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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-QSB

(Mark one)

     |X|   Quarterly Report under Section 13 or 15(d) of the Securities
               Exchange Act of 1934

           For the quarterly period ended March 31, 2007

     | |   Transition Report under Section 13 or 15(d) of the Exchange Act

           For the transition period from            to
                                          ----------    ----------

                        Commission file number 333-112603

                            CATSKILL LITIGATION TRUST
                            -------------------------
 (Exact Name of Small Business Issuer as Specified in Its Declaration of Trust)

              DELAWARE                                 16-6547621
-------------------------------------    ---------------------------------------
  (State or Other Jurisdiction of         (I.R.S. Employer Identification No.)
   Incorporation or Organization)

                       C/O CHRISTIANA BANK & TRUST COMPANY
                                1314 King Street
                           Wilmington, Delaware 19801
--------------------------------------------------------------------------------
                    (Address of Principal Executive Offices)

                                 (302) 888-7400
--------------------------------------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)


--------------------------------------------------------------------------------
 (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that Catskill  Litigation  Trust 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 a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes | |   No |X|

  As of May 14, 2007, 21,912,869 Units of beneficial interest were outstanding.

  Transitional Small Business Disclosure Format (check one): Yes | |   No |X|

================================================================================




                            CATSKILL LITIGATION TRUST

                                   FORM 10-QSB

                                      INDEX

PART I - FINANCIAL INFORMATION                                              Page

      ITEM 1. CONDENSED FINANCIAL STATEMENTS (unaudited)

      Condensed Balance Sheet as of March 31, 2007                          3

      Condensed Statements of Operations for the Three Months Ended
      March 31, 2007 and March 31, 2006                                     4

      Condensed Statements of Cash Flows for the Three Months Ended
      March 31, 2007 and March 31, 2006                                     5

      Notes to Condensed Financial Statements                               6-10

      ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS
      OR PLAN OF OPERATION                                                 11-15

      ITEM 3.  CONTROLS AND PROCEDURES                                     15

PART II - OTHER INFORMATION

      ITEM 1.  LEGAL PROCEEDINGS                                           16-18

      ITEM 6.  EXHIBITS                                                    18

SIGNATURES                                                                 18

CERTIFICATIONS                                                             18-22


                                       2



                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                            CATSKILL LITIGATION TRUST
                             CONDENSED BALANCE SHEET
                                 March 31, 2007
                                   (Unaudited)

ASSETS
   Current Assets
         Cash and Cash Equivalents                                  $   220,371
                                                                    -----------
   Total Current Assets                                                 220,371
                                                                    -----------
TOTAL ASSETS                                                        $   220,371
                                                                    ===========

LIABILITIES AND TRUST DEFICIENCY
      Current Liabilities
           Accrued expenses                                         $   186,079
           Line of credit-related party                               1,765,000
                                                                    -----------
      Total Current Liabilities                                       1,951,079
                                                                    -----------

      Trust Deficiency
           Units of Beneficial Interest: authorized 21,912,869;
           issued and outstanding 21,912,869, stated as                 182,552
      Accumulated deficit                                            (1,913,260)
                                                                    -----------
      Total Trust Deficiency                                         (1,730,708)
                                                                    -----------
TOTAL LIABILITIES AND TRUST DEFICIENCY                              $   220,371
                                                                    ===========

              The accompanying notes are an integral part of these
                        condensed financial statements.


                                       3


                               CATSKILL LITIGATION TRUST
                          CONDENSED STATEMENTS OF OPERATIONS
                                      (Unaudited)

                                                    For the                 For the
                                               Three Months Ended     Three Months Ended
                                                 March 31, 2007         March 31, 2006
                                               ------------------     ------------------

General and Administrative Expenses:
Litigation Trustee Fees                           $     30,000           $     30,000
Administrative Trustee Fees                              1,500                  1,500
Consulting Fees                                          2,400                  1,500
Legal Fees                                             278,872                 14,368
Accounting Fees                                         12,000                 12,000
Interest Expense                                        31,200                 22,911
Other                                                    4,972                  1,830
                                                  ------------           ------------
Total General and Administrative Expenses              360,944                 84,109
Dividend Income                                          1,278                     61
                                                  ------------           ------------
Net Loss                                          $   (359,666)          $    (84,048)
                                                  ============           ============

Loss per unit outstanding                         $      (0.02)          $      (0.00)

Units outstanding                                   21,912,869             21,912,869
                                                  ============           ============

                  The accompanying notes are an integral part of these
                             condensed financial statements.


                                           4


                                     CATSKILL LITIGATION TRUST
                                     STATEMENTS OF CASH FLOWS
                                            (Unaudited)

                                                                   For the               For the
                                                             Three Months Ended     Three Months Ended
                                                               March 31, 2007         March 31, 2006
                                                             ------------------     ------------------

Cash flows from operating activities
Net loss                                                         $(359,666)              $ (84,048)
   Adjustments to reconcile net loss to net cash (used in)
   provided by operating activities:
      Imputed interest expense                                      31,200                  22,911
   Changes in operating assets and liabilities:
      Accounts payable                                                --                    53,697
      Accrued expenses                                             178,884                   7,500
                                                                 ---------               ---------
Net cash (used in) provided by operating activities               (149,582)                     60

Cash flow from financing activities
      Increase in line of credit-related party                     250,000                    --
                                                                 ---------               ---------

Increase in Cash and Cash Equivalents                              100,418                      60


Cash and Cash Equivalents - beginning of period                    119,953                  17,235
                                                                 ---------               ---------
Cash and Cash Equivalents - end of period                        $ 220,371               $  17,295
                                                                 =========               =========

                  The accompanying notes are an integral part of these
                            condensed financial statements.


                                                 5


                            CATSKILL LITIGATION TRUST

      Notes to Condensed Financial Statements--March 31, 2007 (Unaudited)

NOTE 1 - THE TRUST AND MANAGEMENT'S PLANS

         The  Catskill  Litigation  Trust is a  Delaware  statutory  trust  (the
         "Litigation Trust") formed by Empire Resorts,  Inc. ("Empire Resorts"),
         Monticello  Raceway  Management,  Inc.,  ("MRMI"),   Monticello  Casino
         Management,  L.L.C.,  Monticello Raceway  Development  Company,  L.L.C.
         ("MRDC") and Mohawk Management, L.L.C. ("Mohawk"). On January 12, 2004,
         22,702,896 units of beneficial  interest were issued to the members and
         stockholders of those entities. At that time, Empire Resorts,  Catskill
         Development,  L.L.C.  ("Catskill"),  MRMI, Mohawk, Joseph E. Bernstein,
         Paul A. deBary (Messrs.  Bernstein and deBary are hereinafter  referred
         to as the "Litigation  Trustees") and Christiana Bank and Trust Company
         (the "Administrative Trustee") entered into the Declaration of Trust of
         Catskill  Litigation  Trust (the  "Declaration of Trust").  Pursuant to
         Amendment No. 1 to the  Declaration of Trust,  dated as of November 15,
         2004,  the number of units  issued  was  reduced  to  21,912,869.  From
         January 12, 2004 to December 31, 2006,  there were no additional  units
         issued.

