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

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q

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

                 For the quarterly period ended September 30, 1996

                        Commission file number: 0-24740


                           RESURGENCE PROPERTIES INC.

             (Exact name of registrant as specified in its charter)



           MARYLAND                                              13-3757163
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)


                           c/o Wexford Management LLC
                   411 West Putnam Avenue, Greenwich, CT 06830
                    (Address of principal executive offices)

                                 (203) 862-7000
              (Registrant's telephone number, including area code)

                                      None
              (Former name, former address and former fiscal year,
                          if changed since last report)


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 the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date:

As of November 1, 1996, there were 10,000,000 shares of Common Stock, $0.01 par
value, outstanding.
================================================================================
<PAGE>
                           RESURGENCE PROPERTIES INC.

                                    FORM 10-Q

                                TABLE OF CONTENTS                               


PART I - FINANCIAL INFORMATION                                                  

Item 1.           Financial Statements

                       Consolidated  Balance Sheets as of September 30, 1996 and
                       December 31, 1995

                       Unaudited  Consolidated  Statements of Operations for the
                       Three  Months Ended  September  30, 1996 and 1995 and for
                       the Nine Months Ended September 30, 1996 and 1995

                       Unaudited  Consolidated Statement of Shareholders' Equity
                       for the Nine Months Ended September 30, 1996

                       Unaudited  Consolidated  Statements of Cash Flows for the
                       Nine Months Ended September 30, 1996 and 1995

                        Notes to Unaudited Consolidated Financial Statements    

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


PART II - OTHER INFORMATION


Item 6.           Exhibits and Reports on Form 8-K                              


SIGNATURES                                                                      
<PAGE>
<TABLE>
<CAPTION>
RESURGENCE PROPERTIES INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share and per share amounts)

                                                                                          September 30,          December 31,
                                                                                              1996                  1995
                                                                                           ---------             ---------
<S>                                                                                        <C>                   <C>
ASSETS

OPERATING REAL ESTATE PROPERTIES:
      Land .....................................................................           $  15,834             $  20,539
      Buildings and improvements ...............................................              60,854                78,868
                                                                                           ---------             ---------
                                                                                              76,688                99,407
      Accumulated depreciation and amortization ................................              (4,878)               (4,337)
                                                                                           ---------             ---------

               Operating real estate properties, net ...........................              71,810                95,070

MORTGAGE LOANS ON REAL ESTATE:
      Earning ..................................................................                --                  15,052
      Non-earning ..............................................................               5,640                 7,162
                                                                                           ---------             ---------
                                                                                               5,640                22,214
      Allowance for possible losses ............................................              (3,810)               (5,295)
                                                                                           ---------             ---------

      Mortgage loans on real estate, net .......................................               1,830                16,919

CASH AND CASH EQUIVALENTS ......................................................              14,718                 8,818

ACCOUNTS RECEIVABLE (net of allowance
      for doubtful accounts of $241 and $196) ..................................               1,235                 1,802

ASSETS HELD FOR SALE ...........................................................              24,225                31,707

OTHER ASSETS ...................................................................               4,643                 1,547
                                                                                           ---------             ---------

TOTAL ASSETS ...................................................................           $ 118,461             $ 155,863
                                                                                           =========             =========

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES:
      Senior debt ..............................................................           $  23,883             $  57,898
      Mortgage notes payable ...................................................               5,433                 8,134
      Real estate taxes ........................................................               1,208                 5,476
      Other liabilities ........................................................               1,226                 2,354
                                                                                           ---------             ---------
               Total liabilities ...............................................              31,750                73,862

COMMITMENTS AND CONTINGENCIES

REDEEMABLE PREFERRED STOCK .....................................................                 300                   300
<PAGE>
<CAPTION>
RESURGENCE PROPERTIES INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share and per share amounts)
(continued)

