FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   (Mark one)

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2004

                                       or

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


                        Commission File Number: 000-32859

                              BFA LIQUIDATION TRUST

             (Exact name of registrant as specified in its charter)


           Arizona                                                    86-1018485
(State or other jurisdiction of                                 (I.R.S. Employer
 incorporation or organization)                              Identification No.)

3300 N. Central Ave., Suite 900, Phoenix, Arizona                          85012
(Address of principal executive offices)                              (Zip Code)

       Registrant's telephone number, including area code: (602) 279-3587

         Former Address: 1313 E. Osborn Rd, Suite 250, Phoenix, AZ 85014

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. Yes [X] No [ ]

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
described in Rule 12b-2 of the 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: As of May 12, 2004,  448,610,056
units  of  Class  A  Beneficial  Interests  and  137,246,636  units  of  Class B
Beneficial Interests were outstanding.


<PAGE>

                              BFA Liquidation Trust
                                    Form 10-K
                                Table of Contents

                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.                                                  1

Item 2. Management's Discussion and Analysis of Financial
        Condition and Results of Operation.                                   10

Item 3. Quantitative and Qualitative Disclosures about Market Risk.           12

Item 4. Controls and Procedures.                                              12

                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings.                                                    12

<PAGE>

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

<TABLE>
<CAPTION>
                     BFA LIQUIDATION TRUST AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF NET ASSETS IN LIQUIDATION
                                   (UNAUDITED)

                                                                              March 31,      December 31,
                                                                                 2004            2003
                                                                             -----------     -----------
<S>                                                                          <C>             <C>
        ASSETS IN LIQUIDATION AT ESTIMATED FAIR VALUE
Cash and cash equivalents                                                    $ 3,892,306     $ 4,032,941
Receivables, net (note 2)                                                      3,899,092       4,190,921
Other trust assets, net (note 3)                                              26,890,423      27,746,115
Restricted cash and cash equivalents                                             630,884         630,884
Fair value of expected cash flows from settlements (note 4)                      723,923         723,937
                                                                             -----------     -----------

      TOTAL ASSETS                                                            36,036,628      37,324,798
                                                                             -----------     -----------
               LIABILITIES IN LIQUIDATION
Accounts Payable and accrued liabilities                                       1,012,200       1,037,939
Estimated costs to complete liquidation (note 5)                               3,381,871       4,271,302
Settlement liability (note 6)                                                    349,744         349,744
                                                                             -----------     -----------

      TOTAL LIABILITIES                                                        4,743,815       5,658,985
                                                                             -----------     -----------

Commitments and contingencies (note 8)

      NET ASSETS IN LIQUIDATION                                              $31,292,813     $31,665,813
                                                                             ===========     ===========

CLAIMS AGAINST NET ASSETS IN LIQUIDATION CONSIST OF THE FOLLOWING:
 Class "3A" Certificate,
       448,610,056 units  outstanding,  $.06 per unit at March 31,
       2004 and $.06 per unit at December 31, 2003                           $26,664,240     $26,949,857
 Class "3B" Certificate,
       137,246,636 units  outstanding,  $.03 per unit at March 31,
       2004 and $.03 per unit at December 31, 2003                             4,628,573       4,715,956
                                                                             -----------     -----------

      TOTAL NET ASSETS                                                       $31,292,813     $31,665,813
                                                                             ===========     ===========
<FN>
The accompanying notes are an integral part of these Consolidated Financial Statements.
</FN>
</TABLE>

                                      -1-
<PAGE>
<TABLE>

                     BFA LIQUIDATION TRUST AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS IN LIQUIDATION
                                   (UNAUDITED)
<CAPTION>
                                                                 Three months ended
                                                          --------------------------------
                                                          March 31, 2004    March 31, 2003
                                                          -------------    ---------------

<C>                                                       <C>                <C>
Net assets in liquidation, January 1, 2004 and
January 1, 2003, respectively                             $  31,665,813      $ 194,833,341

Interest on notes receivable (note 2)                           130,336          1,507,478
Interest on notes payable                                          --              (58,584)
Changes in fair value of other trust assets and
liabilities (notes 3 and 7)                                    (503,336)        (1,754,223)
Changes in fair value of estimated costs to complete
liquidation (note 5)                                               --                 --
Distributions to holders of Class 3A and 3B beneficial
interests                                                          --          (93,568,679)
                                                          -------------      -------------
Net assets in liquidation, March 31, 2004 and
March 31, 2003, respectively                              $  31,292,813      $ 100,959,333
                                                          =============      =============
<FN>
The accompanying notes are an integral part of these Consolidated Financial Statements.
</FN>
</TABLE>

                                      -2-
<PAGE>
                    BFA LIQUIDATION TRUST AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

The BFA  Liquidation  Trust  (the  "TRUST")  was formed  pursuant  to the "First
Amended Joint Liquidating Plan of Reorganization of the Debtors Under Chapter 11
of the Bankruptcy  Code" proposed by the Baptist  Foundation of Arizona  ("BFA")
and related subsidiaries and affiliates (the "DEBTORS"), Official Collateralized
Investors'  Committee  and Official  Joint  Committee  of  Unsecured  Creditors,
relating to Case No.  99-13275 ECF GBN (the "PLAN"),  which was confirmed by the
Bankruptcy Court for the District of Arizona  ("BANKRUPTCY  COURT"), by an order
entered  on  December  22,  2000  and  became  effective  on  January  22,  2001
("EFFECTIVE DATE").

The primary purpose of the Trust is to (i) oversee and direct the liquidation of
the assets that were  transferred  to the Trust pursuant to the Plan (the "TRUST
ASSETS") for the benefit of the Trust's beneficiaries; (ii) prosecute all claims
and causes of action  that the Trust may have  against any person or entity (the
"LITIGATION  CLAIMS")  for the benefit of the Trust's  beneficiaries;  and (iii)
distribute any proceeds of the Litigation  Claims and the Trust Assets  received
by the Trust to the Trust's beneficiaries.