         In the Declaration of Trust, Catskill,  MRDC and Mohawk assigned to the
         Litigation Trust all of their claims under or related to the alienation
         and frustration of their agreements and business relations with the St.
         Regis Mohawk Tribe and their rights to any judgment or settlement  that
         may arise from any  litigation  relating  to two  litigations  entitled
         Catskill  Development,  L.L.C., Mohawk Management L.L.C. and Monticello
         Raceway   Development   Company   L.L.C.,   Plaintiffs  v.  Park  Place
         Entertainment  Corporation,  Defendant  (the "PPE  Case") and  Catskill
         Development,  L.L.C.,  Mohawk  Management,  L.L.C.,  Monticello Raceway
         Development Company,  L.L.C.,  Plaintiffs v. Gary Melius, Ivan Kaufman,
         Walter Horn,  President  R.C. - St. Regis  Management  Company,  et al,
         Defendants (the Melius, Kaufman & Horne Case, hereinafter  collectively
         with the PPE Case referred to as the "Litigation").  If at any time the
         Litigation Trustees determine,  in their absolute discretion,  that the
         assets  of the  Litigation  Trust are not  sufficient  to  justify  its
         continuance,  the  Litigation  Trustees are authorized to terminate the
         Litigation Trust. In addition,  the Litigation Trust is to terminate on
         the  date  that  all  litigation  has been  fully  prosecuted  to final
         judgment or dismissal,  including all appeals, and all Litigation Trust
         assets have been distributed to the Litigation Trust's beneficiaries.

         In June  2006,  two of the  plaintiffs  in the PPE Case were  dismissed
         without  prejudice on  jurisdictional  grounds as a result of a finding
         that these parties lacked diversity of citizenship. A new complaint was
         subsequently  filed by the  Trustees  on  behalf  of these  plaintiffs.
         Pursuant to a stipulation  entered into by all parties to the PPE Case,
         the parties accepted all previous  determinations of the trial court as
         applicable to the new complaint and the case was consolidated with that
         of the remaining  plaintiff,  essentially  restoring the parties to the
         status that had existed prior to the dismissal. Accordingly, references
         to  the  "PPE  Case"  subsequent  to  the  consolidation  refer  to the
         consolidated case.

         On January 24, 2007,  the  Litigation  Trust  entered into an agreement
         (the "Joint  Alliance  Agreement")  with the St. Regis Mohawk Tribe and
         representatives  of the  litigants in a separate  lawsuit  against PPE.
         That lawsuit  pursued  claims on behalf of enrolled  members of the St.
         Regis Mohawk  Tribe that are similar to the claims that the  Litigation
         Trust is  pursuing on behalf of its  beneficiaries.  As a result of the
         common interests of the Litigation Trust's  beneficiaries and the class
         of enrolled tribal members, the parties to the Joint Alliance Agreement
         have agreed to work  together to merge their  respective  interests and
         share in any recoveries of their respective claims. Additional units of
         the Litigation  Trust will be issued if a merger is  consummated  under
         the Joint  Alliance  Agreement.  Subject to any  extension of the Joint
         Alliance Agreement,  such a merger must be consummated prior to the end
         of the term of the Joint Alliance Agreement, which extends through July
         30, 2007.

         During  the term of the Joint  Alliance  Agreement,  the  parties  have
         agreed to work  together  to  accomplish  a merger of their  respective
         litigation  interests in the  Litigation  Trust.  The  litigants in the
         tribal court litigation have agreed to execute and deliver  appropriate
         documentation  providing  for the transfer of all their right title and
         interest  in their  claims  to the  Litigation  Trust.  The  Litigation
         Trustees have agreed to request the consent of the beneficiaries of the


                                       6


         Litigation   Trust  to  an  amendment  of  the   Declaration  of  Trust
         establishing  the Litigation Trust that would permit the prosecution of
         such claims by the  Litigation  Trust and a doubling of the  authorized
         ownership units of the Litigation Trust. Upon the effectiveness of such
         amendment,  the Litigation Trust will obtain complete  ownership rights
         to the  claims of the tribal  litigants,  including  the  Tribal  Court
         judgment,  and 50% of the ownership units of the Litigation  Trust will
         become  beneficially  owned by the  enrolled  members of the St.  Regis
         Mohawk Tribe, as the class of plaintiffs certified by the Tribal Court.
         Consummation  of the merger of claims will  involve an amendment to the
         Declaration  of Trust to  authorize  an increase in the number of units
         outstanding  and will  require  the consent of the  unitholders  of the
         Litigation  Trust pursuant to the Declaration of Trust and satisfaction
         of  other  conditions,  including  approval  of the  Tribal  Court.  No
         assurance  can be given that such merger will be completed or completed
         on a timely basis.

         If the merger of these claims is consummated,  the enrolled  members of
         the St. Regis Mohawk Tribe, as beneficial owners of the new units, will
         be entitled to share  equally in any future  recovery or  settlement in
         the litigation  currently  being  prosecuted by the  Litigation  Trust.
         Similarly,  the existing  unitholders  will be entitled to share in any
         future  recovery or  settlement  of the claims of the tribal  litigants
         that are granted to the Litigation Trust.

         As discussed in Note 3, Empire Resorts,  a related party,  has provided
         the  Litigation  Trust with a line of credit of up to $2,500,000 to pay
         all expenses of the Litigation Trust permitted under the Declaration of
         Trust.  The  line  of  credit  expires  upon  the  termination  of  the
         Litigation Trust.  Empire Resorts is a holding company,  owning all the
         capital stock or membership interests of certain other entities. Empire
         Resorts is therefore dependent on these other entities to pay dividends
         or make  distributions  in order to generate  internal cash flow and to
         satisfy its  obligations,  including its obligations  under the line of
         credit. There can be no assurance,  however,  that these other entities
         will generate  enough revenue  sufficient  for such purposes.  Although
         Empire  Resorts  significantly  increased  its level of  operations  in
         recent years,  it has yet to  demonstrate  that such  operations can be
         profitable.  Therefore,  there can be no assurance  that Empire Resorts
         will have the ability to meet its obligations under the line of credit.

         Although funds currently  available to the Litigation  Trust are deemed
         sufficient to cover its operations in connection with the appeal of the
         PPE case,  it is  anticipated  that the  Litigation  Trust will need to
         raise additional funds in order to complete a trial in the PPE case and
         recommence  the  Melius,  Kaufman  and Horn Case in the event  that the
         appeal is successful or if the  unitholders  approve the  assignment of
         the Tribal Court judgment pursuant to the Joint Alliance Agreement.

