Reserves for Expected Costs of Liquidation and Residual Wind-Down Claims and Costs

9 Months Ended

Dec. 31, 2020

Reserves for Expected Costs of Liquidation and Residual Wind-Down Claims and Costs

6. Reserves for Expected Costs of Liquidation and Residual Wind-Down Claims and Costs

The following is a summary of the activity in the reserves for expected costs of liquidation for the three and nine months ended December 31, 2020 and 2019:


	Three months ended December 31, 2020
(in thousands)	Reserve for Expected Wind-Down Costs			Reserve for Expected Reporting Costs			Reserve for Indenture Trustee/Fiscal and Paying Agent Costs			Total Reserves for Expected Costs of Liquidation
Balance, September 30, 2020	$	4,312		$	2,256		$	82		$	6,650
Less reductions in reserves		(1,501	)		(169	)		—			(1,670	)
Less liquidation costs incurred:
Trust professionals		(453	)		(523	)		—			(976	)
Trust governance		(551	)		(450	)		(9	)		(1,010	)
Other administrative expenses		(158	)		(85	)		—			(243	)

Balance, December 31, 2020	$	1,649		$	1,029		$	73		$	2,751


	Nine months ended December 31, 2020
(in thousands)	Reserve for Expected Wind-Down Costs			Reserve for Expected Reporting Costs			Reserve for Indenture Trustee/Fiscal and Paying Agent Costs			Total Reserves for Expected Costs of Liquidation
Balance, March 31, 2020	$	22,530		$	6,100		$	82		$	28,712
Less reductions in reserves		(6,167	)		(1,838	)		—			(8,005	)
Less liquidation costs incurred:
Trust professionals		(1,429	)		(1,712	)		—			(3,141	)
Trust governance		(1,709	)		(1,350	)		(9	)		(3,068	)
Other administrative expenses		(11,576	)		(171	)		—			(11,747	)

Balance, December 31, 2020	$	1,649		$	1,029		$	73		$	2,751


	Three months ended December 31, 2019
(in thousands)	Reserve for Expected Wind-Down Costs			Reserve for Expected Reporting Costs			Reserve for Indenture Trustee/Fiscal and Paying Agent Costs			Total Reserves for Expected Costs of Liquidation
Balance, September 30, 2019	$	41,065		$	18,596		$	98		$	59,759
Plus additions to (reductions in) reserves		1,639			(5	)		—			1,634
Less liquidation costs incurred:
Trust professionals		(567	)		(553	)		—			(1,120	)
Trust governance		(615	)		(450	)		(15	)		(1,080	)
Other administrative expenses		(34	)		(94	)		—			(128	)

Balance, December 31, 2019	$	41,488		$	17,494		$	83		$	59,065


	Nine months ended December 31, 2019
(in thousands)	Reserve for Expected Wind-Down Costs			Reserve for Expected Reporting Costs			Reserve for Indenture Trustee/Fiscal and Paying Agent Costs			Total Reserves for Expected Costs of Liquidation
Balance, March 31, 2019	$	23,379		$	13,996		$	110		$	37,485
Plus net additions to reserves		22,362			6,776			—			29,138
Less liquidation costs incurred:
Trust professionals		(2,309	)		(1,759	)		—			(4,068	)
Trust governance		(1,852	)		(1,350	)		(27	)		(3,229	)
Other administrative expenses		(92	)		(169	)		—			(261	)

Balance, December 31, 2019	$	41,488		$	17,494		$	83		$	59,065

During the three months ended December 31, 2020, estimates of expected Wind-Down Costs and estimates of expected Reporting Costs (for which there is a reasonable basis for estimation) decreased by $1.5 million and $0.2

million, respectively. During the nine months ended December 31, 2020, estimates of expected Wind-Down Costs and estimates of expected Reporting Costs (for which there is a reasonable basis for estimation) decreased by

$6.2 million and $1.8

million, respectively. During the three months ended December 31, 2019, estimates of expected Wind-Down Costs and estimates of expected Reporting Costs increased by

$1.6 million and decreased by $5,000, respectively. During the nine months ended December 31, 2019, estimates of expected Wind-Down Costs and estimates of expected Reporting Costs increased (net of reductions in the three months ended June 30, 2019) by $22.4 million and $6.8 million, respectively. Such revisions in the estimates were recorded as reductions in (additions to) the reserves for expected costs of liquidation in such periods. The GUC Trust has recorded reserves for expected costs of liquidation that represent amounts expected to be incurred over the estimated remaining liquidation period of the GUC Trust for which there was a reasonable basis for estimation as of December 31, 2020.

The amount of liquidation costs that will ultimately be incurred depends both on the time period and on the extent of activities required for the GUC Trust to complete its functions and responsibilities under the Plan and the GUC Trust Agreement. Significant uncertainty remains both as to that time period and as to the extent of those activities. As of December 31, 2020, the recorded reserves for expected costs of liquidation reflect estimated costs for a remaining liquidation period estimated to extend through March 2021, which was unchanged from the prior quarter ended September 30, 2020. The remaining liquidation period has been estimated predominately on a modified probability-weighted basis as permitted under U.S. GAAP and which the GUC Trust believes is the most appropriate measurement basis under the circumstances. Where an outcome is estimated to be likely, the likely outcome has been used as the best estimate and no weight has been given to the unlikely outcome. In addition, consistent with the liquidation basis of accounting, no consideration has been given to potential outcomes to the extent there does not exist a reasonable basis for estimation. The remaining liquidation period is dependent predominantly on the estimate of the remaining period of time for resolution of litigation involving certain General Motors vehicle recalls described in Part II, Item 1 (“Legal Proceedings”), as well as the period of time to wind down the GUC Trust following resolution of the litigation, which period of time is also included in the estimated liquidation period. Certain liquidation costs that are expected to be prepaid by the GUC Trust upon its dissolution have also been estimated and accrued. Future developments in the General Motors vehicle recall litigation could extend the current estimate of such remaining period of time for resolution and, therefore, extend the estimated remaining liquidation period of the GUC Trust beyond March 2021. Changes in estimates regarding the period of time to wind down the GUC Trust could also extend the estimated remaining liquidation period beyond March 2021. The GUC Trust’s estimates regarding the costs and remaining liquidation period may change in the near term, and such change may be material. The following is a summary of the activity in the reserve for Residual Wind-Down Claims and Costs for the three and nine months ended December 31, 2020 and 2019.


	Three months ended December 31,				Nine months ended December 31,
(in thousands)	2020		2019		2020		2019
Balance, beginning of period	$	178	$	169	$	177	$	169
Plus addition to reserve		—		—		1		—

Balance, end of period	$	178	$	169	$	178	$	169