                                                                                          September 30,          December 31,
                                                                                              1996                  1995
                                                                                           ---------             ---------
SHAREHOLDERS' EQUITY:
      Common stock, par value $.01; 50,000,000 shares
           authorized; 10,000,000 shares issued and outstanding ................                 100                   100
      Paid-in-capital ..........................................................             101,045               101,045
      Accumulated deficit ......................................................             (14,734)              (19,444)
                                                                                           ---------             ---------
               Total  shareholders' equity .....................................              86,411                81,701
                                                                                           ---------             ---------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY .....................................           $ 118,461             $ 155,863
                                                                                           =========             =========

                                      See notes to unaudited consolidated financial statements

</TABLE>
<PAGE>
<TABLE>
RESURGENCE PROPERTIES INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share and per share amounts)

                                                                 For the three months          For the nine months 
                                                                  ended September 30,           ended September 30,
                                                                  1996           1995           1996           1995
                                                               --------       --------       --------       --------
<S>                                                            <C>            <C>            <C>            <C>
REVENUES:
      Minimum rents .....................................      $  3,432       $  4,271       $ 11,046       $ 12,658
      Recoveries from tenants ...........................           704            763          2,156          2,605
      Mortgage loan interest ............................             6            503          4,560          1,687
      Investment income .................................           361            139            672            523
      Net gain (loss) from asset dispositions ...........          (172)            32            791             90
      Other .............................................         1,048            149          1,216            320
                                                               --------       --------       --------       --------
               Total revenues ...........................         5,379          5,857         20,441         17,883
                                                               --------       --------       --------       --------

EXPENSES:
      Property operations ...............................         1,818          2,170          5,343          6,304
      Interest expense ..................................           702          1,571          2,821          5,017
      Non-income producing assets .......................           240            509            921          1,446
      Management fees ...................................           512            512          1,537          1,537
      General and administrative ........................           124            322            470            768
      Depreciation and amortization .....................           776            882          2,329          2,545
      Write-downs for impairment of value ...............           740          1,020          2,449          4,020
                                                               --------       --------       --------       --------
               Total expenses ...........................         4,912          6,986         15,870         21,637
                                                               --------       --------       --------       --------

INCOME (LOSS) BEFORE INCOME TAXES AND
       EXTRAORDINARY GAIN ...............................           467         (1,129)         4,571         (3,754)

      Income Taxes ......................................          --             --             --             --
                                                               --------       --------       --------       --------
INCOME (LOSS) BEFORE EXTRAORDINARY GAIN .................           467         (1,129)         4,571         (3,754)

      Extraordinary Gain ................................          --              171            160            760
                                                               --------       --------       --------       --------
NET INCOME (LOSS) .......................................      $    467       $   (958)      $  4,731       $ (2,994)
                                                               ========       ========       ========       ========

INCOME (LOSS) PER COMMON SHARE
      (10,000,000 shares outstanding):

INCOME (LOSS) BEFORE EXTRAORDINARY GAIN .................      $   0.05       $  (0.11)      $   0.46       $  (0.38)

EXTRAORDINARY GAIN ......................................          --             0.02           0.02           0.08
                                                               --------       --------       --------       --------
NET INCOME (LOSS) .......................................      $   0.05       $  (0.09)      $   0.48       $  (0.30)
                                                               ========       ========       ========       ========

                                      See notes to unaudited consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RESURGENCE PROPERTIES INC. AND SUBSIDIARIES

UNAUDITED  CONSOLIDATED  STATEMENT OF  SHAREHOLDERS'  EQUITY 
For the Nine Months Ended September 30, 1996
(Dollars in thousands, except share amounts)


                                                        COMMON STOCK                 PAID - IN         ACCUMULATED
                                                  SHARES            AMOUNT           CAPITAL             DEFICIT            TOTAL
                                                  ------            ------           -------             -------            -----
<S>                                             <C>               <C>
Balance, December 31, 1995 .............        10,000,000        $      100        $  101,045        $  (19,444)        $   81,701

Preferred stock dividends ..............              --                --                --                 (21)               (21)