NOTE  2  -  BASIS  OF   PRESENTATION   AND  SUMMARY  OF  SIGNIFICANT   ACCOUNTING
         POLICIES

         BASIS OF PRESENTATION

         These unaudited  condensed  financial  statements have been prepared in
         accordance with accounting  principles generally accepted in the United
         States  of  America  ("GAAP"),  and with  Form  10-QSB  and Item 310 of
         Regulation S-B of the Securities and Exchange  Commission  (the "SEC").
         In the opinion of the Litigation Trustees,  the accompanying  unaudited
         condensed  financial  statements contain all the adjustments  necessary
         (consisting only of normal recurring accruals) for a fair presentation.
         The interim results are not necessarily  indicative of the results that
         would be expected for the full year and do not contain all  information
         included in the  Litigation  Trust's  annual  financial  statements and
         notes for the year ended December 31, 2006.

         Certain  information  and  footnote  disclosures  normally  included in
         financial statements prepared in accordance with accounting  principles
         generally  accepted in the United States of America have been condensed
         or omitted. It is suggested that these financial  statements be read in
         conjunction  with the audited  financial  statements  and notes thereto
         included in the report on Form 10-KSB for the year ended  December  31,
         2006.


                                       7


         USE OF ESTIMATES IN THE FINANCIAL STATEMENTS

         The  preparation of financial  statements in conformity with accounting
         principles  generally accepted in the United States of America requires
         the Litigation  Trustees to make estimates and assumptions  that affect
         the  reported  amounts  of assets and  liabilities  and  disclosure  of
         contingent  assets  and  liabilities  at  the  date  of  the  financial
         statements and the reported amounts of revenues and expenses during the
         reporting period. Actual results could differ from those estimates.

         CASH AND CASH EQUIVALENTS

         Cash and cash equivalents include cash on account,  demand deposits and
         certificates  of deposit with  original  maturities  of three months or
         less at  acquisition  and money market  funds.  From time to time,  the
         Litigation  Trust maintains  significant cash balances in excess of the
         amounts  covered by the  Federal  Deposit  Insurance  Corporation.  The
         Litigation  Trust has not incurred any losses in such  accounts and the
         Litigation Trustees believe it is not exposed to any significant credit
         risk on cash.

         INCOME TAXES

         For federal income tax purposes,  the Litigation  Trust is treated as a
         grantor trust.  Under the grantor trust rules, each holder of a unit of
         beneficial  interest is treated as the owner of his or her share of the
         Litigation  Trust's  assets.  The treatment of income and expense items
         under GAAP may differ from the tax  treatment  of such items.  Expenses
         incurred by the Litigation Trust are capitalized for tax purposes.

NOTE 3 - LINE OF CREDIT-RELATED PARTY

         As discussed in Note 1, Empire Resorts,  a related party,  has provided
         the  Litigation  Trust with a line of credit of up to  $2,500,000.  The
         line of credit can be used to pay all expenses of the Litigation  Trust
         permitted under the Declaration of Trust,  including but not limited to
         professional  fees and the  fees and  expenses  of the  Litigation  and
         Administrative Trustees. The line of credit is non-interest bearing and
         is to be repaid from any amounts  received from litigation  settlements
         or  awards.  The line of credit  expires  upon the  termination  of the
         Litigation Trust.

         As of March 31,  2007,  $1,765,000  had been drawn  against the line of
         credit.

         The  Litigation  Trust  imputed  interest on the  borrowings  at Empire
         Resorts'  borrowing rate (8.00% per annum at March 31, 2007).  Interest
         expense  for the three  months  ended March 31, 2007 and March 31, 2006
         amounted to $31,200 and $22,911, respectively. Imputed interest expense
         is deemed contributed capital to the Litigation Trust.

NOTE 4 - DISTRIBUTIONS

         The  distribution  of any net proceeds from  litigation  settlements or
         awards,  after  amounts  are  applied to cover all  current or expected
         expenses of the Litigation  Trust, is to be made at the sole discretion
         of the Litigation Trustees and will be distributed as follows:

         First:  To pay the Litigation  Trustees their fees arising from
         litigation settlements or awards. (See Note 5.)

         Second: To reimburse $7,500,000 to Empire Resorts for expenses incurred
         in  connection  with  the  Litigation  prior  to the  formation  of the
         Litigation Trust and, in addition,  to repay Empire Resorts any amounts
         outstanding under the line of credit.

         Third: If any amount remains after the above requirements are met, such
         amount  remaining  is to be  divided  among  the  beneficiaries  of the
         Litigation  Trust in proportion  to their  ownership of units as of the
         date the distribution is made.


                                       8


NOTE 5 - COMMITMENTS AND CONTINGENCIES

         COMPENSATION OF LITIGATION TRUSTEES

         Each of the two Litigation  Trustees is entitled to annual compensation
         of $60,000 plus  reimbursement  of expenses  incurred  carrying out the
         purpose of the Litigation Trust. In addition, one litigation trustee is
         entitled to 4.0%, and the other 1.0%, of any litigation  settlements or
         awards.

         COMPENSATION OF THE ADMINISTRATIVE TRUSTEE

         The Administrative  Trustee is entitled to a monthly administrative fee
         of $500.  In  addition,  the  Administrative  Trustee is  entitled to a
         custody fee on certain cash balances and marketable  securities of 0.5%
         per annum on the first $10,000,000 of fair value and 3.0% on the excess
         and reimbursement for certain fees and expenses.

         EXPENSES PAID PRIOR TO THE FORMATION OF THE LITIGATION TRUST

         As  discussed  in Note 4, the  Litigation  Trust is obligated to pay to
         Empire  Resorts  up to  $7,500,000.  This  amount  represents  expenses
         incurred prior to the formation of the Litigation  Trust. The amount is
         payable solely from the proceeds of litigation settlements or awards.

         REPAYMENTS OF AMOUNTS DRAWN UNDER THE LINE OF CREDIT-RELATED PARTY

         As  discussed  in Note 4, the  expenses  of the  Litigation  Trust  are
         expected to be paid from draws under the line of credit.  Amounts drawn
         under the line of credit  are to be repaid  from any  amounts  received
         from litigation settlements or awards.

         ADDITIONAL AMOUNTS PAYABLE TO APPEALS COUNSEL

         Under the terms of the Litigation Trust's arrangement with the law firm
         handling  its appeal,  additional  fees in an  aggregate  amount not to
         exceed $100,000 may be payable to that firm.

         The exact amount  payable in the event of a reversal of the decision by
         the trial  court will vary from  $50,000 to $100,000  depending  on the
         precise nature of the outcome.

         CONTINGENT FEE PAYABLE TO CONSULTANT

         On January 24, 2007, the Litigation  Trust retained the services of JAF
         Management,  LLC  ("JAF") to serve as a  consultant  to the  Litigation
         Trust concerning strategic and structuring alternatives, capital market
         and industry conditions and financial  valuations relating to potential
         settlement opportunities or active settlement negotiations. The term of
         the consulting agreement expires on March 31, 2008. As compensation for
         the services of JAF, the  Litigation  Trust has agreed to pay a success
         fee in  connection  with any  out-of-court  settlement  or  termination
         arrangement  with  respect  to any of the  litigations  equal  to three
         percent (3%) of the amount by which the gross  realizable value of such
         settlement  or  termination   arrangement  exceeds  $200  million.  Any
         compensation  payable  to JAF is to be  treated  as an  expense  of the
         Litigation  Trust and shall not be deducted in determining the value of
         any settlement or termination arrangement.