The Trust is not operated  with the  objective of  continuing or engaging in the
conduct of a trade or  business,  except to the extent  reasonably  necessary to
preserve or enhance the liquidation  value of the Trust Assets,  consistent with
the primary  purpose of the Trust. To facilitate the orderly  administration  of
the Trust and to  maximize  the value of the Trust  Assets,  the Trust  owns one
subsidiary,  New Asset Subsidiary,  LLC ("NAS"). The assets will be grouped in a
consistent and coherent manner and held, pending sale, by NAS. The Trust and NAS
are charged with the  responsibility of appraising the assets,  listing them for
sale in an orderly manner,  and  distributing  the proceeds from the sale to its
beneficiaries  on a regular basis. The Trust is expected to terminate after five
(5) years on January 22, 2006 unless the  Bankruptcy  Court  determines  that an
extension of the Trust is necessary for the purposes of the Trust.

The Plan provides for the appointment of a liquidating trustee (the "LIQUIDATING
TRUSTEE") and a liquidating trust board  ("LIQUIDATION  TRUST BOARD") to oversee
the  liquidation  of the Trust  Assets and to ensure  that such  liquidation  is
conducted in a cost-effective manner and in a reasonable time. In addition,  the
Liquidating Trustee and Liquidating Trust Board are directing the prosecution of
the Litigation Claims in an attempt to maximize the Trust's recoveries from such
claims.  The  Liquidating  Trustee  and the  Liquidating  Trust Board are making
ongoing efforts to dispose of the Trust Assets, to make timely distributions and
to minimize the duration of the Trust.

The Trust has a  wholly-owned  subsidiary to assist in  liquidating  the assets,
NAS, an Arizona limited liability company. NAS was formed on the Effective Date,
and the Trust is the sole  member of that  company.  The Trust is able to direct
NAS to take any actions that the Liquidating  Trustee believes will maximize the
value of the assets held by NAS. The Trust transferred  substantially all of its
assets to NAS,  which NAS is currently  marketing for sale. NAS is not permitted
to sell any assets or take any other  action  unless so  directed  by the Trust.
Collectively, the Trust and NAS are referred to as the "Trust".

Basis of Presentation

The  accompanying  consolidated  financial  statements  as of March 31, 2004 and
March 31, 2003 and for the three  months ended March 31, 2004 and March 31, 2003
include the accounts of the Trust and NAS.  All  intercompany  transactions  and
accounts are  eliminated in  consolidation.  The Trust's  investments in certain
wholly-owned  entities  are  included  in these  financial  statements  at their
estimated  fair value since the Trust  expects to liquidate the  investments  by
selling the entire individual businesses as going concerns.

                                      -3-
<PAGE>

These  consolidated  financial  statements  have  been  prepared  based  on  the
liquidation  basis of accounting,  accordingly  assets and liabilities have been
recorded at estimated fair values.  In accordance with the liquidation  basis of
accounting,  the financial statements reflect the estimated costs of liquidating
the assets and distributing the proceeds to holders of beneficial interests.

The  accompanying   unaudited  consolidated  financial  statements  reflect  all
adjustments,  consisting only of normal  recurring  adjustments that are, in the
opinion of  management,  necessary  for a fair  statement of the results for the
interim  period  presented.   Such  financial  information  should  be  read  in
conjunction with the consolidated financial statements and related notes thereto
as of December  31, 2003 and for the fiscal  years ended  December  31, 2002 and
December  31,  2001  included  in the  Trust's  Form  10 -K as  filed  with  the
Securities and Exchange Commission. The results for the three months ended March
31, 2004 may not be indicative of the future results for the entire year 2004.

The Trust's  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 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  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.

TRUST ASSETS

The assets of the Trust are carried at estimated  fair market values  determined
by discounting, at appropriate risk adjusted discount rates, the Trust's current
best  estimate  of cash  flows  expected  to be  realized  from the  collection,
liquidation  and  disposition  of assets held by the Trust.  Such assets consist
principally of notes  receivable,  income producing real estate and interests in
real estate, interests in partnerships and operating companies and miscellaneous
other assets,  receivables and assets from litigation  and/or  settlements.  The
estimates  of the  future  cash  flows and  discount  rates from which the asset
values of the Trust were  derived are updated  quarterly  and are made under the
direction of the  management of the Trust based upon  information  available and
believed to be reliable. These estimates reflect significant judgments regarding
assumptions,  discount  rates,  timing of cash flows,  market risk and allowable
disputed claims.  Because of the inherent uncertainty regarding the valuation of
these assets there will likely be  differences  between  actual  results and the
estimated  fair values  reflected  in the  accompanying  consolidated  financial
statements and the differences may be material.

In addition to the assets  described  above, the Trust also holds the Litigation
Claims, which consist of claims against the former directors and officers of BFA
and judgments and deficiencies  related to loans made to former borrowers of the
Debtors. Because of the significant uncertainties associated with estimating the
probability  and timing of cash flows related to these  claims,  there can be no
assurance  that the Trust  will  realize  any value of such  Litigation  Claims.
However, if realized these Litigation Claims could be material to the Trust.

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.
For each asset,  estimates of income,  expenses and net cash flow on a quarterly
basis through the expected final  disposition date are prepared.  The individual
asset cash flow  estimates  are  developed  based  upon  factors  which  include
appraisals by independent  appraisers,  physical  inspection of the asset or the
collateral  underlying the related loans, local market  conditions,  contractual
payments and discussions with the relevant borrower.

