Net Assets in Liquidation

12 Months Ended

Mar. 31, 2020

4. 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 current holders of Allowed General Unsecured Claims (to the extent their liquidating distributions have not yet been paid to them) 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 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 any appropriated Distributable Cash. As of March 31, 2020, GUC Trust Distributable Assets aggregated approximately $349.4 million. For additional information, see “Net Assets in Liquidation—Distributable Assets” in Item 7 (“Management’s Discussion and Analysis of Financial Condition and Results of Operations”) above.

Cash and Cash Equivalents and Marketable Securities

As of March 31, 2020 and 2019, cash and cash equivalents and marketable securities aggregated $435.6 million and $505.1 million, respectively, and are comprised of the following:


(in thousands)	2020		2019
Distributable Cash (including associated Dividend Cash)	$	393,431	$	472,070
Other Administrative Cash		40,767		31,445
Administrative Fund		1,161		1,246
Residual Wind-Down Assets		178		175
Funds for Indenture Trustee / Fiscal Paying Agent Costs		90		117

Total		435,627	$	505,053

As described in Note 5, as of March 31, 2020, the GUC Trust had accrued liquidating distributions payable aggregating $351.9 million. Such amount includes $349.4 million of distributions payable to holders of GUC Trust Units in respect of Excess GUC Trust Distributable Assets. As described in

“Net Assets in Liquidation—Distributable Assets” in Item 7 (“Management’s Discussion and Analysis of Financial Condition and Results of Operations”) above

, the GUC Trust

mad

e a distribution of $300.0 million to holders of GUC Trust Units

n May

28,

2020. In addition, as of March 31, 2020, the amount of Distributable Cash reflected in the table above includes $41.5 million for amounts set aside for projected GUC Trust fees, costs and expenses to be incurred beyond 2020. The aggregate amount of Distributable Cash which was pending distribution or was set aside and was not available for distribution as of March 31, 2020 was $44.0 million (exclusive of distributions payable to holders of GUC Trust Units). As described in Note 2 above, on March 27, 2020, the GUC Trust Administrator filed a motion seeking authority from the Bankruptcy Court to appropriate Distributable Cash of $50.0 million for the purpose of satisfying of settlement consideration pursuant to the Amended Settlement Agreement described in Item 3 (“Legal Proceedings”). On April 23, 2020, the Bankruptcy Court issued an order approving such motion.

Accrued Investment Income on Cash Equivalents and Marketable Securities

As of March 31, 2020 and 2019, the GUC Trust had accrued approximately $0.8 million and $30.3 million, respectively, of investment income on marketable securities and cash equivalents expected to be earned over the 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 year ended March 31, 2020, such accrual was reduced by approximately $29.5 million primarily due to

a reduction in yields on U.S. Treasury bills, along with

shortenings in the expected dates to make distributions in respect of GUC Trust Units. Such shortenings in the expected dates to make distributions in respect of GUC Trust Units is associated with the execution of the Amended Settlement Agreement described in Item 3 (“Legal Proceedings”). Such accrual, along with receivables for investment income earned as of March 31, 2020 and 2019, is included in Accrued Investment Income in the accompanying Statements of Net Assets in Liquidation.

Potential Distributable Capital and Net Operating Loss Carryovers

As described in Note 8 and further described in “Critical Accounting Policies and Estimates—Income Taxes” in Item 7 (“Management’s Discussion and Analysis of Financial Condition and Results of Operations”), the GUC Trust’s unused capital and net operating loss carryovers potentially could succeed to Claimants (as defined above 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 has retained 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 has issued 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) any 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 years ended March 31, 2020, 2019 and 2018 in the numbers of GUC Trust Units outstanding or which the GUC Trust was obligated to issue:


	Year Ended March 31, 2020		Year Ended March 31, 2019		Year Ended March 31, 2018
Outstanding or issuable as of beginning of year		31,855,504		31,855,504		31,854,103
Issued during the year		230,997		—		1,448
Less: Issuable as of beginning of year		—		—		(47	)
Add: Issuable as of end of year		—		—		—

Outstanding as of end of year (1) (2)		32,086,501		31,855,504		31,855,504

(1)

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.

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

Contingent Settlement Obligation

As described in Item 3 (“Legal Proceedings”), the GUC Trust has executed the Amended Settlement Agreement with certain representatives of a proposed class of

conomic

oss

laintiffs, the Avoidance Action Trust and New GM. If finally approved by the MDL Court, the Amended Settlement Agreement will result in the GUC Trust paying $50.0 million as settlement consideration consisting of a $48.0 million payment to a fund for the benefit of Economic Loss Plaintiffs and to pay $2.0 million for a portion of noticing costs. The expected payment of $48.0 million to such fund has been accrued as a contingent settlement obligation and the expected payment for noticing costs of $2.0 million has been accrued in the reserves for expected costs of liquidation in the accompanying statement of net assets in liquidation as of March 31, 2020.

Allowed and Disputed Claims

The following table presents a summary of activity with respect to Allowed and Disputed General Unsecured Claims and Term Loan Avoidance Action Claims for the years ended March 31, 2020 and 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, 2018	$	31,855,432	$	50,000		$	1,494,986		$	1,544,986		$	33,400,418
New Allowed General Unsecured Claims		—		—			—			—			—
Disputed General Unsecured Claims resolved or disallowed		—		—			—			—			—
Term Loan Avoidance Action Claims resolved or disallowed		—		—			(143	)		(143	)		(143	)

Total, March 31, 2019		31,855,432		50,000			1,494,843			1,544,843			33,400,275
New Allowed General Unsecured Claims		231,000		—			—			—			231,000
Disputed General Unsecured Claims resolved or disallowed		—		(50,000	)		—			(50,000	)		(50,000	)
Term Loan Avoidance Action Claims resolved or disallowed		—		—			(1,494,843	)		(1,494,843	)		(1,494,843	)

Total, March 31, 2020	$	32,086,432	$	—		$	—		$	—		$	32,086,432

(1)

Remaining Disputed General Unsecured Claims as of March 31, 2019 and 2018 represented a general claim contingency for any future disputed claims or other obligations of the GUC Trust. During the year ended March 31, 2020, the GUC Trust released such general claim contingency because it was deemed no longer necessary.

(2)	Maximum Amount of Unresolved Claims represents the sum of 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

during the year ended March 31, 2020, the Term Loan Avoidance Action was settled among the parties resulting in recoveries to the Avoidance Action Trust of approximately $231.0 million. As a result, Allowed General Unsecured Claims arose in a corresponding amount and the holders became entitled to receive distributions from the GUC Trust aggregating approximately $68.5 million. As of March 31, 2020, approximately $67.8 million had been distributed by the GUC Trust to such holders.