NOTE 6 - CERTAIN RELATIONSHIPS

         The Litigation  Trustees are both currently  members of Empire Resorts'
         Board of Directors.

NOTE 7 - RECENT ACCOUNTING PRONOUNCEMENTS

         In  June  2006,  the  Financial   Accounting   Standards  Board  issued
         Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an
         Interpretation of FASB Statement No. 109" (the  "Interpretation").  The
         Interpretation  establishes  for all entities a minimum  threshold  for
         financial  statement  recognition of the benefit of tax positions,  and


                                       9


         requires certain expanded disclosures.  The Interpretation is effective
         for fiscal  years  beginning  after  December  31,  2006,  and is to be
         applied  to all open tax  years  as of the date of  effectiveness.  The
         adoption of the  Interpretation  did not have a material  impact on the
         financial statements of the Litigation Trust.

         In  September   2006,  the  FASB  issued  SFAS  No.  157,  "Fair  Value
         Measurements"  ("SFAS No.  157").  This  Statement  defines fair value,
         establishes a framework for measuring fair value and expands disclosure
         of fair value measurements. SFAS No. 157 applies under other accounting
         pronouncements  that  require  or permit  fair value  measurements  and
         accordingly, does not require any new fair value measurements. SFAS No.
         157 is  effective  for  financial  statements  issued for fiscal  years
         beginning after November 15, 2007. The Litigation Trust does not expect
         the  adoption  of SFAS No.  157 to have an  impact  on the  results  of
         operations and financial condition of the Litigation Trust.

         In  September  2006,  the  staff  of the SEC  issued  Staff  Accounting
         Bulletin No. 108 ("SAB 108") which  provides  interpretive  guidance on
         how  the   effects  of  the   carryover   or  reversal  of  prior  year
         misstatements  should be  considered  in  quantifying  a  current  year
         misstatement.  SAB 108 is effective for fiscal years ending on or after
         November 15, 2006.  Adoption of SAB 108 did not have a material  impact
         on the Litigation Trust's consolidated  financial position,  results of
         operations or cash flows.

         In February  2007,  the FASB issued  Statement of Financial  Accounting
         Standards  No.  159,  The Fair Value  Option for  Financial  Assets and
         Financial Liabilities ("SFAS 159"), to permit all entities to choose to
         elect,  at specified  election  dates,  to measure  eligible  financial
         instruments at fair value. An entity shall report  unrealized gains and
         losses on items for which the fair  value  option  has been  elected in
         earnings at each subsequent reporting date, and recognize upfront costs
         and  fees  related  to those  items in  earnings  as  incurred  and not
         deferred. SFAS 159 applies to fiscal years beginning after November 15,
         2007, with early adoption permitted for an entity that has also elected
         to apply the provisions of SFAS 157, Fair Value Measurements. An entity
         is prohibited from retrospectively applying SFAS 159, unless it chooses
         early  adoption.  SFAS 159 also applies to eligible  items  existing at
         November 15, 2007 (or early  adoption  date).  The adoption of the SFAS
         159 did not have a material  impact on the financial  statements of the
         Litigation Trust.


                                       10


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

FORWARD-LOOKING STATEMENTS

      This Report on Form 10-QSB contains  "forward-looking  statements"  within
the meaning of Section 27A of the Securities Act of 1933, as amended and Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All
statements  other than  statements of historical  facts included in this Report,
including without limitation, the statements under "General," and "Liquidity and
Capital Resources," are forward-looking  statements.  All subsequent written and
oral forward-looking  statements attributable to the Litigation Trust or persons
acting on its behalf are expressly qualified in their entirety by the cautionary
statements.

      The following discussions should be read in conjunction with our financial
statements  and the  related  notes  thereto  and  other  financial  information
appearing   elsewhere  in  this  report.  The  following   discussion   contains
forward-looking  statements  that involve  risks and  uncertainties.  Our actual
results could differ  materially from those  anticipated in the  forward-looking
statements as a result of various factors,  including those discussed  elsewhere
in this report.

GENERAL

      We are a statutory  trust created under  Delaware law. Our formation was a
condition to the merger of Empire Resorts,  Inc. ("Empire Resorts"),  Monticello
Raceway  Management,  Inc.,  ("MRMI"),   Monticello  Casino  Management,  L.L.C.
("MCM"),  Monticello Raceway  Development  Company,  L.L.C.  ("MRDC") and Mohawk
Management,  L.L.C.  ("Mohawk").  Also as a condition  to that  merger,  each of
Catskill Development, L.L.C. ("Catskill"), MRDC, and Mohawk, agreed to assign to
us all of their claims under or related to the  alienation  and  frustration  of
their  agreements and business  relations with the St. Regis Mohawk Tribe.  That
assignment included rights to any proceeds from any settlement or award that may
arise from any litigation  relating to that claim.  We currently  maintain a web
site  at  WWW.CATSKILLTRUST.COM  to  facilitate  communications  and  provide  a
convenient  source of more detailed  information for our  unit-holders and other
interested parties.

      Our  litigation  claims arise from the efforts of each of Catskill,  MRDC,
and  Mohawk  to  develop  with the St.  Regis  Mohawk  Tribe a gaming  casino in
Monticello,  New York. The plaintiffs spent several years and substantial  funds
to develop and obtain  required  approvals  for the casino.  Subsequently,  Park
Place  Entertainment  Corporation,  the world's  largest gaming  corporation and
Atlantic City's largest casino operator, entered into an agreement providing for
the St.  Regis  Mohawk  Tribe to commit its future  casino  development  efforts
exclusively to Park Place Entertainment  Corporation.  That agreement conflicted
with the Mohawk Tribe's agreements with Catskill, MRDC and Mohawk.

      There is one lawsuit  pending and one lawsuit that has been  discontinued.
The first lawsuit is Catskill Development,  L.L.C.,  Mohawk Management,  L.L.C.,
and Monticello  Raceway  Development  Company,  L.L.C.,  Plaintiffs v.Park Place
Entertainment  Corporation,  Defendant.  (Civil Action No. 00CIV8660 (CM) (GAY))
(United States District Court Southern  District of New York) referred to herein
as the "PPE case."  This lawsuit had  initially  been  dismissed on a motion for
summary  judgment.  However,  the trial court  subsequently  vacated the earlier
decision  granting  summary  judgment to Park Place  Entertainment,  in order to
consider new evidence and allow additional  discovery  proceedings.  After these
proceedings  were completed,  the dismissal was  reinstated.  An appeal has been
taken and a brief has been filed by the Litigation Trust. The respondent's brief
was filed on June 9, 2005 and the  Litigation  Trust's  reply brief was filed on
July 12, 2005.  Oral  arguments on the appeal were heard on October 17, 2005. On
March 8, 2006, the Court of Appeals for the Second Circuit  vacated the judgment
in the  case.  It  determined  that  there was no  jurisdiction  over two of the
plaintiffs  in the case and  remanded it to the  District  Court for  additional
findings  as to the  jurisdiction  over the  remaining  plaintiff  and as to the
possible  third  party  beneficiary  status of that  plaintiff  with  respect to
contracts entered into by the other plaintiffs.