ESTIMATED COSTS TO COMPLETE LIQUIDATION AND LITIGATION

The estimated costs to complete  liquidation  represent the estimated cash costs
of operating  the Trust  through its expected  termination  on January 21, 2006,
discounted  using a present value factor of 4.00% at March 31, 2004 and December
31, 2003. These costs, which include personnel, facilities,  Liquidating Trustee
and Liquidating Trust Board  compensation,  professional fees,  litigation costs
and other related costs,  are estimated based on various  assumptions  regarding


                                      -4-
<PAGE>
the number of employees,  the use of outside professionals  (including attorneys
and accountants) and other costs.  Litigation costs contain assumptions based on
what  management  expects  the  likely  course  of  actions  will  be  regarding
litigating and or settling certain  contingencies  (Note 5). Given that there is
inherent  uncertainty  in  the  estimation  process,  actual  results  could  be
materially different.

NEW ACCOUNTING PRONOUNCEMENTS

In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable Interest
Entities,  an  Interpretation  of ARB 51." FIN No. 46  provides  guidance on the
identification of entities of which control is achieved through means other than
voting  rights  (""variable  interest  entities" or "VIEs") and how to determine
when and which  business  enterprise  should  consolidate  the VIE (the "primary
beneficiary").   In  addition,  FIN  No.  46  requires  that  both  the  primary
beneficiary and all other enterprises with a significant  variable interest in a
VIE make additional disclosures. The transitional disclosure requirements of FIN
No. 46 are required in all financial  statements  initially issued after January
31, 2003, if certain conditions are met. Our adoption of this Interpretation did
not  have  a  material  impact  on  our  consolidated  financial  statements  or
disclosures.

2. RECEIVABLES, NET

At March 31, 2004,  net  receivables  consisted  primarily  of an  approximately
$850,000  note from  W.H.H.C.,  an  approximately  $950,000  note  from  Clearly
Waikoloa,  approximately  $1.43 million from various note receivables related to
land  contracts,  and  approximately  $670,000 of various other  mortgage  notes
receivable and commercial  receivables most of which are  collateralized by real
estate.  At  December  31,  2003,  net  receivables  consisted  primarily  of an
approximately  $820,000 note from W.H.H.C.,  an approximately  $1.3 million note
from Clearly Waikoloa,  approximately $1.4 million from various note receivables
related to land contracts,  and approximately $680,000 of various other mortgage
notes receivable and commercial  receivables most of which are collateralized by
real estate.

The following is a summary of gross cash flows and related valuation  allowances
at:
<TABLE>
<CAPTION>
                                                        March 31,      December 31,
                                                          2004             2003
                                                      ------------    ------------
<S>                                                   <C>             <C>
Total gross future cash flows from notes receivable   $ 42,121,945    $ 42,870,365
Collectibility discount                                (38,052,853)    (38,391,751)
Present value discount (8-9%)                             (170,000)       (287,693)
                                                      ------------    ------------
Net receivables                                       $  3,899,092    $  4,190,921
                                                      ============    ============
</TABLE>

Some of the  debtors  are in default  on their  contractual  obligations  to the
Trust.  At this time  management  does not expect to receive  future  cash flows
related to  receivables  in default  and thus no amount is included in the above
stated receivable amount. The Trust is aggressively pursuing collection of these
debts  by  various  means  including,   but  not  limited  to,  foreclosure  and
litigation, and recoveries from these actions, if any, could be material.

3. OTHER TRUST ASSETS, NET

The other trust assets are carried at estimated fair values which are the result
of  discounting,  at appropriate  discount rates,  the currently  estimated cash
flows projected to be realized from the collection, liquidation and disposition.
These valuations include appraisals by independent appraisers of the liquidation
value of some assets.  These values do not  represent  the full future cash flow
values  expected  from  the  sale  or  operations  of  these  assets  due to the
discounting of respective cash flows. Such assets consist  principally of income
producing  real estate and interests in real estate,  interests in  partnerships
and operating companies, and miscellaneous other assets transferred to the Trust
upon the consummation of the Plan.

                                      -5-
<PAGE>

Other trust assets consist of the following:
                                                     March 31,      December 31,
                                                        2004            2003
                                                   ------------    ------------
Real estate assets and partnerships, net           $ 24,126,205    $ 24,932,982
Investments in other operating companies, net         5,212,277       5,212,277
Other assets, net                                       149,315         295,842
                                                   ------------    ------------
Future value of other trust assets                   29,487,797      30,441,101
Present value discount (various rates)               (2,597,374)     (2,694,986)
                                                   ------------    ------------
Other trust assets value                           $ 26,890,423    $ 27,746,115
                                                   ============    ============

4. FAIR VALUE OF EXPECTED CASH FLOWS FROM SETTLEMENTS

Settlement proceeds at March 31, 2004 and December 31, 2003 primarily consist of
the net expected  proceeds from the  settlement  with  Chaparral  Pines LLC. The
Chaparral Pines LLC settlement  consists of $300,000 cash and real estate valued
at  approximately  $420,000 net of selling costs. The Chaparral Pines settlement
agreement  must now be signed by both parties and approved by the Superior Court
to become final.  Also during 2003 the Trust  settled with  National  Union Fire
Insurance Company of Pittsburgh,  PA ("NATIONAL  UNION") in regards to insurance
claims of the Debtors against former officers and directors.  The National Union
settlement  consists  of gross  proceeds  of $3.75  million  less legal fees and
expenses  of  approximately  $550,000  for a net  amount of  approximately  $3.2
million. Both the Superior Court for the State of Arizona,  Maricopa County (the
"SUPERIOR COURT") and Bankruptcy Court approved the settlement on October 17 and
21, 2003,  respectively.  The National Union Settlement became final and the net
proceeds along with approximately  $1.7 million in litigation  proceeds that was
derived from the sale of assets  received as part of the litigation  settlements
with Jalma W. and Carole  Hunsinger  and their  affiliates  was  distributed  on
December 19, 2003.

