Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Nov. 20, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | NOVATION COMPANIES, INC. | |
Entity Central Index Key | 1,025,953 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 95,590,178 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets | ||
Cash and cash equivalents | $ 32,263 | $ 4,805 |
Marketable securities, current | 8,995 | 9,943 |
Other current assets | 223 | 644 |
Current assets of discontinued operations | 407 | 447 |
Total current assets | 41,888 | 15,839 |
Non-current Assets | ||
Marketable securities, non-current | 0 | 26,545 |
Other assets | 203 | 246 |
Total non-current assets | 203 | 26,791 |
Total assets | 42,091 | 42,630 |
Liabilities: | ||
Current liabilities - accounts payable and accrued expenses | 2,829 | 792 |
Non-current liabilities | 73 | 71 |
Total liabilities not subject to compromise | 2,902 | 863 |
Liabilities subject to compromise | 93,016 | 90,966 |
Total liabilities | 95,918 | 91,829 |
Commitments and contingencies | ||
Capital stock, $0.01 par value per share, 120,000,000 shares authorized: | ||
Common stock, 92,844,907 shares issued and outstanding | 928 | 928 |
Additional paid-in capital | 744,891 | 744,873 |
Accumulated deficit | (808,121) | (804,319) |
Accumulated other comprehensive income | 8,475 | 9,319 |
Total shareholders' deficit | (53,827) | (49,199) |
Total liabilities and shareholders' deficit | $ 42,091 | $ 42,630 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets - Parenthetical - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Capital stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Capital stock, shares authorized | 120,000,000 | 120,000,000 |
Common stock, shares issued | 92,844,907 | 92,844,907 |
Common stock, shares outstanding | 92,844,907 | 92,844,907 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Income: | ||||
Interest income – mortgage securities | $ 829 | $ 1,140 | $ 1,819 | $ 2,201 |
Total | 829 | 1,140 | 1,819 | 2,201 |
General and administrative expenses | 755 | 1,048 | 1,793 | 2,857 |
Total | 755 | 1,048 | 1,793 | 2,857 |
Other income | 162 | 607 | 306 | 910 |
Reorganization items, net | (1,846) | 0 | (3,056) | 0 |
Interest expense | (1,078) | (857) | (2,084) | (1,733) |
Loss from continuing operations before income taxes | (2,688) | (158) | (4,808) | (1,479) |
Income tax expense, continuing operations | 7 | 10 | 14 | 14 |
Net loss from continuing operations | (2,695) | (168) | (4,822) | (1,493) |
Income (loss) from discontinued operations, net of income taxes | 0 | (12) | 1,020 | (77) |
Net loss | (2,695) | (180) | (3,802) | (1,570) |
Other comprehensive income (loss): | ||||
Unrealized gains realized upon the sale of securities | (79) | (100) | (79) | (100) |
Unrealized gain (loss) on marketable securities – available-for-sale | (61) | 899 | (765) | 3,224 |
Total other comprehensive income (loss) | (140) | 799 | (844) | 3,124 |
Total comprehensive income (loss) | $ (2,835) | $ 619 | $ (4,646) | $ 1,554 |
Earnings (loss) per share: | ||||
Basic, in dollars per share | $ (0.03) | $ 0 | $ (0.04) | $ (0.02) |
Diluted, in dollars per share | $ (0.03) | $ 0 | $ (0.04) | $ (0.02) |
Weighted average shares outstanding: | ||||
Weighted average common shares outstanding, basic | 92,776,846 | 91,355,821 | 92,778,583 | 91,338,420 |
Weighted average number of shares outstanding, diluted | 92,776,846 | 91,355,821 | 92,778,583 | 91,338,420 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Shareholders' Deficit - USD ($) $ in Thousands | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Income [Member] |
Balance at Dec. 31, 2015 | $ (62,593) | $ 928 | $ 744,575 | $ (809,532) | $ 1,436 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Compensation recognized under stock compensation plans | 240 | 240 | |||
Net loss | (1,570) | (1,570) | |||
Other comprehensive income (loss) | 3,124 | 3,124 | |||
Balance at Jun. 30, 2016 | (60,799) | 928 | 744,815 | (811,102) | 4,560 |
Balance at Dec. 31, 2016 | (49,199) | 928 | 744,873 | (804,319) | 9,319 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Compensation recognized under stock compensation plans | 18 | 18 | |||
Net loss | (3,802) | (3,802) | |||
Other comprehensive income (loss) | (844) | (844) | |||
Balance at Jun. 30, 2017 | $ (53,827) | $ 928 | $ 744,891 | $ (808,121) | $ 8,475 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Cash flows from operating activities: | ||
Net loss | $ (3,802) | $ (1,570) |
Income (loss) from discontinued operations, net of income taxes | 1,020 | (77) |
Net loss from continuing operations | (4,822) | (1,493) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Accretion of marketable securities | 58 | (282) |
Amortization of deferred debt issuance costs and senior debt discount | 0 | (43) |
Loss on disposal of fixed assets, net | 0 | 76 |
Realized gain on sale of marketable securities | (79) | (100) |
Compensation recognized under stock compensation plans | 18 | 217 |
Changes in: | ||
Due from discontinued operations | 0 | (28) |
Other current assets and liabilities, net | 421 | 612 |
Other noncurrent assets and liabilities, net | 45 | 80 |
Accounts payable and accrued expenses | 4,109 | 1,143 |
Net cash provided by (used in) operating activities of continuing operations | (250) | 182 |
Net cash provided by (used in) operating activities of discontinued operations | 998 | (1,913) |
Net cash provided by (used in) operating activities | 748 | (1,731) |
Cash flows from investing activities: | ||
Proceeds from sales and maturities of marketable securities | 26,674 | 13,326 |
Proceeds from paydowns of notes receivable | 0 | 21 |