                                       11


      The  District  Court  determined  that  Catskill  Development  and  Mohawk
Management  were not diverse and  dismissed  them from the case.  Following  the
dismissal,  the Trustees of the Litigation Trust filed a new complaint on behalf
of the  beneficiaries  of the Trust  against  Harrah's  Operating  Company,  the
successor  in interest to Park Place  Entertainment,  Inc.  with  respect to the
claims of Catskill  Development and Mohawk Management.  The state citizenship of
the Trustees of the Trust,  which had received the claims of the two non-diverse
parties by assignment, entitled them to claim jurisdiction in the federal court.
The  parties to the case had  previously  agreed  that all  parties to the newly
filed case would be subject to the  decisions  made in the original  case.  This
allowed  the Judge to  consolidate  the two cases and enter a decision  granting
summary  judgment and  dismissing  the case in its  entirety.  This  effectively
restored  the case to the  status it had been at the time the  appeal was filed,
with all parties and all claims represented and all of the decisions made in the
case applicable to all the parties.

      On October 11, 2006,  following  the filing of a new  complaint in the PPE
case by the Litigation  Trustees on behalf of two of the plaintiffs who had been
dismissed,  the  District  Court  consolidated  the new action with the existing
action.  An amended  answer to the new  complaint was filed on November 2, 2006.
The effect of these  actions  has been to  fulfill  the  technical  requirements
necessary to restore the PPE case to the status it was in prior to the dismissal
of the two  plaintiffs,  whose claims will now be  represented by the Litigation
Trustees.

      On November  20, 2006 the  District  Court issued a decision on the issues
presented by the 2nd Circuit's remand.  The District Court again entered summary
judgment against all the plaintiffs in the  consolidated  action for the reasons
given in its previous decisions.  As a consequence of the consolidation process,
the issue of third party  beneficiary  status becomes less important to a proper
resolution of the appeal. However, as requested by the 2nd Circuit, the District
Court also addressed the question of whether Monticello Raceway Development, the
one plaintiff whose claim to federal diversity jurisdiction in the original case
had not been in  question,  would  be a third  party  beneficiary  of any of the
contracts entered into by the other  plaintiffs.  The plaintiffs argued that all
of the contracts  were clearly  interdependent  as part of an overall  structure
designed to accomplish the  development and operation of the casino and that, in
particular,  the Land  Purchase  Agreement  contained an express  obligation  to
support the approval process for the other contracts.  However,  the Court found
that the references  made in the Land Purchase  Agreement and other documents to
the development  agreement between Monticello Raceway Development and the Tribal
Gaming Authority were too vague to form the basis for a third party  beneficiary
claim,  particularly in light of express  language in the development  agreement
that  she  believed  indicated  that  it was  intended  to  stand  on  its  own.
Accordingly,  the  District  Court  determined  that there  were no third  party
beneficiary rights under the development agreement.

      Following the issuance of this  decision and order,  the  plaintiffs  have
filed a new appeal to the 2nd Circuit.  Since the  restoration  of the claims of
the two  non-diverse  plaintiffs  to the case has  resulted in all of the issues
remaining the same as on the previous appeal,  it was anticipated by the parties
that the 2nd Circuit would be able to review the original  briefs in the case as
they were originally  filed, and that the only additional  briefing that will be
necessary would be supplemental briefs to deal with cases and other developments
that have arisen since those briefs were issued.  The ultimate  decision on this
question  rests with the Court,  however.  There is also no  assurance  that the
original panel that was assigned to the appeal last year will be assigned again.
Whether  or not a new panel is  assigned,  it is  likely  that  additional  oral
arguments will be heard.

      The second lawsuit is Catskill  Development,  L.L.C.,  Mohawk  Management,
L.L.C., and Monticello Raceway Development Company,  L.L.C.,  Plaintiffs against
Gary Melius,  Ivan Kaufman,  Walter Horn,  President R.C. - St. Regis Management
Company,  et al,  Defendants.  (Index No. 891/03) (Supreme Court of the State of
New York  County of  Sullivan).  This  lawsuit  has been  discontinued  under an
agreement that permits it to be refiled at a future date without being barred by
the statute of  limitations.  Our purposes are the prosecution of our litigation
claims  through  the  recovery  of any  settlement  or final  judgments  and the
distribution of the net amount of any such recoveries to our beneficiaries.


                                       12


      The administration of our Litigation Trust will involve the authentication
and payment of fees and  expenses for legal and related  services in  connection
with  our  litigation  claims,  reporting  and  regulatory  compliance  and  the
maintenance of litigation,  financial and  unit-holder  records.  Administrative
expenses,  exclusive of imputed interest and legal fees, are currently estimated
to be approximately  $200,000 per year,  comprised of the fees of the litigation
and  administrative  trustees,   auditors  and  accountants  and  other  support
services.  Legal fees and other  expenses  involved in pursuing  our  litigation
claims are  impossible to predict with any degree of accuracy.  No assurance can
be given that the amounts available to us for the payment of such expenses under
our line of credit will be sufficient to carry our litigation  claims through to
a successful  conclusion  or that  alternative  funds will be available for such
purpose.

      Our  unit-holders  will  only be  entitled  to the net  proceeds  from any
settlement or award,  if any, of our litigation  claims after the payment of our
expenses, the fees of our litigation trustees, any amounts outstanding under our
line of credit and  $7,500,000  to Empire  Resorts  for  reimbursement  of prior
expenses incurred in connection with our litigation claims.

      Under our agreement with counsel arguing the appeal, a portion of the fees
related to arguing  the appeal will be  contingent  on the  resulting  decision.
However,  these contingent fees do not relate to the additional matters relating
to jurisdiction  that arose subsequent to the initial briefing of the case. As a
result,  we currently  expect  significant  additional  expenses  related to the
appeal. We do not expect additional expenses related to a trial (which is itself
dependent  on the  outcome of the appeal)  until at least the second  quarter of
2007.

      On June 1, 2004, we filed a Voluntary Discontinuance and Tolling Agreement
with respect to the second lawsuit.  Since there are many issues of fact and law
in the PPE case  which  relate to  matters  that are also at issue in the second
lawsuit,  we believe that,  as long as the right to recommence  the suit without
regard to the statute of limitations was preserved,  the  discontinuance of this
suit was  appropriate  in order to avoid the cost of  maintaining  two  separate
lawsuits.