Net income .............................              --                --                --               4,731              4,731
                                                ----------        ----------        ----------        ----------         ----------
Balance, September 30, 1996 ............        10,000,000        $      100        $  101,045        $  (14,734)        $   86,411
                                                ==========        ==========        ==========        ==========         ==========


                                      See notes to unaudited consolidated financial statements

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RESURGENCE PROPERTIES INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)

                                                                      For the Nine Months
                                                                       ended September 30,
                                                                     ----------------------
                                                                        1996        1995
                                                                     --------    ---------
<S>                                                                  <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ................................................   $  4,731    $ (2,994)
Adjustments to reconcile net income (loss) to net cash provided by
     operating activities:
     Depreciation and amortization:
         Operating real estate properties ........................      1,999       2,445
         Other assets ............................................        330         100
     Net gain from asset dispositions ............................       (791)        (90)
     Extraordinary gain ..........................................       (160)       (760)
     Write-downs for impairment of value .........................      2,449       4,020
     Straight line adjustment for stepped rentals ................         37          (9)
     Net changes in assets and liabilities .......................     (3,858)     (2,089)
                                                                     --------    --------

         Net cash provided by operating activities ...............      4,737         623
                                                                     --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Net proceeds from sales of assets ...........................     25,934       6,982
     Net collections on mortgage loans ...........................     14,050       2,717
     Improvements to operating properties ........................     (1,440)     (1,433)
     Property acquisitions .......................................       (800)     (9,532)
                                                                     --------    --------

         Net cash provided by (used for) investing activities ....     37,744      (1,266)
                                                                     --------    --------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Senior debt repayments, net .................................    (25,939)     (4,394)
     Mortgage loan repayments ....................................     (2,701)        (70)
     Preferred stock dividends ...................................        (21)        (21)
     Purchase of interest in senior debt .........................     (7,920)    (10,059)
                                                                     --------    --------

         Net cash used for financing activities ..................    (36,581)    (14,544)
                                                                     --------    --------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS .............      5,900     (15,187)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD .................      8,818      26,877
                                                                     --------    --------

CASH AND CASH EQUIVALENTS AT END OF PERIOD .......................   $ 14,718    $ 11,690
                                                                     ========    ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

     Cash paid for interest ......................................   $  2,924    $  6,113
                                                                     ========    ========
                 See notes to unaudited consolidated financial statements 

</TABLE>
<PAGE>
RESURGENCE PROPERTIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)


A.       ORGANIZATION AND ACCOUNTING POLICIES

         Resurgence  Properties Inc. and its  subsidiaries  and  sub-partnership
         (the  "Company")  is engaged in  diversified  real  estate  activities,
         including the ownership,  operation and  management of retail,  office,
         industrial/warehouse  and multi-family real estate,  and investments in
         mortgage loans on real estate.  The Company was  incorporated  on March
         25, 1994 and began its  operations  on April 7, 1994,  when the Company
         succeeded to most of the assets of Liberte  Investors  ("Liberte") upon
         consummation    of   Liberte's    bankruptcy   plan   ("The   Plan   of
         Reorganization").  The Company is managed and  administered  by Wexford
         Management LLC ("Wexford").

         The accompanying financial statements,  notes and discussions should be
         read in conjunction with the consolidated financial statements, related
         notes and discussions  contained in the Company's annual report on Form
         10-K for the year ended December 31, 1995, which is herein incorporated
         by   reference.   Consequently,   information   with   respect  to  the
         organization,   significant  accounting  policies  and  other  required
         disclosures are contained therein.

         The  interim  financial  information  contained  herein  is  unaudited;
         however, in the opinion of management, all adjustments (consisting only
         of normal recurring adjustments) necessary for the fair presentation of
         such financial information have been included.

         The December 31, 1995 year-end  balance sheet data presented herein was
         derived from  audited  financial  statements,  but does not include all
         disclosures required by generally accepted accounting principles.

         The results for the interim  period are not  necessarily  indicative of
         the results to be expected for the year ending December 31, 1996.