5. ESTIMATED COSTS TO COMPLETE LIQUIDATION AND LITIGATION

The estimated  costs to complete  liquidation  and  litigation of $ 3,381,871 at
March 31, 2004 and $4,271,302 at December 31, 2003 represent the estimated costs
of operating  the Trust  through its expected  termination  on January 21, 2006,
discounted  using a present value factor of 4.00% at March 31, 2004 and December
31, 2003. These costs, which include personnel, facilities,  Liquidating Trustee
and  Liquidating  Trust Board  compensation,  professional  fees and  litigation
costs,  are  estimated  based on  various  assumptions  regarding  the number of
employees,   the  use  of  outside   professionals   (including   attorneys  and
accountants) and other matters.  Litigation costs contain  assumptions  based on
what  management  expects  the  likely  course  of  actions  will  be  regarding
litigating and or settling certain  contingencies.  Given that there is inherent
uncertainty  in the  estimation  process,  actual  results  could be  materially
different.

6. SETTLEMENT LIABILITY

The settlement  liability at March 31, 2004 and December 31, 2003 represents the
class action's 50% portion of the remaining  settlement assets from Jalma W. and
Carole  Hunsinger and their affiliates and Harold D. and Stephanie B. Friend and
their affiliates.  The settlement  liability relates to assets reported in other
trust  assets  of  approximately   $250,000  and  receivables  of  approximately
$450,000.  In January  2003 the courts  approved an  allocation  process for the
January  2003  settlements  whereby  the  Trust and the  class  action  each are
allocated 50% of the settlement proceeds.  All of the class action investors are
beneficial holders of the Trust, however not all beneficial holders of the Trust
are  class  action  investors.  From  all  Litigation  Claims,  the  Trust  will
distribute its allocated  share of the proceeds to the  beneficial  holders on a
pro rata basis in accordance  with the Plan.  The class action  proceeds will be
distributed  to its investors  based on a formula as agreed by its members.  The
Trust has recorded a settlement  liability for the settlement  proceeds,  net of
legal fees,  equal to the amount  allocated to the class  action.  The liability
will remain until the proceeds are distributed to the class action  investors by
the Trust.

                                      -6-
<PAGE>

7. CHANGES IN OTHER TRUST ASSETS

During the three  months ended March 31, 2004,  the  valuation of certain  other
trust  assets  were  adjusted  based on current and pending  sales  offers,  new
information   received  by  management  and  actual  operating  results.   These
adjustments  aggregately  total an approximate  $634,000 decrease in other trust
assets. Included in actual operating results are sales of approximately $430,000
for the sale of various lots at  Stillwaters  Resort,  Park at Juniper Ridge and
Westside Property.

During the three  months ended March 31, 2003,  the  valuation of certain  other
trust  assets  were  adjusted  based on current and pending  sales  offers,  new
information   received  by  management  and  actual  operating  results.   These
adjustments  aggregately  total an  approximate  $1.8 million  decrease in other
trust assets.  Included in actual  operating  results are sales of approximately
$196,000 for the sale of lots at ASC San Antonio and Westside Property.

8. COMMITMENTS AND CONTINGENCIES

Contingent Liabilities

The Trust is involved in various legal proceedings.  A number of creditors filed
proofs of claims in the Debtors'  bankruptcy  proceedings.  As of March 31, 2004
all of these  claims have been  resolved  and either paid in full (if any amount
was due) or fully reserved for (if disputed).

Contingent Assets

In 2002 a complaint alleging four (4) separate causes of action was filed in the
Superior Court against BFA's former limited liability company member,  Chaparral
Pines,  LLC, in the development of the Chaparral Pines property.  The complaints
center  around the  mismanagement  of the property by the  defendant.  Chaparral
Pines filed a Motion to dismiss the complaint. After briefings and argument, the
Superior  Court has  allowed the Trust to proceed on three of the four counts in
the complaint. Discovery has commenced. Because of the substantial nature of the
Chaparral  Pines  project,  the  defendants'  were working to accumulate all the
construction-related  documents.  During that time the Trust was able to reach a
settlement  agreement with Chaparral Pines LLC consisting of the Trust receiving
$300,000 in cash and real estate valued at approximately $420,000 net of selling
costs. The settlement  agreement has now been signed by both parties and must be
approved by the  Bankruptcy  Court to become final.  The Trust has recorded this
asset in its fair value of expected cash flows from  settlements  net of various
discounts.

In an effort to avoid  repaying  $4 million  dollars  in debt to the Trust,  Mr.
William  Blair has engaged in a number of legal  maneuvers.  In 2001,  the Trust
filed a Notice of Trustee's Sale on the collateral  securing repayment on one of
the Notes (the "DESERT DIAMOND NOTE").  The Trust separately filed a lawsuit and
obtained a judgment  against  Mr.  Blair  individually  as a co-maker  under the
Desert Diamond Note. That debt has been reduced to judgment in an amount of $1.4
million  dollars,  plus  interest at 19% until paid in full.  With regard to Mr.
Blair's  second  obligation  (the  "CAMPBELL  NOTE") the Superior  Court entered
judgment on March 19, 2003 against both Mr. Blair and his trust in the amount of
$1,418,329.82 with interest at the rate of 18% from August 13, 2001, until paid.
The  Trust  has  authorized  the  initiation  of a  new  lawsuit  to  recover  a
substantial  number of real property transfers made by Mr. Blair to mostly third
party related entities on the eve of the Superior Court judgments.  These claims
will be pursued under Arizona  state law theories of  fraudulent  transfer.  The
Trust now has  successfully  litigated  and  received  judgments  on the two (2)
Superior  Court actions and defended the Trust's  claims  against the actions of
Mr. Blair in connection  with the Desert  Diamond  bankruptcy.  This  bankruptcy
included  a  proposed  cram down plan and an  adversary  lawsuit  to modify  the
underlying  contract.  The assets of the bankruptcy  estate have been liquidated
and the  proceeds  from the sale of the assets  distributed  to the Trust.  With
regard to the remaining  action against Fidelity Title (the "TITLE COMPANY") the
Title  Company  hired by Mr. Blair to transfer  title to portions of the Trust's
collateral to third parties without lien releases, the Bankruptcy Court recently
granted the Title Company's  Motion for  Reconsideration  and reversed its prior
ruling.  The effect is that the Bankruptcy  Court has upheld an alleged contract
modification  disallowed by a different judge in an earlier  litigation.  If the
Bankruptcy  Court's  ruling  stands as issued,  the Trust  would be  required to