      On January 24, 2007, the  Litigation  Trust entered into an agreement (the
"Joint Alliance  Agreement") with the St. Regis Mohawk Tribe and representatives
of the litigants in a separate  lawsuit against PPE. That lawsuit pursued claims
on behalf of enrolled  members of the St. Regis Mohawk Tribe that are similar to
the claims that the Litigation Trust is pursuing on behalf of its beneficiaries.
The  lawsuit  resulted  in a $1.787  billion  judgment  against  PPE,  which was
rendered in the St. Regis Mohawk Tribal Court (the "Tribal  Court") on March 20,
2001.  An  enforcement  action by the  plaintiffs  to enforce that judgment in a
federal district court was subsequently  dismissed,  without  prejudice.  At the
time of the enforcement action, the validity of the Tribal Court was in question
and the matter was the subject of other judicial and administrative proceedings.

      A subsequent  decision  issued in one of the related court cases  reviewed
several  determinations  of the  Department of the  Interior,  in light of prior
litigation  relating to the  governmental  organization  of the St. Regis Mohawk
Tribe. As a result of its review, the court vacated certain  determinations made
by the  Department  of the Interior  and ordered  review of the matters de novo,
(i.e. from the beginning). Further determinations and legal proceedings may have
an effect on the  ultimate  recognition  of the validity of the St. Regis Mohawk
Tribal Court by the federal courts.

      As  a  result  of  the  common   interests  of  the   Litigation   Trust's
beneficiaries and the class of enrolled tribal members, the parties to the Joint
Alliance  Agreement  have  agreed to work  together  to merge  their  respective
interests and share in any  recoveries of their  respective  claims.  Additional
units of the  Litigation  Trust may be issued as a result of the Joint  Alliance
Agreement.  The term of the Joint Alliance  Agreement  extends  through July 30,
2007.

      During the term of the Joint Alliance  Agreement,  the parties have agreed
to work together to accomplish a merger of their respective litigation interests
in the  Litigation  Trust.  The  litigants in the Tribal Court  litigation  have
agreed to  execute  and  deliver  appropriate  documentation  providing  for the
transfer of all their right title and interest in their claims to the Litigation


                                       13


Trust.  The  Litigation  Trustees  have  agreed to  request  the  consent of the
beneficiaries  of the  Litigation  Trust to an amendment of the  Declaration  of
Trust  establishing  the Litigation  Trust that would permit the  prosecution of
such claims by the Litigation  Trust and a doubling of the authorized  ownership
units of the Litigation  Trust.  Upon the  effectiveness of such amendment,  the
Litigation  Trust will  obtain  complete  ownership  rights to the claims of the
tribal litigants,  including the Tribal Court judgment, and 50% of the ownership
units of the  Litigation  Trust will become  beneficially  owned by the enrolled
members of the St. Regis Mohawk Tribe,  as the class of plaintiffs  certified by
the Tribal Court. Consummation of the merger of claims will involve an amendment
to the  Declaration  of Trust to  authorize  an  increase in the number of units
outstanding  and will require the consent of the  unitholders  of the Litigation
Trust  pursuant to Section  9.3 of the  Declaration  of Trust of the  Litigation
Trust and satisfaction of other conditions,  including Tribal Court approval. No
assurance  can be given that such merger will be  completed  or  completed  on a
timely basis.

      If the merger of these claims is consummated,  the enrolled members of the
St. Regis Mohawk Tribe, as beneficial  owners of the new units, will be entitled
to share in any future recovery or settlement in the litigation  currently being
prosecuted by the Litigation Trust. Similarly,  the existing unitholders will be
entitled  to share in any future  recovery  or  settlement  of the claims of the
tribal litigants that are granted to the Litigation Trust.

      The  Litigation  Trust is not  engaged  in  settlement  negotiations  with
respect to any of the claims at this time. The defendants  have raised  numerous
defenses  to the  various  claims  in the  litigations  and  have  pursued  them
vigorously  resulting in dismissals or judgments in their favor.  The ability of
the  Litigation  Trust to prevail in the  various  litigations  will depend on a
number of factors,  including  the ability to obtain  reversals in the appellate
courts  and  to  pursue  the  litigations   successfully  in  the  trial  courts
notwithstanding potential defenses to the claims and the St. Regis Mohawk Tribal
Court judgment, including the alleged invalidity of the Tribal Court.

RESULTS OF OPERATIONS

For the three months  ended March 31, 2007,  we reported a net loss of $359,666.
Included  in net loss are legal fees of  $278,872,  administrative  expenses  of
$50,872 and imputed  interest of $31,200,  offset by dividend  income of $1,278.
For the three months  ended March 31,  2006,  we reported a net loss of $84,048.
Included in this net loss are legal fees of $14,368,  administrative expenses of
$46,830 and imputed interest of $22,911, offset by dividend income of $61.

The  expenditures  for legal fees in the first quarter of 2007, as compared with
the comparable period for 2006,  reflect the level of activity necessary to make
submissions  of briefs for  submission  to the Court of  Appeals  for the Second
Circuit as well as the increase in activities  resulting from the Joint Alliance
Agreement.  Administrative expenses, excluding legal fees, also increased in the
first  quarter  of  2007,  as  compared  with the  first  quarter  of 2006,  due
principally to expenses associated with the implementation of the Joint Alliance
Agreement.  Imputed  interest  expense has  increased  significantly  due to the
additional withdrawals on the line of credit.

LIQUIDITY AND CAPITAL RESOURCES

      Empire Resorts has provided us with an irrevocable line of credit of up to
$2,500,000 to provide funds to pay any and all of our expenses  permitted  under
the  Declaration of Trust.  Although no interest is payable on amounts  advanced
under  our  line  of  credit,  the  Litigation  Trust  imputes  interest  on the
borrowings at Empire Resorts borrowing rate (8% per annum at March 31, 2007). As
of March 31, 2007, $1,765,000 had been drawn down and was outstanding under this
line of credit. Amounts outstanding under our line of credit are to be repaid by
us from proceeds  received from any  settlement or award in connection  with our
litigation  claims after  payment of an amount  necessary to pay our  Litigation


                                       14


Trustees the fees for their  services as set forth in the  Declaration of Trust.
Repayments  of  amounts  outstanding  under our line of credit  may be made as a
whole or in part from time to time at any time without  notice.  We may reborrow
any  amounts  repaid.  Our line of credit  will  remain in full force and effect
until our termination.

      Empire  Resorts  is a holding  company,  owning all the  capital  stock or
membership  interests of certain  other  entities.  Empire  Resorts is therefore
dependent  on these other  entities to pay  dividends or make  distributions  in
order to generate  internal cash flow and to satisfy its obligations,  including
its obligations  under our line of credit.  There can be no assurance,  however,
that these other entities will generate  enough revenue to pay cash dividends or
make cash  distributions.  In addition,  these entities may enter into contracts
that limit or prohibit their ability to pay dividends or make distributions.