Proceeds from sale of subsidiary, net | 0 | 7,642 |
Purchases of available-for-sale securities | (3) | (12,699) |
Proceeds from restricted cash | 0 | 368 |
Net cash provided by investing activities of continuing operations | 26,671 | 8,658 |
Net cash used in investing activities of discontinued operations | 0 | (159) |
Net cash provided by investing activities | 26,671 | 8,499 |
Cash flows from financing activities: | ||
Cash payments for contributions of capital to discontinued operations | 0 | (205) |
Net cash used in financing activities of continuing operations | 0 | (205) |
Net cash provided by financing activities of discontinued operations | 0 | 205 |
Net cash provided by financing activities | 0 | 0 |
Cash and cash equivalents, including discontinued operations: | ||
Net increase | 27,419 | 6,768 |
Beginning of period | 5,000 | 3,178 |
End of period | 32,419 | 9,946 |
Supplemental disclosure of cash flow information. Cash paid for: | ||
Reorganization items | 1,772 | 0 |
Income taxes, net | $ 0 | $ (5) |
Financial Statement Presentatio
Financial Statement Presentation | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Financial Statement Presentation | Financial Statement Presentation Description of Operations – Novation Companies, Inc. (the “Company,” “Novation,” “we,” or “us”) has been implementing its strategy to acquire operating businesses or making other investments that generate taxable earnings. See Note 2 for a description of the Company's bankruptcy reorganization and see Note 10 for a description of the Healthcare Staffing, Inc. ("HCS") Acquisition (as defined in Note 2) and the Note Refinancing (as defined in Note 2), which were completed after June 30, 2017. Prior to 2016, Novation owned 100% of Corvisa LLC ("Corvisa"). On December 21, 2015, the Company entered into a Membership Interest Purchase Agreement (the "Corvisa Purchase Agreement") with Corvisa Services LLC ("Corvisa Services"), a wholly owned subsidiary of the Company, and ShoreTel, Inc. ("ShoreTel"). Subject to the terms and conditions under the Corvisa Purchase Agreement, ShoreTel agreed to purchase all of the membership interests of Corvisa (the "Corvisa Sale"). The Corvisa Sale closed on January 6, 2016. The operations of Corvisa have been classified as discontinued operations for all periods presented. Prior to 2016, the Company originated, purchased, securitized, sold, invested in and serviced residential nonconforming mortgage loans and mortgage securities. As a result of those activities, the Company holds mortgage securities that continue to be a source of its earnings and cash flow. See Note 4 and Note 7 for additional information regarding these securities and the valuation thereof. Also as a result of those activities, the Company may, from time to time, receive indemnification and loan repurchase demands related to past sales of loans to securitization trusts and other third parties. See Note 6 for additional information regarding these demands. Liquidity and Going Concern – As of June 30, 2017 , the Company had approximately $32.3 million in unrestricted cash and cash equivalents and $0.2 million of restricted cash, portions of which are included in the other current assets and other assets line items on the condensed consolidated balance sheet. In addition, the Company held approximately $8.8 million in mortgage securities that continue to be a source of cash for the Company. The Company's marketable securities are classified as available-for-sale and are included in the current marketable securities line items on the condensed consolidated balance sheet as of June 30, 2017 . For additional information regarding the Company's marketable securities, see the condensed consolidated statements of cash flow and Note 4 . The Company's ongoing contractual obligations consist primarily of its senior notes, which are discussed in Note 5 and commitments under operating lease agreements for the Company's office space. As discussed in Note 5 , the Company did not make the quarterly interest payments due on March 30, 2016, totaling $0.9 million , as required under the Company's three series of 2011 Notes and three related Indentures (each as defined in Note 2 ). These interest payments were not made within 30 days after they became due and payable, and remain unpaid, such non-payment constituting events of default under the Indentures. The trustee under any Indenture or the holders of not less than 25% of the aggregate principal amount of the outstanding 2011 Notes issued pursuant to such Indenture, by notice in writing to the Company (and to the trustee if given by the holders), was able to declare the principal amount of all of the 2011 Notes issued under such Indenture to be due and payable immediately. On May 9, 2016, the Company received a notice of acceleration with respect to the Series 1 2011 Notes and the Series 2 2011 Notes declaring all principal and unpaid interest immediately due and payable. A similar acceleration notice was received on June 6, 2016 with respect to the Series 3 2011 Notes. As of June 30, 2017 , the aggregate outstanding principal under the 2011 Notes was $85.9 million , and the recorded aggregate interest liability was $5.8 million . As discussed in Note 2, the Company and three of its subsidiaries filed voluntary petitions (the “Bankruptcy Petitions”) for reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Maryland (the “Bankruptcy Court”). These factors raise substantial doubt about the Company’s ability to continue as a going concern. We have taken action to alleviate the substantial doubt raised by our historical