                                      -7-
<PAGE>
release its liens on the remaining real property  collateral for a release price
of $12,500/lot (a total of $275,000 for the remaining  lots).  The Title Company
also has on file a Motion for Award of Fees  seeking  an award of  approximately
$138,000 in fees and costs  incurred.  The  Bankruptcy  Court  awarded the Title
Company an amount of $44,000  for fees and costs.  The Trust has  appealed  both
rulings made by the Bankruptcy Court relating to the Title Company matters and a
stay has been  issued  pending  the  resolution  of the  appeal.  The  Trust has
included the estimated valued this note receivable at the lot release price less
awarded and  estimated  attorney's  fees in the note  receivable  portion of the
accompanying consolidated financial statements.

The Trust holds a note receivable in an outstanding  amount of  approximately $2
million dollars from W.H.H.C.  Through this note the Trust has begun foreclosing
on approximately  70 acres of real property located in Maricopa County,  Arizona
as a partial  payment on the  outstanding  note. A lawsuit has been filed in the
Superior  Court to foreclose  on the mortgage and obtain a judgment  against the
real  property.  Two (2) of the  defendants  have made a claim in the form of an
affirmative defense,  that the Trust has filed a wrongful claim against the real
property. Three (3) of the defendants have now filed answers. The remaining four
(4) defendants  claim no interest in the real property.  The estimated  value of
the 70 acres of real property has been included in the notes receivable  portion
of the accompanying consolidated financial statements.

On November  12, 2003 the Trust filed an adversary  proceeding  against Glen and
Nannie Lou Crotts and the Glen E. Crotts  Revocable Trust  ("CROTTS").  Glen and
Nannie Lou Crotts are the parents of past BFA president  William Crotts and Glen
Crotts served as president of BFA prior to William  Crotts.  The complaint  sets
forth four claims  against the Crotts.  The first two (2) claims seek to recover
monies owed in excess of $750,000 on two (2)  promissory  notes to the Trust now
in  default.  The third  claim  asserts  that the  Crotts  assisted  BFA  senior
management in creating misleading  financial statements in 1994 and 1995 through
participation  in real  estate  transactions.  The fourth and final  claim is to
recover $296,000  withdrawn from the investment  accounts held at BFA during the
one-year  period prior to BFA filing for  bankrupcty  protection as a preference
amount.  The Crotts have denied the  assertions in all the claims and have filed
counterclaims  against the Trust for  withholding  distributions  on $537,219 of
their  investments in BFA and $18,000 from another  partnership.  The Crotts and
the Trust have agreed to  mediation,  which did not result in a  settlement.  No
amount has been recorded in the accompanying  consolidated financials statements
related to these claims and counterclaims.

Because of the  significant  uncertainty  associated with the valuation of these
contingent  assets,  it is likely that the  amounts  ultimately  realized  could
differ  from  the  amounts  that  are  actually  reflected  in the  accompanying
consolidated financial statements and the differences could be material.


9. CASH RECEIPTS AND DISBURSEMENTS

For the year three  months  ended March 31, 2004 and March 31,  2003,  the Trust
received net cash proceeds from sales of assets, note receivable collections and
operations of approximately $775,000 and $186.7 million respectively, consisting
of the following:

                                                        Three months ended
                                                --------------------------------
                                                March 31, 2004    March 31, 2003
                                                --------------    --------------
Principal and interest received from notes       $    422,829      $  2,757,380
receivable
Cash flows from other trust assets                    351,706       183,967,684
                                                 ------------      ------------
Total                                            $    774,535      $186,725,064
                                                 ============      ============

Conversely, for the same respective periods, the Trust paid out to various
creditors approximately $915,000 and $182.2 million, respectively, as follows:

                                                       Three months ended
                                               --------------------------------
                                               March 31, 2004     March 31, 2003
                                               -------------      -------------
Trust operations                               $    (915,170)     $    (685,516)
Payable to Class 5 creditors                            --                 --
Principal and interest payments on
collateralized notes payable                            --             (642,295)
Distributions to Class 3A & 3B                          --         (180,918,679)
                                               -------------      -------------
Total                                          $    (915,170)     $(182,246,490)
                                               =============      =============

                                      -8-
<PAGE>
Distributions  to Class 3A and 3B  include  the  class  action  50%  portion  of
litigation proceeds and are net of returned distributions and reserves.

16. SUBSEQUENT EVENTS

On April 13, 2004 the sale of Building 3 in the  Bloomington  Industrial  Center
was completed for approximately $1.5 million.

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
        of Operation.