      Empire  Resorts  had no  operating  revenue  during the fiscal  year ended
December 31, 2003 and  operating  revenue of $45.0  million,  $86.8  million and
$98.1  million for the fiscal years ended  December 31, 2004,  2005 and 2006 and
sustained net losses of approximately $6.5 million, $12.7 million, $18.5 million
and $7.1 million,  respectively,  during such periods.  Although  Empire Resorts
significantly increased its level of operations during 2005 and 2006, it has yet
to demonstrate that such operations can be profitable.  Therefore,  there can be
no assurance that Empire  Resorts will have the ability to meet its  obligations
under our line of credit.

CRITICAL ACCOUNTING ESTIMATES

The Trustees use estimates and assumptions in preparing our financial statements
in preparing our financial  statements in  accordance  with  generally  accepted
accounting  principles  (United States).  These estimates and assumptions affect
the  reported  amounts of assets  and  liabilities  and  reported  revenues  and
expenses. The fair value of our cash and equivalents approximates their carrying
value.

OFF BALANCE SHEET ARRANGEMENTS

As of May 14, 2007,  the  Litigation  Trust does not have any off balance  sheet
arrangements.

ITEM 3.  CONTROLS AND PROCEDURES

(a) The Litigation  Trust carried out an evaluation,  under the  supervision and
with the participation of the Litigation Trust's management, including Joseph E.
Bernstein  (acting  Chief  Executive  Officer) and Paul A. deBary  (acting Chief
Financial  Officer),   the  Litigation  Trust's  Litigation  Trustees,   of  the
effectiveness of the design and operation of the Litigation Trust's  "disclosure
controls and procedures",  as such term is defined in Exchange Act Rule 15d-15e,
as of the end of the period covered by this report.  Based upon that evaluation,
Messrs.  Bernstein  and  deBary  have  concluded  that  the  Litigation  Trust's
disclosure  controls and procedures  were effective as of the end of the periods
covered by this report to provide reasonable assurance that information required
to be  disclosed  by the  Litigation  Trust in reports  that it files or submits
under the Exchange Act is recorded,  processed,  summarized and reported  within
the time periods specified in SEC rules and forms.

(b) There have been no significant  changes in the Litigation  Trust's  internal
controls or in other  factors  that could  significantly  affect the  Litigation
Trust's  internal  controls  subsequent to the date the Litigation Trust carried
out this evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.

      A control system,  no matter how well conceived and operated,  can provide
only  reasonable,  not absolute  assurance  that the  objectives  of the control
system are met. Because of the inherent  limitations in all control systems,  no
internal  controls can provide  absolute  assurance  that all control issues and
instances of fraud, if any, within a company have been detected.


                                       15


PART  II -OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

      We are a statutory  trust created under  Delaware law. Our formation was a
condition to the  consolidation  of Empire  Resorts with MRMI,  MCM,  MRDC,  and
Mohawk. Also, as a condition to that consolidation,  each of Catskill,  MRDC and
Mohawk,  agreed to  assign to us all of their  claims  under or  related  to the
alienation and frustration of their  agreements and business  relations with the
St. Regis Mohawk Tribe. That assignment included rights to any proceeds from any
settlement or award that may arise from any  litigation  relating to that claim.
Our  litigation  claims  arise from the  efforts of each of  Catskill,  MRDC and
Mohawk to develop with the St. Regis Mohawk Tribe a gaming casino in Monticello,
New York.  We spent several  years and  substantial  funds to develop and obtain
required  approvals  for the  casino.  Subsequently,  Park  Place  Entertainment
Corporation,  the world's largest gaming corporation and Atlantic City's largest
casino  operator,  entered into an agreement  providing for the St. Regis Mohawk
Tribe to commit its future casino development  efforts exclusively to Park Place
Entertainment  Corporation.  That agreement  conflicted  with the Mohawk Tribe's
agreements with Catskill, MRDC and Mohawk.

      There  is  one  lawsuit  now  pending  and  one  lawsuit   that  has  been
discontinued.  The  first  lawsuit  is  Catskill  Development,   L.L.C.,  Mohawk
Management,   L.L.C.,  and  Monticello  Raceway  Development  Company,   L.L.C.,
Plaintiffs. v. Park Place Entertainment  Corporation,  Defendant.  (Civil Action
No. 00CIV8660  (CM)(GAY)) (United States District Court Southern District of New
York).  This  lawsuit  had  initially  been  dismissed  on a motion for  summary
judgment. However, the trial court vacated the earlier decision granting summary
judgment to Park Place  Entertainment,  in order to allow  consideration  of new
evidence and additional  discovery  proceedings.  Following  those  proceedings,
judgment in favor of the defendant was reinstated.  An appeal has been taken and
briefs  have been  filed by the  Litigation  Trust.  In  preparing  the brief on
appeal,  our counsel became aware of a case that was decided  shortly before the
plaintiffs  brought  the  original  complaint.  The  effect of this case is that
jurisdiction may not be found to exist for two of the three plaintiff  entities.
We made the Court of Appeals aware of this circumstance. If the Court determines
that the federal courts lack  jurisdiction  over these  plaintiffs,  they may be
required to pursue their claims in the New York courts.  This could increase the
expense  involved,  and result in additional delay, in prosecuting their claims.
The  respondent's  brief was filed on June 9,  2005 and the  Litigation  Trust's
reply brief was filed on July 12, 2005.  Oral arguments on the appeal were heard
on October 17, 2005. At that time,  one member of the panel  questioned  whether
there were factual issues that needed to be determined before the jurisdictional
issues could be resolved.  On March 8, 2006,  the  Litigation  Trust  received a
Summary  Order from the United  States  Court of Appeals for the Second  Circuit
with  regard  to  the  Litigation   Trust's  appeal  in  the  case  of  Catskill
Development,   L.L.C.,   Mohawk  Management,   L.L.C.,  and  Monticello  Raceway
Development  Company,  L.L.C.,  Plaintiffs.  v.  Harrah's  Entertainment,  Inc.,
Defendant.

      The  unpublished  order  remanded  the  case  to the  District  Court  for
additional  development  of the record.  In the  appeal,  the  Litigation  Trust
brought to the  attention  of the court a recent  decision  which  measured  the
diversity of a limited  liability  company  according to the  citizenship of its
individual members, rather than the state of its organization.  If this decision
were found to be a precedent,  the  Litigation  Trust conceded that diversity of
citizenship sufficient to establish subject matter jurisdiction in the case with
respect to Catskill and Mohawk would not exist.  However,  the Litigation  Trust
argued that this decision has been  inconsistently  applied and therefore should
not be  followed.  The Court of Appeals  has  rejected  the  Litigation  Trust's
arguments in this respect.