         The  Company  has  approximately  $9.4  million of net  operating  loss
         carry-forwards  ("NOL") available for U.S. income tax purposes expiring
         in years through 2008.  The Company has provided a valuation  allowance
         to offset the full amount of the net deferred  tax assets  arising from
         book and tax differences including those from the NOL's.

         Certain  reclassifications  have been made to the prior year  financial
         statements to conform with the current period presentation.

         In March 1995, the Financial Accounting Standards Board issued SFAS No.
         121,"Accounting  for  the  Impairment  of  Long-Lived  Assets  and  for
         Long-Lived  Assets to be  Disposed  of" ("SFAS No.  121").  The Company
         adopted SFAS No. 121 for the fiscal year beginning January 1, 1996.
<PAGE>
         Under SFAS No. 121 the initial test to determine if  impairment  exists
         is to compute the recoverability of the asset based on anticipated cash
         flows (net realizable  value) compared to the net carrying value of the
         asset.  If  anticipated  cash  flows  on  an  undiscounted   basis  are
         insufficient  to  recover  the net  carrying  value  of the  asset,  an
         impairment loss should be recognized, and the asset written down to its
         estimated  fair  value.  The fair  value of the asset is the  amount by
         which  the  asset  could be  bought  or sold in a  current  transaction
         between willing parties, that is, other than in a forced or liquidation
         sale.  The net  realizable  value of an asset will generally be greater
         than its fair value because net realizable value does not discount cash
         flows  to  present  value  and   discounting  is  usually  one  of  the
         assumptions used in determining fair value.

         Upon  implementation  of SFAS No. 121,  certain of the Company's assets
         held for sale have been  written down to their  estimated  fair values,
         while others remain at depreciated  cost.  Thus, the net carrying value
         of the Company's  asset  portfolio may differ  materially from its fair
         value.  However,  the  write-downs for impairment do not affect the tax
         basis  of the  assets  and  the  write-downs  are not  included  in the
         determination of taxable income or loss.

         Because the  determination  of both net realizable value and fair value
         is based upon  projections of future  economic  events such as property
         occupancy  rates,  rental rates,  operating  cost  inflation and market
         capitalization  rates  which are  inherently  subjective,  the  amounts
         ultimately  realized at disposition may differ  materially from the net
         carrying  value as of the balance  sheet  date.  The cash flows used to
         determine fair value and net  realizable  value are based on good faith
         estimates  and   assumptions   developed  by  management.   Inevitably,
         unanticipated  events and  circumstances may occur and some assumptions
         may not  materialize;  therefore  actual  results  may  vary  from  our
         estimates and the  variances  may be material.  The Company may provide
         additional  losses in  subsequent  periods if the real estate market or
         local  economic   conditions  change  and  such  write-downs  could  be
         material.

         In October  1995,  the  Financial  Accounting  Standards  Board  issued
         Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting
         for  Stock-Based  Compensation,"  which was  effective  for the Company
         beginning January 1, 1996. SFAS No. 123 requires  expanded  disclosures
         of stock based compensation  arrangements with employees and encourages
         (but does not require)  compensation  cost to be measured  based on the
         fair value of the equity instrument  awarded.  Companies are permitted,
         however,  to continue to apply APB  Opinion  No. 25,  which  recognizes
         compensation cost based on the intrinsic value of the equity instrument
         awarded.  The Company will  continue to apply APB Opinion No. 25 to its
         stock based  compensation  awards to  employees  and will  disclose the
         required pro forma  effect on net income and earnings per share.  As of
         September  30, 1996 there was no effect on net income or  earnings  per
         share arising from stock based compensation.
<PAGE>
B.       ASSETS HELD FOR SALE

         Harbor Bay Business Park, located in Alameda,  California,  is a 50,000
         square  foot  office  building,  built in 1989 and is  situated on 2.75
         acres of land.  The net  carrying  value as of  September  30, 1996 was
         $1,913.  During the third quarter of 1996,  the Company  entered into a
         contract to sell the property for $2,250. Accordingly, the property was
         reclassified  on the  consolidated  balance  sheet  from  an  operating
         property  to an asset  held  for sale as of  September  30,  1996.  The
         property  was  subsequently  sold in November  1996 for $2,146,  net of
         closing costs.