The selected  historical  financial  data  presented  below for the three months
ended  March 31,  2004 and  March 31,  2003 are  derived  from our  consolidated
financial statements.  The selected financial data should be read in conjunction
with Item 7.  "Management's  Discussion and Analysis of Financial  Condition and
Results of Operations"  and the  consolidated  financial  statements and related
notes included in Item 1.
<TABLE>
<CAPTION>

                                                                    Three months ended
                                                              -------------------------------
                                                              March 31, 2004   March 31, 2003
                                                              --------------   --------------
<S>                                                           <C>              <C>
Net Assets in liquidation, beginning                          $  31,665,813    $ 194,833,341

Interest on notes receivable                                        130,336        1,507,478
Interest on notes payable                                              --            (58,584)
Changes in fair value of other trust assets and liabilities        (503,336)      (1,754,223)
Changes in fair value of estimated costs to complete
liquidation                                                            --               --
Distributions to holders of Class 3A and 3B beneficial
interests                                                              --        (93,568,679)
                                                              -------------    -------------

Net assets in liquidation, ending                             $  31,292,813    $ 100,959,333
                                                              =============    =============
</TABLE>

Certain statements under the headings  "Management's  Discussion and Analysis of
Financial Condition and Results of Operation," "Business," and elsewhere in this
report constitute  "forward-looking  statements" within the meaning of the rules
and regulations promulgated by the Securities and Exchange Commission.

This report contains a number of forward-looking  statements,  which reflect the
Trust's  current views with respect to future events and financial  performance.
Such   forward-looking   statements  are  based  on  management's   beliefs  and
assumptions  regarding  information  that is currently  available,  and are made
pursuant to the "safe harbor"  provisions of the federal  securities laws. These
forward-looking  statements are subject to certain risks and uncertainties.  The
Trust's  actual  performance  and results  could  differ  materially  from those
expressed in the forward-looking  statements due to risks and uncertainties that
could materially impact the Trust in an adverse fashion and are only predictions
of future results, and there can be no assurance that the Trust's actual results
will not  materially  differ  from those  anticipated  in these  forward-looking
statements.  In this report,  the words  "anticipates",  "believes",  "expects",
"intends",   "plans",   "may",   "future",   and  similar  expressions  identify
forward-looking statements. Readers are cautioned not to place undue reliance on
the forward-looking statements contained herein, which speak only as of the date
hereof.  The Trust has no  obligation  to  publicly  update or revise any of the
forward-looking  statements to reflect  events or  circumstances  that may arise
after the date hereof.

                                      -9-
<PAGE>
         FOR THE THREE MONTHS ENDED MARCH 31, 2004 COMPARED TO

                  THE THREE MONTHS ENDED MARCH 31, 2003

The  estimated  fair value of the  Trust's net assets in  liquidation  decreased
approximately  $373,000 for the three months ended March 31, 2004 as compared to
an  approximately  $93.9  million  decrease for the three months ended March 31,
2003.  Factors which  contributed  to the net decrease of the net asset value of
the Trust's  net assets for the three  months  ended March 31, 2004  include (i)
interest   income  from  notes   receivables   which  increased  net  assets  by
approximately  $130,000, and (ii) a decrease in the value of certain other trust
assets which  decreased  net assets by  approximately  $503,000.  Factors  which
contributed to the net decrease of the net asset value of the Trust's net assets
for the three months ended March 31, 2003 include (i) interest income from notes
receivables  which  increased net assets by  approximately  $1.5  million,  (ii)
interest  expense for notes payable which decreased net assets by  approximately
$59,000,  (iii)  decrease  in value of  certain  other  trust  assets  including
litigation proceeds and related settlement  liability which decreased net assets
by approximately $1.8 million, and (iv) distributions to holders of Class 3A and
3B  beneficial  interests  which  decreased  net assets by  approximately  $93.6
million.

Interest  income  from notes  receivable  decreased  in 2004 as compared to 2003
because of  principal  payments  received.  Interest  expense  on notes  payable
decreased  from 2004 as compared 2003 because the notes were paid off subsequent
to March 31,  2003.  The changes in fair value of other trust  assets in 2004 as
compared to 2003  changed  because of the  changes in the fair  market  value of
assets and certain related liabilities and sales or operations of these assets.

In 2003, the Trust distributed  approximately $163.3 million to holders of Class
3A or 3B beneficial  interests.  This  distribution  was made  principally  from
collections  on  Trust  Assets  and the  distribution  of the  Trust's  share of
litigation   proceeds.   During  2003  the  Trust   distributed   an  additional
approximately   $93.5  million  of  litigation   proceeds   during  2003  (which
represented the class action's share of such litigation  proceeds) to holders of
Class 3A and 3B beneficial  interests.  The Class 3A and 3B beneficial  interest
were valued at approximately $101 million at March 31, 2003.

Non-cash  trust assets at March 31, 2004 and December 31, 2003 were comprised of
the following:
<TABLE>
<CAPTION>
       NON-CASH ASSETS IN LIQUIDATION AT ESTIMATED                      December 31,
                   FAIR VALUE                           March 31, 2004        2003
                                                       --------------    -----------
<S>                                                     <C>              <C>
Receivables, net                                        $ 3,899,092      $ 4,190,921
Other trust assets, net                                  26,890,423       27,746,115
Fair value of expected cash flows from settlements          420,750          420,750
                                                        -----------      -----------
TOTAL ASSETS                                            $31,210,265      $32,357,786
                                                        ===========      ===========
</TABLE>

The fair  value of the  Trust  Assets  is  reassessed  at  least  quarterly  and
adjustments  to estimated  fair values are reflected in the period in which they
become known. For each asset, estimates of income, expenses and net cash flow on
a quarterly basis through the expected final disposition date are prepared.  The
individual  asset cash flow  estimates are developed  based upon factors,  which
include appraisals by independent  appraisers,  physical inspection of the asset
or the  collateral  underlying  the  related  loans,  local  market  conditions,
contractual  payments and discussions with the relevant  borrower.  At March 31,
2004 and December 31, 2003, the projected  monthly cash flows were discounted at
various  rates,  as  appropriate,  to reflect the Trust Assets at estimated fair
market value.