      The Litigation Trust also requested the Court to preserve  jurisdiction in
the case by dismissing the non-diverse  plaintiffs and proceeding to rule on the
issues on appeal as they apply to the remaining  plaintiff.  However,  the Court
found the record to be  insufficient  to determine  the ownership of MRDC on the
date of the commencement of the action. Moreover, the Court felt that additional
findings of fact were required for the court to determine  whether the dismissal
of the non-diverse plaintiffs would result in prejudice to any of the parties.


                                       16


      In remanding the case, the Court of Appeals vacated the original judgment,
directing  that if the District Court  determined  that MRDC was a diverse party
whose jurisdiction  should be preserved,  it could consider whether to reinstate
all or part of its prior judgment.  In addition,  the Court of Appeals indicated
that the trial court  should make a  determination  as to whether the  remaining
plaintiff  would be a third party  beneficiary  of the  contracts  made with the
non-diverse parties under New York law.

      The  District  Court  determined  that  Catskill  Development  and  Mohawk
Management  were not diverse and  dismissed  them from the case.  Following  the
dismissal,  the Trustees of the Litigation Trust filed a new complaint on behalf
of the  beneficiaries  of the Trust  against  Harrah's  Operating  Company,  the
successor  in interest to Park Place  Entertainment,  Inc.  with  respect to the
claims of Catskill  Development and Mohawk Management.  The state citizenship of
the Trustees of the Trust,  which had received the claims of the two non-diverse
parties by assignment, entitled them to claim jurisdiction in the federal court.
The  parties to the case had  previously  agreed  that all  parties to the newly
filed case would be subject to the  decisions  made in the original  case.  This
allowed  the Judge to  consolidate  the two cases and enter a decision  granting
summary  judgment and  dismissing  the case in its  entirety.  This  effectively
restored  the case to the  status it had been at the time the  appeal was filed,
with all parties and all claims represented and all of the decisions made in the
case applicable to all the parties.

      On October 11, 2006,  following  the filing of a new  complaint in the PPE
case by the Litigation  Trustees on behalf of two of the plaintiffs who had been
dismissed,  the  District  Court  consolidated  the new action with the existing
action.  An amended  answer to the new  complaint was filed on November 2, 2006.
The effect of these  actions  has been to  fulfill  the  technical  requirements
necessary to restore the PPE case to the status it was in prior to the dismissal
of the two  plaintiffs,  whose claims will now be  represented by the Litigation
Trustees.

      On November  20, 2006 the  District  Court issued a decision on the issues
presented by the 2nd Circuit's remand.  The District Court again entered summary
judgment against all the plaintiffs in the  consolidated  action for the reasons
given in its previous decisions.  As a consequence of the consolidation process,
the issue of third party  beneficiary  status becomes less important to a proper
resolution of the appeal. However, as requested by the 2nd Circuit, the District
Court also addressed the question of whether Monticello Raceway Development, the
one plaintiff whose claim to federal diversity jurisdiction in the original case
had not been in  question,  would  be a third  party  beneficiary  of any of the
contracts entered into by the other  plaintiffs.  The plaintiffs argued that all
of the contracts  were clearly  interdependent  as part of an overall  structure
designed to accomplish the  development and operation of the casino and that, in
particular,  the Land  Purchase  Agreement  contained an express  obligation  to
support the approval process for the other contracts.  However,  the Court found
that the references  made in the Land Purchase  Agreement and other documents to
the development  agreement between Monticello Raceway Development and the Tribal
Gaming Authority were too vague to form the basis for a third party  beneficiary
claim,  particularly in light of express  language in the development  agreement
that  she  believed  indicated  that  it was  intended  to  stand  on  its  own.
Accordingly,  the  District  Court  determined  that there  were no third  party
beneficiary rights under the development agreement.

      Following the issuance of this  decision and order,  the  plaintiffs  have
filed a new appeal to the 2nd Circuit.  Since the  restoration  of the claims of
the two  non-diverse  plaintiffs  to the case has  resulted in all of the issues
remaining the same as on the previous appeal,  it was anticipated by the parties
that the 2nd Circuit would be able to review the original  briefs in the case as
they were originally  filed, and that the only additional  briefing that will be
necessary would be supplemental briefs to deal with cases and other developments
that have arisen since those briefs were issued.  The ultimate  decision on this
question  rests with the Court,  however.  There is also no  assurance  that the
original panel that was assigned to the appeal last year will be assigned again.
Whether  or not a new panel is  assigned,  it is  likely  that  additional  oral
arguments will be heard.

       The second lawsuit is Catskill Development,  L.L.C., Mohawk Management,
L.L.C.,  and  Monticello  Raceway  Development  Company,  L.L.C.,  Plaintiffs.
against Gary Melius,  Ivan Kaufman,  Walter Horn,  President  R.C. - St. Regis
Management  Company,  et al, Defendants.  (Index No. 891/03) (Supreme Court of
the  State  of  New  York  County  of   Sullivan).   This   lawsuit  has  been
discontinued  under an  agreement  that  permits  it to be refiled at a future
date without being barred by the statute of limitations.


                                       17


      Our purposes are the prosecution of our claims now through the recovery of
any settlement or final judgments and the  distribution of the net amount of any
such recoveries to our beneficiaries.

      The Joint Alliance  Agreement  that the  Litigation  Trust entered into on
January 24, 2007,  with the St. Regis  Mohawk Tribe and  representatives  of the
litigants in a separate lawsuit provides for the assignment of the claims of the
tribal members to the Trust in exchange for the issuance of additional  units in
the Litigation Trust as described in item 2 above.  Unless the term of the Joint
Alliance  Agreement is  extended,  the  consummation  of this  transaction  will
require approval by the Tribal Court and the unit-holders prior to July 30, 2007

ITEM 6.  EXHIBITS

a:  Exhibits

      *31.1 Certification of Acting Chief Executive  Officer pursuant to Section
            302 of the Sarbanes-Oxley Act of 2002.

      *31.2 Certification of Acting Chief Financial  Officer pursuant to Section
            302 of the Sarbanes-Oxley Act of 2002.

      *32.1 Certification  of the Acting Chief Executive  Officer pursuant to 18
            U.S.C.   Section  1350  adopted  pursuant  to  Section  906  of  the
            Sarbanes-Oxley Act of 2002.

      *32.2 Certification  of the Acting Chief Financial  Officer pursuant to 18
            U.S.C.   Section  1350  adopted  pursuant  to  Section  906  of  the
            Sarbanes-Oxley Act of 2002.

      *Filed herewith

                                   SIGNATURES

      In  accordance  with  the  requirements  of  the  Exchange  Act,  Catskill
Litigation  Trust  caused  this  report  to be  signed  on  its  behalf  by  the
undersigned, thereunto duly authorized.

                                    CATSKILL LITIGATION TRUST
                                    (Registrant)

Date:  May 14, 2007                 By: /s/ Joseph E. Bernstein
                                        ----------------------------------------
                                        Joseph E. Bernstein
                                        Litigation Trustee


Date:  May 14, 2007                 By: /s/ Paul A. deBary
                                        ----------------------------------------
                                        Paul A. deBary
                                        Litigation Trustee


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