         During the third  quarter of 1996,  the  Company  received  $917 from a
         settlement of a lawsuit the Company  instituted against a former tenant
         for default of their lease obligation.

         During the third quarter of 1996,  the Company sold various land assets
         for net proceeds of approximately  $1,298,  which resulted in a loss of
         $172.

         In October 1996,  the Company sold  Cimarron  Plaza for net proceeds of
         $7,912, which resulted in a loss of $39.

C.       SENIOR DEBT

         The Company prepaid $11,376 and $3,143 in July 1996 and September 1996,
         respectively,  of its Senior Debt then  outstanding.  In November 1996,
         the  Company  prepaid  an  additional  $7,958 of its  Senior  Debt then
         outstanding.  The net principal balance  outstanding after the November
         1996 prepayment was approximately $15,924.

D.       WRITE-DOWNS FOR IMPAIRMENT OF VALUE AND LOAN LOSSES

         During  the  third  quarter  of 1996 and  1995,  the  Company  recorded
         write-downs for impairment of value on certain assets totaling $740 and
         $1,020, respectively. No independent appraisal of these assets has been
         obtained or is contemplated.  Since the  determination of fair value is
         based on future  economic events which are inherently  subjective,  the
         amounts  ultimately  realized may differ  materially  from the carrying
         values as of the balance sheet date.

         A discussion of the specific  circumstances  regarding the  write-downs
         recorded in the third  quarter of 1996 is as follows  (this  discussion
         excludes   changes  in  net  carrying  values  resulting  from  capital
         improvements, sales, pay downs or depreciation):

         Bayshore Club Apartments,  located in Naples,  Florida, is a two story,
         200  unit  apartment  complex  comprising  165,600  square  feet  in 16
         buildings  that was  constructed  in 1976 and  renovated in 1991 and is
         situated on 32.27 acres of land. The net carrying value of the property
         was $5,640 as of December 31, 1995. In March 1996, the Company  entered
         into  a  contract  for  sale  of  the  property  for  $5,350.  Due to a
         subsequent  decline  in the  standard  of living  in the  neighborhood,
         increases  in the number of  available  garden  apartment  units in the
         marketplace  and the  inability  to reverse the decline in occupancy at
         the  property,  it was  necessary  to  negotiate  an  amendment  to the
         contract reducing the sale price to $4,400, including estimated closing
<PAGE>
         costs.  Accordingly,  the property was reclassified on the consolidated
         balance  sheet from an operating  property to an asset held for sale as
         of March 31, 1996 and a write-down  of $1,197 was  recorded  during the
         first quarter of 1996. Subsequently,  the amended contract fell through
         and the Company entered into a new contract with a different  purchaser
         for $3,800, including closing costs. Accordingly,  a write-down of $620
         was  recorded  during  the  third  quarter  of 1996 to  reduce  the net
         carrying value to $3,800.

         P&V Enterprises, located in Palmdale, California, consists of 59 vacant
         lots zoned for single family  homes.  During the third quarter of 1996,
         the Company entered into an option  contract with a prospective  buyer,
         for a total sales price of $400,  including  estimated  closing  costs.
         Accordingly,  a write-down of $120 was recorded in the third quarter of
         1996 to reduce the net carrying value to $400.
<PAGE>
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following  section  includes a discussion and analysis of the results of the
Company for the quarter ended September 30, 1996.