The Trust's  consolidated  financial statements have been prepared in accordance
with accounting  principles  generally  accepted in the United States of America
and in accordance with the liquidating 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,  liquidation  liabilities,  resolution of disputed claims,
estimates  of  liquidating  costs to be  incurred,  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

                                      -10-
<PAGE>
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 results for the basis for making
judgments  about the fair values of assets and  liquidation  liabilities are not
readily  apparent  from other  sources.  Actual  results  may differ  from these
estimates under different assumptions or conditions.

         The Trust believes the following  critical  accounting  policies affect
the Trust's more  significant  estimates and assumptions used in the preparation
of our consolidated financial statements, which have been prepared in accordance
with the liquidation basis of accounting:

     o   Receivables are recorded at fair value, which represents our discounted
         expected future cash flows calculated  based on the following  factors:
         receivable  payment  history,  financial  performance  of  debtor,  and
         underlying collateral of the Trust.

     o   Other  assets  consist  of  real  estate  partnerships,   interests  in
         operating  companies  and other  assets and are recorded at fair value,
         which  represents  discounted  expected  future  cash  flows,  based on
         estimates  and  assumptions   regarding  timing  of  sales,  timing  of
         payments, projected cash flows and appropriate discount factors.

     o   Payables,  accrued  liabilities and notes payable are recorded based on
         expected cash outflows which require estimates and assumptions relating
         to the timing of the payments and discount factors.

     o   Estimated costs to complete  liquidation  and litigation  represent the
         estimated  costs of operating the Trust to its expected  termination on
         January 21,  2006,  discounted  using a 4.00%  present  value factor at
         March 31, 2004 and December 31, 2003.

         o     The costs include personnel, facilities,  Liquidating Trustee and
               Liquidating  Trust  Board  compensation,  professional  fees  and
               litigation   costs,   and  are  estimated  based  on  assumptions
               regarding the number of employees,  use of outside professionals,
               and timing of cash flows.

Contingent Assets,  Litigation  Settlements and related liabilities are recorded
at the Trust's estimated future cash flows which require a significant amount of
estimates  and  assumptions.  In  January  2003,  the FASB  issued  FIN No.  46,
"Consolidation of Variable Interest Entities,  an Interpretation of ARB 51." FIN
No. 46 provides  guidance on the  identification of entities of which control is
achieved through means other than voting rights  (""variable  interest entities"
or  "VIEs")  and how to  determine  when and which  business  enterprise  should
consolidate  the VIE  (the  "primary  beneficiary").  In  addition,  FIN No.  46
requires  that both the primary  beneficiary  and all other  enterprises  with a
significant  variable  interest  in  a  VIE  make  additional  disclosures.  The
transitional disclosure requirements of FIN No. 46 are required in all financial
statements  initially  issued after January 31, 2003, if certain  conditions are
met. Our adoption of this  Interpretation  did not have a material impact on our
consolidated financial statements or disclosures.

The following table sets forth,  as of March 31, 2004, the aggregate  amounts of
our contractual  obligations and commitments with definitive  payment terms that
will require cash outlays in the future.
<TABLE>
<CAPTION>

                                              Payments Due by Period

                Total                    Less than 1 Year      2-3 Years       4-5 Years      After 5 Years
                -----                    ----------------      ---------       ---------      -------------
<S>                                            <C>               <C>               <C>              <C>
Operating Leases                               $30,804           $12,535           $--              $--
                                               -------           -------           ---              ---
Total Contractual Commitments                  $30,804           $12,535           $--              $--
                                               =======           =======           ===              ===
</TABLE>

                                      -11-
<PAGE>

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Trusts principal exposure to risk relates to interest rate risk, credit risk
and market  risk  associated  with the types of assets  being  sold.  An adverse
change in interest rates would not have a material adverse impact on the Trust's
operations or net assets.  Adverse changes in credit or market risk could have a
material adverse affect of the Trust's  operations and net assets. The Trust has
attempted  to minimize  this risk by  discounting  the Trust Assets based on the
asset's  exposure to credit or market  risk and  historical  experiences  of the
asset.

Item 4. Controls and Procedures.

Based on their  evaluation,  as of the end of the  period  covered  by this Form
10-Q, the Trust's  Liquidating Trustee (the Trust's principal executive officer)
and  Assistant  to the  Liquidating  Trustee (the  Trust's  principal  financial
officer) have concluded that they have reasonable assurance of the effectiveness
of the Trust's disclosure  controls and procedures (as defined in Rule 13a-15(e)
under the Securities Exchange Act of 1934).

In connection with this evaluation, the Liquidating Trustee and the Assistant to
the Liquidating  Trustee identified no change in internal control over financial
reporting that occurred  during the Trust's fiscal quarter ended March 31, 2004,
and that has materially affected,  or is reasonably likely to materially affect,
the Trust's internal control over financial reporting.

                                     PART II

Item 1. Legal Proceedings.

Chaparral Pines

         In 2002 a complaint  alleging  four (4)  separate  causes of action was
filed in the Superior  Court  against  BFA's former  limited  liability  company
member,  Chaparral  Pines,  LLC,  in  the  development  of the  Chaparral  Pines
property.  The complaints center around the mismanagement of the property by the
defendant.  Chaparral  Pines  filed a Motion to  dismiss  the  complaint.  After
briefings and argument,  the Superior  Court has allowed the Trust to proceed on
three of the four counts in the complaint.  Discovery has commenced.  Because of
the  substantial  nature of the Chaparral Pines project,  the  defendants'  were
working to accumulate all the construction-related  documents.  During that time
the Trust was able to reach a  settlement  agreement  with  Chaparral  Pines LLC
consisting  of the Trust  receiving  $300,000 in cash and real estate  valued at
approximately  $420,000 net of selling costs.  The settlement  agreement has now
been signed by both parties and needs to be approved by the Bankruptcy  Court to
become  final.  The Trust has recorded  this asset in its fair value of expected
cash flows from settlements net of various discounts.

