, 2025, we had $10 million in letters of credit outstanding that were related to and in lieu of reserves required for our outstanding securitization transaction completed during the third quarter of 2024, which were not issued pursuant to, nor do they impact our borrowing capacity under, the Revolving Corporate Credit Facility. Surety bonds issued as of March 31, 2025 totaled $127 million, the majority of which were requested by federal, state or local governments in connection with our operations. Guarantees We have a commitment to an owners’ association that we manage to pay for any shortfall between the actual expenses incurred by the owners’ association and the income received by the owners’ association, in lieu of our payment of maintenance fees for unsold inventory. The agreement will terminate on the earlier of: 1) sale of 95% of the total ownership interests in the owners’ association; or 2) written notification of termination by either party. At March 31, 2025, our expected commitment for the remainder of 2025 is $18 million, which will ultimately be recorded as a component of rental expense on our income statement. Loss Contingencies In February 2019, the owners’ association for the St. Regis Residence Club, New York filed a lawsuit in the Supreme Court for the State of New York, New York County, Commercial Division against ILG and several of its subsidiaries and certain third parties. The operative complaint alleged that the defendants breached their fiduciary duties related to sale and rental practices, aided and abetted certain breaches of fiduciary duty, engaged in self-dealing as the sponsor and manager of the club, tortiously interfered with the management agreement, were unjustly enriched, and engaged in anticompetitive conduct. The plaintiff sought unspecified damages, punitive damages and disgorgement of payments under the management and purchase agreements. In February 2022, the Court granted our motion to dismiss the complaint and dismissed with prejudice all claims except one (such claim, the “Remaining Claim”), with respect to which the plaintiff was granted leave to amend its complaint. The plaintiff filed an amended complaint with respect to the Remaining Claim and appealed the dismissal of the other claims. In June 2023, the appellate court upheld the dismissal of those claims. Plaintiff filed a motion for reconsideration of that appellate ruling, and in October 2023, the appellate court denied that motion. In November 2022, the Court granted our motion to dismiss the amended complaint with respect to the Remaining Claim and again granted plaintiff leave to amend its complaint. The plaintiff filed an amended complaint with respect to the Remaining Claim and again appealed the dismissal of the other claims. In January 2024, the appellate court upheld the dismissal of the other claims. In September 2023, the Court granted our motion to dismiss the amended complaint with respect to the Remaining Claim and denied plaintiff permission to file any additional amended complaints. Plaintiff’s appeal of the September 2023 ruling was dismissed as untimely by the appellate court on June 10, 2024. In the ordinary course of our business, various claims and lawsuits have been filed or are pending against us. A number of these lawsuits and claims may exist at any given time. We record and accrue for legal contingencies when we determine that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In making such determinations, we evaluate, among other things, the degree of probability of an unfavorable outcome and, when it is probable that a liability has been incurred, our ability to make a reasonable estimate of loss. We review these accruals each reporting period and make revisions based on changes in facts and circumstances. We have not accrued for the matter described above and we cannot estimate a range of the potential liability associated with this matter, if any, at this time. We have accrued for other claims and lawsuits, but the amount accrued is not material individually or in the aggregate. For matters not requiring accrual, we do not believe that the ultimate outcome of such matters, individually or in the aggregate, will materially harm our financial position, cash flows, or overall trends in results of operations based on information currently available. However, legal proceedings are inherently uncertain, and while we believe that our accruals, where required, are adequate and/or we have valid defenses to the claims asserted, unfavorable rulings could occur that could, individually or in the aggregate, have a material adverse effect on our business, financial condition, or operating results.
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