Net Assets in Liquidation

3 Months Ended

Jun. 30, 2019

3. Net Assets in Liquidation

Description

Under the GUC Trust Agreement and the Plan, as described more fully in Note 1, the beneficiaries of the GUC Trust are future and, to the extent their liquidating distributions have not yet been paid to them, current holders of Allowed General Unsecured Claims and future and current holders of GUC Trust Units. Assets of the GUC Trust consisting primarily of Distributable Cash (including Dividend Cash) as described in Note 1 are available to be distributed to the Trust Beneficiaries (“GUC Trust Distributable Assets”) in accordance with the Plan and the GUC Trust Agreement, except to the extent that they are set aside or appropriated for funding the expected costs of liquidation of the GUC Trust. The amounts of net assets in liquidation presented in the accompanying Condensed Statements of Net Assets in Liquidation correspond to the amounts of GUC Trust Distributable Assets as of the respective dates, after certain adjustments including reductions for the amounts of set aside Distributable Cash and appropriated Distributable Cash. As of June 30, 2019, GUC Trust Distributable Assets aggregated approximately $457.9 million. For additional information, see “Net Assets in Liquidation—Distributable Assets” in Item 2 (“Management’s Discussion and Analysis of Financial Condition and Results of Operations”) below.

Cash and Cash Equivalents and Marketable Securities

As of June 30, 2019, cash and cash equivalents and marketable securities aggregated $505.2 million and are comprised of the following:


(in thousands)
Distributable Cash (including associated Dividend Cash)	$	472,070
Other Administrative Cash		31,562
Administrative Fund		1,234
Residual Wind-Down Assets		175
Funds for Indenture Trustee / Fiscal Paying Agent Costs		114

Total	$	505,155

As described in Note 4, as of June 30, 2019, the GUC Trust had accrued liquidating distributions payable aggregating $1.8 million. In addition, as described in Note 2, as of June 30, 2019, the amount of Distributable Cash reflected in the table above includes $12.4 million of amounts set aside for projected GUC Trust fees, costs and expenses to be incurred beyond 2019. The aggregate amount of Distributable Cash which was pending distribution or was set aside and was not available for distribution as of June 30, 2019 was $14.2 million. As described in Note 2 above, on February 1, 2019, the GUC Trust Administrator filed a motion seeking authority from the Bankruptcy Court to appropriate Distributable Cash of $13.72 million for the purpose of satisfying noticing costs up to $13.72 million pursuant to the Revised Settlement Agreement described below in “Allowed and Disputed Claims” and Part II, Item 1 (“Legal Proceedings”). No hearing date has been scheduled with respect to such motion.

Accrued Investment Income on Cash Equivalents and Marketable Securities

As of June 30, 2019 and March 31, 2019, the GUC Trust had accrued approximately $11.5 million and $30.3 million, respectively, of investment income on marketable securities and cash equivalents expected to be earned over the estimated remaining liquidation period in accordance with the liquidation basis of accounting. Such accrual is estimated principally based on forecasted cash outflows and expected returns based on recent yields on Treasury bills in which the marketable securities are invested. Estimates of forecasted cash outflows consider the amount and timing of distributions in respect of GUC Trust Units. During the quarter ended June 30, 2019, such accrual was reduced by approximately $18.8 million primarily due to a shortening in the expected date to make distributions in respect of GUC Trust Units during the quarter ended June 30, 2019. Such accrual, along with receivables for investment income earned as of June 30, 2019 and March 31, 2019, is included in Accrued Investment Income in the accompanying Condensed Statements of Net Assets in Liquidation.

Potential Distributable Capital and Net Operating Loss Carryovers

As described in “Critical Accounting Policies and Estimates—Income Taxes” in Item 2 (“Management’s Discussion and Analysis of Financial Condition and Results of Operations”) below, the GUC Trust’s unused capital and net operating loss carryovers potentially could succeed to Claimants (as defined below pursuant to tax rules) upon the termination of the GUC Trust. Reference is made thereto for information regarding such potential distributable loss carryovers and the material uncertainties associated therewith.

Trust Units

As described in Note 1, under the Plan, each holder of an Allowed General Unsecured Claim retains a contingent right to receive, on a pro rata basis, additional Distributable Cash (if and to the extent not required for the satisfaction of previously Disputed General Unsecured Claims or Term Loan Avoidance Action Claims, or appropriation for the payment of the expenses or any tax liabilities of the GUC Trust). The GUC Trust issues units representing such contingent rights (“GUC Trust Units”) at the rate of one GUC Trust Unit per $1,000 of Allowed General Unsecured Claims to each holder of an Allowed General Unsecured Claim, subject to rounding pursuant to the GUC Trust Agreement, in connection with the initial recognition of each Allowed General Unsecured Claim.

The GUC Trust makes quarterly liquidating distributions to holders of GUC Trust Units to the extent that (i)(a) certain previously Disputed General Unsecured Claims asserted against the Debtors’ estates or Term Loan Avoidance Action Claims are either disallowed or are otherwise resolved favorably to the GUC Trust (thereby reducing the amount of GUC Trust assets reserved for distribution in respect of such asserted or potential claims) or (b) certain Excess GUC Trust Distributable Assets (as defined in the GUC Trust Agreement) that were previously set aside from distribution are released in the manner permitted under the GUC Trust Agreement, and (ii) as a result of the foregoing, the amount of Excess GUC Trust Distributable Assets (as defined in the GUC Trust Agreement) as of the end of the relevant quarter exceeds thresholds set forth in the GUC Trust Agreement.