William Blair

         In an effort to avoid repaying $4 million dollars in debt to the Trust,
Mr. William Blair has engaged in a number of legal maneuvers. In 2001, the Trust
filed a Notice of Trustee's Sale on the collateral  securing repayment on one of
the Notes (the "DESERT DIAMOND NOTE").  The Trust separately filed a lawsuit and
obtained a judgment  against  Mr.  Blair  individually  as a co-maker  under the
Desert Diamond Note. That debt has been reduced to judgment in an amount of $1.4
million  dollars,  plus  interest at 19% until paid in full.  With regard to Mr.
Blair's  second  obligation  (the  "CAMPBELL  NOTE") the Superior  Court entered
judgment on March 19, 2003 against both Mr. Blair and his trust in the amount of
$1,418,329.82 with interest at the rate of 18% from August 13, 2001, until paid.
The  Trust  has  authorized  the  initiation  of a  new  lawsuit  to  recover  a
substantial  number of real property transfers made by Mr. Blair to mostly third
party related entities on the eve of the Superior Court judgments.  These claims
will be pursued under Arizona  state law theories of  fraudulent  transfer.  The
Trust now has  successfully  litigated  and  received  judgments  on the two (2)
Superior  Court actions and defended the Trust's  claims  against the actions of
Mr. Blair in connection  with the Desert  Diamond  bankruptcy.  This  bankruptcy
included  a  proposed  cram down plan and an  adversary  lawsuit  to modify  the
underlying  contract.  The assets of the bankruptcy  estate have been liquidated


                                      -12-
<PAGE>

and the proceeds from the sale of the assets have been distributed to the Trust.
With regard to the remaining action against Fidelity Title (the "TITLE COMPANY")
the Title  Company  hired by Mr.  Blair to  transfer  title to  portions  of the
Trust's collateral to third parties without lien releases,  the Bankruptcy Court
recently granted the Title Company's Motion for Reconsideration and reversed its
prior  ruling.  The  effect is that the  Bankruptcy  Court has upheld an alleged
contract modification  disallowed by a different judge in an earlier litigation.
If the Bankruptcy  Court's ruling stands as issued,  the Trust would be required
to release its liens on the  remaining  real property  collateral  for a release
price of  $12,500/lot  (a total of $275,000 for the remaining  lots).  The Title
Company  also  has on file a  Motion  for  Award  of Fees  seeking  an  award of
approximately  $138,000 in fees and costs incurred. The Bankruptcy Court awarded
the Title  Company  an  amount  of  $44,000  for fees and  costs.  The Trust has
appealed both rulings made by the Bankruptcy Court relating to the Title Company
matters and a stay has been put in place  pending the  resolution of the appeal.
The Trust has  included the  estimated  valued this note  receivable  at the lot
release price less awarded and estimated  attorney's fees in the note receivable
portion of the accompanying consolidated financial statements.

W.H.H.C

         The  Trust  holds  a  note  receivable  in  an  outstanding  amount  of
approximately  $2 million dollars from W.H.H.C.  Through this note the Trust has
begun foreclosing on approximately 70 acres of real property located in Maricopa
County, Arizona as a partial payment on the outstanding note. A lawsuit has been
filed in the  Superior  Court to foreclose on the mortgage and obtain a judgment
against the real property.  Two (2) of the  defendants  have made a claim in the
form of an  affirmative  defense,  that the  Trust has  filed a  wrongful  claim
against the real property.  Three (3) of the defendants  have now filed answers.
The remaining  four (4) defendants  claim no interest in the real property.  The
estimated  value of the 70 acres of real property has been included in the notes
receivable portion of the accompanying consolidated financial statements.

Glen Crotts

         On November  12, 2003 the Trust filed an adversary  proceeding  against
Glen and Nannie Lou Crotts and the Glen E. Crotts  Revocable  Trust  ("CROTTS").
Glen and Nannie Lou Crotts are the parents of past BFA president  William Crotts
and Glen  Crotts  served  as  president  of BFA  prior to  William  Crotts.  The
complaint  sets forth four claims  against the Crotts.  The first two (2) claims
seek to recover monies owed in excess of $750,000 on two (2) promissory notes to
the Trust now in default.  The third claim asserts that the Crotts  assisted BFA
senior management in creating misleading  financial  statements in 1994 and 1995
through participation in real estate transactions. The fourth and final claim is
to recover  $296,000  withdrawn from the investment  accounts held at BFA during
the  one-year  period  prior  to  BFA  filing  for  bankrupcty  protection  as a
preference  amount.  The Crotts have denied the assertions in all the claims and
have filed  counterclaims  against the Trust for  withholding  distributions  on
$537,219 of their investments in BFA and $18,000 from another  partnership.  The
Crotts  and the Trust  have  agreed  to  mediation,  which  did not  result in a
settlement.  No  amount  has  been  recorded  in the  accompanying  consolidated
financials statements related to these claims and counterclaims.


Disputed Proofs of Claims

         A number of creditors filed proofs of claims in the Debtors' bankruptcy
proceedings.  As of March 31, 2004 all of these  claims have been  resolved  and
either paid in full (if any amount was due) or fully reserved for (if disputed).

                                      -13-
<PAGE>



                                   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.

                            BFA LIQUIDATION TRUST

                               By:   /s/ CLIFTON R. JESSUP, JR.
                                     -------------------------------------------
                               Name: Clifton R. Jessup, Jr., Liquidating Trustee


                                      -14-