Net Assets in Liquidation

9 Months Ended

Dec. 31, 2019

Text Block [Abstract]

Net Assets in Liquidation

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 an addition for distributions payable to holders of GUC Trust Units and reductions for the amounts of set aside Distributable Cash and appropriated Distributable Cash. As of December 31, 2019, GUC Trust Distributable Assets aggregated approximately $321.1 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 December 31, 2019, cash and cash equivalents and marketable securities aggregated approximately $435.3 million and are comprised of the following:

(in thousands)
Distributable Cash (including associated Dividend Cash	$	404,290
Other Administrative Cash		29,578
Administrative Fund		1,190
Residual Wind-Down Assets		177
Funds for Indenture Trustee / Fiscal Paying Agent Costs		109
Total	$	435,344

As described in Note 4, as of December 31, 2019, the GUC Trust had accrued liquidating distributions payable aggregating $323.5 million. Such amount includes $321.1 million of distributions payable to holders of GUC Trust Units in respect of Excess GUC Trust Distributable Assets as of December 31, 2019. As described in Note 4, the GUC Trust does not currently plan on making a distribution to holders of GUC Trust Units at this time. In addition, as described in Note 2, as of December 31, 2019, the amount of Distributable Cash reflected in the table above includes $80.7 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 December 31, 2019 was $83.1 million (exclusive of distributions payable to holders of GUC Trust Units in respect of Excess GUC Trust Distributable Assets).

Accrued Investment Income on Marketable Securities and Cash Equivalents

As of December 31, 2019 and March 31, 2019, the GUC Trust had accrued approximately $14.5 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 (or expected yields resulting from recent changes in the federal funds rate) on U.S. 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 December 31, 2019, such accrual was reduced by approximately $1.8 million primarily due to the occurrence of one less quarter of interest accrual (with respect to investment income received in the quarter ended December 31, 2019, rather than accrued for such quarter), along with a shortening in the expected date to make a distribution in respect of GUC Trust Units. During the nine months ended December 31, 2019, such accrual was reduced by approximately $15.8 million primarily due to a reduction in yields on U.S. Treasury bills. Such accrual, along with receivables for investment income earned as of December 31, 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 may make at its discretion 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 number of GUC Trust Units outstanding as of December 31, 2019 was 32,086,501, which was unchanged from September 30, 2019. The number of GUC Trust Units outstanding does not equal the amount of Allowed General Unsecured Claims on a 1 to 1,000 basis because of additional GUC Trust Units that were issued due to rounding. The GUC Trust does not expect to issue any additional GUC Trust Units.

Allowed and Disputed Claims

As of December 31, 2019 and September 30, 2019, there were no remaining Disputed General Unsecured Claims or Term Loan Avoidance Action Claims. Allowed General Unsecured Claims as of such dates aggregated approximately $32,086 million.

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 previously executed the Settlement Agreement with certain plaintiffs that, if approved by the Bankruptcy Court, would have provided for the Settlement Payment to such plaintiffs of $15.0 million, among other provisions. During the quarter ended March 31, 2018, the GUC Trust accrued a contingent settlement obligation of $15.0 million for the Settlement Payment. As a result of developments in the related litigation specifically related to the impact of the Rule 23 Decision described in Part II, Item 1 (“Legal Proceedings”), such accrual was reversed in the quarter ended September 30, 2018, due to uncertainties then associated with the effectiveness of the Settlement Agreement in effect at that time. As described in Part II, Item 1 (“Legal Proceedings”), the Settlement Agreement was not approved by the Bankruptcy Court.