Results of Operations - General

          The  Company's  current  objective  is to maximize  shareholder  value
through (i) actively managing its real estate and mortgage portfolio to optimize
both cash flow and capital  appreciation,  (ii) selectively disposing of certain
assets and (iii)  acquiring  interests in real property and  mortgages  offering
superior  profit  potential.  The Company  believes that the market price of the
Common Stock is trading at prices below the market value of the Company's assets
net of its liabilities.  Accordingly,  the Company has undertaken an analysis of
its operating and financial activities to consider alternative  strategies that,
consistent with the objective of maximizing  long-term  shareholder  value, will
increase the market price of the Common Stock.  Strategies  that the Company may
pursue would include, but would not be limited to, changes in the composition of
the  Company's  asset  portfolio,  business  combinations,  the  disposition  of
significant  portions of the  Company's  assets,  the sale of the Company or the
liquidation of the Company.

          The Company has  disposed of a  significant  portion of its  portfolio
acquired  under the plan of  reorganization  of  Liberte  Investors.  The future
performance  of the Company's  portfolio of assets will be subject to prevailing
economic conditions and to financial,  business and other factors, including the
future  performance of the real estate market,  the availability of financing to
prospective asset purchasers and to other factors beyond the Company's  control.
For these reasons, the results of the Company's operations from period to period
may not be comparable.

          Inflation is not expected to have a material  impact on the  Company's
results of operations or financial position.

Nine Months Ended September 30, 1996 Compared to the Nine Months Ended September
30, 1995 and Three Months Ended  September 30, 1996 Compared to the Three Months
Ended September 30, 1995

          For the nine months ended September 30, 1996,  revenues related to the
operations of the Company's operating  properties  decreased to $13,202,000 from
$15,263,000 for the same period in the prior year,  primarily as a result of the
disposition of six operating  properties  (one each in September  1995,  January
1996,  February 1996,  March 1996, April 1996 and June 1996) partially offset by
the acquisition of an operating  property in February 1995. For the same period,
property operating expenses decreased to $5,343,000 from $6,304,000 in the prior
year,  primarily as a result of the six dispositions and partially offset by the
acquisition  of one  property,  as  mentioned  above.  Exclusive of revenues and
expenses related to the six properties sold and one acquired,  operating revenue
and expenses for the nine months ended  September 30, 1996 were  $10,655,000 and
$3,959,000,  respectively, compared to $10,730,000 and $3,935,000, respectively,
for the same period in the prior year.  Depreciation  and  amortization  for the
nine months  ended  September  30, 1996 and 1995,  amounted  to  $2,329,000  and
$2,545,000,  respectively.  The decrease in depreciation  and  amortization is a
result of the disposition of the six operating properties as mentioned above and
write-downs of operating properties in the latter part of 1995.
<PAGE>
          For the three months ended September 30, 1996, revenues related to the
operations of the Company's  operating  properties  decreased to $4,136,000 from
$5,034,000  for the same period in the prior year,  primarily as a result of the
disposition of six operating properties as discussed above. For the same period,
property operating expenses decreased to $1,818,000 from $2,170,000 in the prior
year,  primarily as a result of the  disposition of six operating  properties as
discussed  above.  Exclusive  of  revenues  and  expenses  related  to  the  six
properties  sold,  operating  revenue and  expenses  for the three  months ended
September 30, 1996 were  $3,546,000 and  $1,466,000,  respectively,  compared to
$3,504,000 and $1,379,000,  respectively, for the same period in the prior year.
Depreciation  and amortization for the three months ended September 30, 1996 and
1995,  amounted  to  $776,000  and  $882,000,   respectively.  The  decrease  in
depreciation  and  amortization  is a  result  of the  disposition  of  the  six
operating  properties as mentioned above and write-downs of operating properties
in the latter part of 1995.