The following table presents the changes during the three months ended June 30, 2019, in the number of GUC Trust Units outstanding or which the GUC Trust was obligated to issue:


	Trust Units
Outstanding or issuable as of March 31, 2019		31,855,504
Issued during the period		—
Less: Issuable as of beginning of period		—
Add: Issuable as of end of period (1)		—

Outstanding or issuable as of June 30, 2019 (2)(3)		31,855,504

(1)	The number of GUC Trust Units issuable at any time represents GUC Trust Units issuable in respect of Allowed General Unsecured Claims that were newly allowed during the fiscal quarter.

(2)

The number of GUC Trust Units outstanding at any time represents GUC Trust Units issued in respect of Allowed General Unsecured Claims that were allowed in prior periods, including GUC Trust Units held by the GUC Trust for the benefit of (a) holders of Allowed General Unsecured Claims who had not yet supplied information required by the GUC Trust in order to effect the initial distribution to which they are entitled and (b) governmental entities that are precluded by applicable law from receiving distributions of GUC Trust Units.

(3)	The number of GUC Trust Units outstanding or issuable as of the end of the quarter does not equal the amount of Allowed General Unsecured Claims on a 1 to 1,000 basis at the corresponding date because of additional GUC Trust Units that were issued due to rounding.

Allowed and Disputed Claims

The total cumulative pro rata liquidating distributions ultimately received by Trust Beneficiaries is dependent upon the current amount of Allowed General Unsecured Claims and final resolution of outstanding Disputed General Unsecured Claims and Term Loan Avoidance Action Claims (as described in Note 2). Outstanding Disputed General Unsecured Claims as of June 30, 2019 reflect a distribution “set aside” permitted by the Plan and the GUC Trust Agreement. As described in Note 1, prior to the resolution and allowance of Disputed General Unsecured Claims and Term Loan Avoidance Action Claims, liabilities are not recorded for the conditional obligations associated with Disputed General Unsecured Claims and Term Loan Avoidance Action Claims. Liquidating distributions payable are recorded in the amount of Distributable Cash (previously the fair value of New GM Securities) to be distributed as of the end of the period in which the Disputed General Unsecured Claims and Term Loan Avoidance Claims are resolved as Allowed General Unsecured Claims.

The following table presents a summary of activity with respect to Allowed General Unsecured Claims and remaining Disputed General Unsecured Claims and Term Loan Avoidance Action Claims for the three months ended

June 30, 2019:


(in thousands)	Allowed General Unsecured Claims		Disputed General Unsecured Claims (1)		Term Loan Avoidance Action Claims		Maximum Amount of Unresolved Claims (2)		Total Claim Amount (3)
Total, March 31, 2019	$	31,855,432	$	50,000	$	1,494,843	$	1,544,843	$	33,400,275
New Allowed General Unsecured Claims		—		—		—		—		—
Disputed General Unsecured Claims resolved or disallowed		—		—		—		—		—
Term Loan Avoidance Action Claims resolved or disallowed		—		—		—		—		—

Total, June 30, 2019	$	31,855,432	$	50,000	$	1,494,843	$	1,544,843	$	33,400,275

(1)

Remaining Disputed General Unsecured Claims represent a general claim contingency for any future disputed claims or other obligations of the GUC Trust. The GUC Trust has set aside from distribution an aggregate of $

14.8

million for this general claim contingency (i.e., $

296

in Distributable Cash per $

1,000

of Allowed General Unsecured Claims, as provided in the Plan). Subsequent to June 30, 2019, the GUC Trust released such general claim contingency.

(2)	Maximum Amount of Unresolved Claims represents the sum of remaining Disputed General Unsecured Claims and Term Loan Avoidance Action Claims.

(3)	Total Claim Amount represents the sum of Allowed General Unsecured Claims and Maximum Amount of Unresolved Claims.

As described in Note 2 above and in Part II, Item 1 (“Legal Proceedings”) below, the parties to the Term Loan Avoidance Action executed a settlement agreement providing for recoveries to the Avoidance Action Trust of approximately $231.0 million, among other provisions. Such settlement agreement was approved by the Bankruptcy Court and recoveries of approximately $231.0 million were received by the Avoidance Action Trust on July 1, 2019. As a result, on July 1, 2019, Resolved Term Loan Avoidance Action Claims arose in a corresponding amount and the holders became entitled to receive distributions from the GUC Trust aggregating approximately $

68.5

million. Such Resolved Term Loan Avoidance Action Claims and distributions payable were recorded subsequent to June 30, 2019 when such allowed claims arose.

As described in Part II, Item 1 (“Legal Proceedings”), during December 2016, certain plaintiffs filed motions with the Bankruptcy Court seeking authority to file late proofs of claim against the GUC Trust. Were any late proofs of claim to be filed (following receipt of authority to do so from the Bankruptcy Court), additional general unsecured claims could arise. Also as described in Part II, Item 1 (“Legal Proceedings”), the GUC Trust has executed the Revised Settlement Agreement with such plaintiffs. If approved by the Bankruptcy Court, the Revised Settlement Agreement would provide for the payment of noticing costs of up to $13.72 million. No further payments by the GUC Trust under the Revised Settlement Agreement would be required.