For the Quarterly Period Ended September 30, 2000

Commission File Number 0-13881

CITY INVESTING COMPANY LIQUIDATING TRUST

(Exact name of registrant as specified in its charter)

99 University Place, 7th Floor
New York, New York
(Address of principal executive offices)

10003-4528
(Zip 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 and (2) has been subject to such filing requirements for the past 90 days.

Yes   X       No      
 

At September 30, 2000 there were 38,979,372 Trust Units of Beneficial Interest outstanding.

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

CITY INVESTING COMPANY LIQUIDATING TRUST
Statements of Income
Third Quarter and Nine Months ended September 30
(Unaudited)

The September 30, 2000 financial statements for the City Investing Company Liquidating Trust (the "Trust") are unaudited. In the opinion of the Trustees, the interim financial statements reflect all adjustments necessary for a fair presentation of the financial position and income and expenses of the Trust as prepared on a Federal income tax basis. Results for interim periods are not necessarily indicative of results for the full year.

Note 2 - Basis of Accounting

The accompanying financial statements have been prepared on the basis of accounting used for Federal income tax purposes. Accordingly, certain revenue and the related assets are recognized when received rather than when earned; and certain expenses are recognized when paid rather than when the obligation is incurred; and assets are reflected at their tax basis.

Note 3 - Gains (Losses) on Dispositions of Assets

Gains (losses) on dispositions of assets, net, include settlement costs and legal fees attributable to the disposition of assets incurred in connection with the defense of litigation against the Trust.

Note 4 - Trust Agreement

In accordance with the Trust Agreement, the Trust has assumed the obligation to make payments, where required, to discharge certain litigation and other contingent liabilities of City Investing Company ("City") which existed on September 25, 1985.

Note 5 - Investment Securities

Investment securities consist of U.S. Treasury Bills with maturities of less than one year and are carried at cost. The fair value of U.S. Treasuries is based on quoted market prices. Investment securities consist of the following:

The gross unrealized gains on investment securities, at September 30, 2000 and December 31, 1999, were $2,118 and $1,574, respectively.

Restricted funds at September 30, 2000 and December 31, 1999 represent a rent deposit of $4.

 
Note 7 - Investments

The Trust held 10,000 shares of Global Bancorporation which were carried at their tax basis. In February 2000, the Trust collected a final liquidating distribution of $20 from Global Bancorporation which resulted in a long-term capital loss of $562. The Trust holds 3,108,105 shares of Oklahoma Energy Corp., previously known as Cayman Resources Corporation common stock, which are carried at their tax basis. At September 30, 2000 and December 31, 1999, the fair market value of the Oklahoma Energy stock, based on quoted market prices, was $528 and $124, respectively.

Note 8 - Real Estate

Prior to January 2, 1990, the Trust held an undivided interest in a July 22, 1983 note received from Texas City Investment Company ("Texas City") in connection with a sale of land located in Galveston County, Texas. Texas City failed to fully pay the note in accordance with its terms. On January 2, 1990, the beneficial owners of the note (including the Trust) foreclosed on the property securing the note. As a result the Trust held an undivided interest in the mortgage receivable on the property. The Trust realized a long term gain of $20 on a sale of approximately one-half of one per cent of the real estate during the third quarter of 1998.

In February 2000, the Trust sold 39 percent of the real estate acreage for $2,410 cash, which resulted in a long-term capital gain of $610. In May 2000, the Trust sold the remaining real estate acreage for $478 cash and a non-recourse promissory note of approximately $3,683, payable in five equal annual installments, bearing interest at 8 percent. The May 2000 sale resulted in a recognized long-term capital gain of $171. The deferred gain of $1,173, reflecting a post closing adjustment of $2, has been recorded as a reduction to the mortgage receivable of $3,683. The Year 2000 U.S. Federal Tax Information letter will provide sufficient detail to permit those taxpayers who are required or choose to report the $1,173 as deferred gain to complete their Federal income tax returns.

Note 9 - Litigation and Other Contingent Liabilities

In accordance with the Trust Agreement, the Trust has assumed the obligation to make payments, where required, to discharge certain litigation and other contingent liabilities of City which existed at September 25, 1985. The Trust may have a contingent liability with respect to an issue raised by the Internal Revenue Service upon audit of tax returns of City Investing Company filed with respect to periods ending on or before September 25, 1985. This issue is currently pending before the Tax Court of the United States. This issue, if resolved unfavorably to City, would result in a substantial liability. As other parties are primarily and jointly responsible for this contingent liability, the Trust is unable to estimate the ultimate cost, if any, of its exposure. The Trust also remains subject to possible claims by the United States Environmental Protection Agency and other third parties.