         Mortgage  loan  interest,   primarily   generated  from  earning  loans
increased  to  $4,560,000  for the nine  months  ended  September  30, 1996 from
$1,687,000  for the same period in the prior year.  For the three  months  ended
September 30, 1996, mortgage loan interest decreased to $6,000 from $503,000 for
the same  period in the prior  year.  The  increase  for the nine  months  ended
September 30, 1996 is primarily due to the payoff of the pool of first  mortgage
loans  collateralized  by eight industrial  buildings located in New Jersey (the
"JPC  Mortgages")  during the  second  quarter of 1996,  which  resulted  in the
recognition  of  contingent  interest  income of  $3,864,000.  This increase was
slightly  offset by the  reduction  in  mortgage  loan  interest  as a result of
mortgage loan payoffs  during the latter part of 1995 and the sale of a mortgage
loan in January 1996. The decrease for the three months ended September 30, 1996
compared  to the prior  year is a result of  mortgage  loan  payoffs  during the
latter part of 1995 and the sale of a mortgage loan in January 1996.

         Other  income  increased  to  $1,216,000  for  the  nine  months  ended
September  30, 1996 from  $320,000  for the same period in the prior year and to
$1,048,000  for the three months ended  September 30, 1996 from $149,000 for the
same period in the prior year,  primarily due to a $917,000  settlement received
in September 1996 from a lawsuit the Company  instituted against a former tenant
for default of their lease obligation.

         Investment  income  increased  to $672,000  for the nine  months  ended
September  30, 1996 from  $523,000  for the same period in the prior year and to
$361,000  for the three months ended  September  30, 1996 from  $139,000 for the
same  period  in the  prior  year,  primarily  due to a  larger  amount  of cash
available for investment during the first nine months of 1996 as compared to the
same period in 1995.

         Interest  expense  decreased  to  $2,821,000  for the nine months ended
September 30, 1996 from  $5,017,000 for the same period in the prior year and to
$702,000 for the three months ended  September 30, 1996 from  $1,571,000 for the
same period in the prior year, primarily due to the reduction in the outstanding
balance  of the  Senior  Debt  resulting  from the  purchases,  prepayments  and
quarterly  amortization payments and the payoff of the Barrington Hills mortgage
in January 1996.
<PAGE>
         Expenses  related to non-income  producing assets decreased to $921,000
for the nine months ended September 30, 1996 from $1,446,000 for the same period
in the prior year and to $240,000 for the three months ended  September 30, 1996
from  $509,000  for the same period in the prior year,  primarily as a result of
asset sales. Expenses related to non-income producing assets consisted primarily
of real estate  taxes.  Such  expenses will decrease in the future to the extent
that such assets are sold.  However, to the extent the Company forecloses on the
remaining mortgage loans, expenses related to assets held for sale may increase.

         General  and  administrative  expenses,  which  primarily  consists  of
insurance,  consulting, legal and accounting fees, decreased to $470,000 for the
nine months ended  September  30, 1996 from  $768,000 for the same period in the
prior year and  decreased to $124,000 for the three months ended  September  30,
1996 from  $322,000  for the same  period in the prior year  primarily  due to a
decrease in legal and consulting fees.

         In  March  1995,  the  Financial   Accounting  Standards  Board  issued
Statement No. 121,  "Accounting for the Impairment of Long-Lived  Assets and for
Long-Lived  Assets to Be Disposed of ("SFAS No. 121").  The Company adopted SFAS
No.  121 for the  fiscal  year  beginning  January  1,  1996.  See Note A to the
consolidated financial statements.

         In accordance with SFAS No. 121, the Company  monitors the value of its
assets on a continuous basis to ascertain if impairment exists, based on current
information available to the Company. For the nine months and three months ended
September 30, 1996, the Company recorded  write-downs for impairment of value on
certain  assets held for sale of $2,449,000 and $740,000, respectively.  For the
nine months  ended  September  30,1995,  the  company  recorded  wide-downs  for
impairment of value on mortgage  loans of $453,000,  on operating  properties of
$573,000 and certain assets held for sale of $2,994,000, totaling $4,020,000 and
for the three months ended September 30, 1995, the Company recorded  write-downs
for  impairment of value on mortgage  loans of $453,000 and certain  assets held
for sale of $567,000, totaling $1,020,000.