On August 14, 2000, the Trust was notified of a complaint AmBase Corporation v. City Investing Company Liquidating Trust, et al. filed on behalf of AmBase Corporation in the Delaware Court of Chancery. Among other things, the complaint asserts that the Trust is primarily liable for the dispute pending before the Tax Court and seeks injunctive relief preventing the final liquidation of the Trust.

Lease Commitment.   The Trust agreed to enter into a one-year lease of office space that expires June 30, 2001 with a monthly rental payment of $2.

Note 10 - Future Distributions of Trust Assets

The existence of the contingent liabilities referred to in Note 9 has and will continue to affect the timing of future distributions of Trust assets.
 

It is difficult to compare amounts in comparable periods, as the financial statements of the Trust are prepared on the basis of accounting used for Federal income tax purposes; that is, amounts are reflected in the financial statements when amounts are received or paid.

The Trust recorded net income of $887 ($0.02 per unit) in the third quarter of 2000 and net income of $2,657 ($0.07 per unit) in the nine-month period ended September 30, 2000, compared with $849 ($0.02 per unit) and a net income of $2,295 ($0.06 per unit) in the corresponding 1999 periods. The reported gains (losses) on the dispositions of assets, net, reflect losses of $2 and gains of $189 in the third quarter and nine-month periods of 2000 as compared to losses of $0 and $29 in the respective 1999 periods. In February 2000, the Trust sold 39 percent of the real estate acreage for $2,410 cash, which resulted in a long-term capital gain of $610. In May 2000, the Trust sold the remaining real estate acreage for $478 cash and a non-recourse promissory note of $3,683, payable in five equal annual installments, bearing interest at 8 percent. The May 2000 sale resulted in a recognized long-term capital gain of $171. The deferred gain of $1,173, reflecting a post closing adjustment of $2, has been recorded as a reduction to the mortgage receivable of $3,683. The Year 2000 U.S. Federal Tax Information letter will provide sufficient detail to permit those taxpayers who are required or choose to report the $1,173 as deferred gain to complete their Federal income tax returns.

In February 2000, the Trust received $20 as the final liquidating distribution from Global Bancorporation which resulted in a long-term capital loss of $562. Other expenses affecting gains (losses) on disposition of assets, net, consist of legal fees incurred by the Trust in connection with the defense of litigation issues that relate to the former operations of City Investing Company and subsidiaries.

Interest, dividend and other income, principally consisting of interest earned on the investment of cash equivalents and investment securities, was $960 and $2,678 in the third quarter and nine months ended September 30, 2000, and $888 and $2,503 in the corresponding 1999 periods. The increase in the third quarter and nine-month periods of 2000 was due to the Treasury issuing Treasury Bills only once a quarter so that the Trust had to extend its investment in Treasury Bills by five weeks in the second quarter and by two weeks in the third quarter periods. Administrative expenses were $71 and $210 for the third quarter and nine months of 2000, compared with $39 and $179 for the comparable 1999 periods. This increase was primarily due to an increase in legal expenses.

At September 30, 2000, the Trust had cash and cash equivalents and U. S. Treasury Bills of $73,068. The Trustees believe that such cash resources and investment securities are sufficient to meet all anticipated liquidity requirements.

ITEM 1.   LEGAL PROCEEDINGS

The information contained under Legal Proceedings in the Trust's Annual Report on Form 10-K for the year ended December 31, 1999 is incorporated by reference herein. Except as set forth below, there have been no material developments in such legal proceedings subsequent to the date of that information.

AmBase Corporation v. City Investing Company Liquidating Trust, et al. On August 14, 2000, the Trust was notified of a complaint filed on behalf of AmBase Corporation in the Delaware Court of Chancery. Among other things, the complaint asserts that the Trust is primarily liable for the dispute pending before the Tax Court of the United States (see Note 9 to the Financial Statements) and seeks injunctive relief preventing the final liquidation of the Trust.

ITEM 2.   CHANGES IN SECURITIES

Trust Units of Beneficial Interest.   On July 17, 2000, the Trustees amended the Trust agreement to extend the existence of the Trust (and thereby the existence of the Trust Units) until the earlier of (a) the complete distribution of the Trust Estate or (b) September 25, 2001, unless an earlier termination is required by the applicable laws of the State of Delaware or by the action of the Beneficiaries as provided in Section 4.2 of the Trust Agreement or a later termination is required by the Trustees pursuant to Section 6.2 (q) of the Trust Agreement.

ITEM 5.   OTHER INFORMATION

None.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

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.

CITY INVESTING COMPANY LIQUIDATING TRUST