         In connection  with the Company's  purchases of interests in the Senior
Debt, as discussed below, for the nine months ended September 30, 1996 and 1995,
the Company recorded extraordinary gains of $160,000 and $760,000, respectively,
and for the  three  months  ended  September  30,  1995,  the  Company  recorded
extraordinary  gains of  $171,000.  No  extraordinary  gain was recorded for the
three months ended September 30, 1996.

Capital Expenditures

         Capital  expenditures for the nine months ended September 30, 1996 were
$1,440,000  of which  approximately  $976,000  related  to tenant  improvements,
$311,000  related to structural  repairs at 1025 Vermont  Avenue and the balance
was for  normal  property  improvements.  The  source of funds for such  capital
expenditures were from cash generated from rents,  interest received on mortgage
loans, proceeds from the sale of assets and principal repayments on its mortgage
loans.
<PAGE>
Liquidity and Capital Resources

         For the nine months ended September 30, 1996, cash and cash equivalents
increased  by  $5,900,000.  $4,737,000  was  provided by  operating  activities,
$37,744,000  was provided by investing  activities and  $36,581,000 was used for
financing activities.  Cash provided by investing activities consisted primarily
of net proceeds from asset sales of $25,934,000  and net collections on mortgage
loans  of  $14,050,000   partially  offset  by  improvements  to  the  operating
properties of $1,440,000 and the purchase of a building for $800,000.  Cash used
for financing  activities  consisted  primarily of net Senior Debt repayments of
$25,939,000, mortgage repayments of $2,701,000 and purchases of interests in the
Senior Debt of $7,920,000.

         During the nine months  ended  September  30,  1996,  the Company  sold
Barrington Hills, Copper Creek Apartments,  Olympia Corners, Pike Plaza, Shoppes
at Cloverplace  and the Fort Smith Quarry  mortgage loan and various land assets
for net proceeds of  approximately  $25,934,000.  These sales  resulted in a net
gain of $791,000, after deducting closing costs.

         In  connection  with  Liberte's  Plan of  Reorganization,  the  Company
assumed  Liberte's then outstanding debt under Liberte's credit agreements which
was  restructured  pursuant to the Credit  Agreement,  the Company's sole credit
facility.  The Credit Agreement has no provision for the extension of additional
credit and the Company, at present,  believes that available cash, existing cash
flow from  operations  and the proceeds  from sales of  properties  and mortgage
repayments are sufficient to satisfy the Company's foreseeable cash requirements
(principally  scheduled debt maturities and amortization,  capital  expenditures
and other assumed liabilities inclusive of real estate taxes) and, when combined
with the Company's ability to leverage new investments,  should be sufficient to
finance such new investments.

         As of September  30, 1996,  the Senior Debt under the Credit  Agreement
was approximately $23,883,000.  This is net of $11,229,000 which the Company has
acquired  through  September 30, 1996.  In November  1996,  the Company  prepaid
$7,958,000  of it's  Senior Debt then  outstanding.  The net  principal  balance
outstanding after such prepayment was approximately  $15,924,000.  The source of
funds for such prepayment was from cash generated from rents,  interest received
on mortgage loans,  proceeds from the sale of assets and principal repayments on
its mortgage loans.
<PAGE>

                           PART II - OTHER INFORMATION 


Item 6.             Exhibits and Reports on Form 8-K:

                    (a)   Not applicable.

                    (b)   None. The Company was not required to file any reports
                          on Form 8-K during the  quarter  ended  September  30,
                          1996.

<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.

                                    Resurgence Properties Inc.



Date: November 14, 1996             By: /s/ Joseph M. Jacobs
                                       ---------------------
                                          Joseph M. Jacobs
                                          Chief Executive Officer and President
                                          (Duly Authorized Officer)




Date: November 14, 1996             By: /s/ Jay L. Maymudes
                                       --------------------
                                         Jay L. Maymudes
                                         Chief Financial Officer, Vice President
                                         and Secretary (Principal Financial and
                                         Accounting Officer and Duly Authorized
                                         Officer)