operating results and to satisfy expected liquidity needs that will arise within the 12 months from the issuance of these condensed consolidated financial statements. These actions included completing our Plan (as defined in Note 2), completing our Note Refinancing and acquiring an operating business, which is anticipated to be cash flow positive, each effective July 27, 2017. The terms of the 2017 Notes (as defined in Note 10 ), issued in exchange for the 2011 Notes in our Note Refinancing, allow the Company to obtain additional financing based on the accounts receivable and inventory of operating subsidiaries. The Company is aggressively pursuing such financing. Other actions the Company has taken include significantly reducing corporate overhead costs. Excluding the cost of reorganization, the Company has reduced compensation and other general and administrative expense by reducing staff, eliminating office space and paring back other administrative costs. The Company acknowledges that it continues to face significant liquidity challenges. The cost of the bankruptcy proceedings have placed demands on the Company's liquidity resources. While no principal is due for many years on the 2017 Notes, the on-going interest costs are significant and the rate is variable. If HCS and the Company's other investments do not perform as expected and/or we are unable to obtain other funding sources, we may not be able to meet financial obligations. The accompanying condensed consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and contemplates the continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the normal course of business. Financial Statement Presentation – The Company’s condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of income and expense during the period. The Company uses estimates and judgments in establishing the fair value of its mortgage securities, assessing the recoverability of its long-lived assets, and accounting for income taxes, including the determination of the timing of the establishment or release of the valuation allowance related to the deferred tax asset balances and reserves for uncertain tax positions. While the condensed consolidated financial statements and footnotes reflect the best estimates and judgments of management at the time, actual results could differ significantly from those estimates. Financial statements for the period following the Chapter 11 filing through the confirmation of a plan of reorganization distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, revenue, expenses, realized gains and losses and provision for losses directly associated with the reorganization or restructuring of the business are reported separately as Reorganization items, net, in the condensed consolidated statement of operations. The condensed consolidated balance sheet distinguishes pre-petition liabilities subject to compromise, pre-petition liabilities that are not subject to compromise and post-petition liabilities. Liabilities subject to comprise are reported at the amounts expected to be allowed, even if they may be settled for lesser amounts. In addition, cash used for reorganization items is disclosed separately in the condensed consolidated statements of cash flows. Cash equivalents consist of liquid investments with an original maturity of three months or less. Cash equivalents are stated at cost, which approximates fair value. The condensed consolidated financial statements of the Company include the accounts of all wholly-owned and majority-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. The Company's condensed consolidated financial statements are unaudited. In the opinion of management, all necessary adjustments have been made, which were of a normal and recurring nature, for a fair presentation of the condensed consolidated financial statements. The Company's condensed consolidated financial statements should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements of the Company and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2016 (the "2016 Form 10-K"). |
Reorganization
Reorganization | 6 Months Ended |
Jun. 30, 2017 | |
Reorganizations [Abstract] | |
Reorganization under Chapter 11 of US Bankruptcy Code Disclosure | Reorganization On July 20, 2016, (the "Bankruptcy Petition Date"), Novation and three of its subsidiaries, NovaStar Mortgage LLC, NovaStar Mortgage Funding Corporation and 2114 Central LLC (collectively, the “Debtors”), filed the Bankruptcy Petitions for reorganization under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. The Debtors’ Chapter 11 cases (the “Chapter 11 Cases”) were being jointly administered under the case Novation Companies, Inc., et al, No. 16-19745-DER. The Company and one of its subsidiaries subsequently filed with the Bankruptcy Court, and amended, a plan of reorganization for the resolution of the outstanding claims against and interests pursuant to Section 1121(a) of the Bankruptcy Code (as amended and supplemented, the “Plan”) and a related disclosure statement. The Bankruptcy Court entered an order on June 12, 2017 confirming the Plan (the “Confirmation Order”) solely with respect to the Company, which provided that the effective date of the Plan will occur when all conditions precedent to effectiveness, as set forth in the Plan, have been satisfied or waived. Two of the conditions to the effectiveness of the Plan were (i) the closing of the Company’s acquisition (the “HCS Acquisition”) of all of the capital stock of HCS as discussed in Note 10 and (ii) the restructuring (the “Note Refinancing”) of the Company’s outstanding Series 1 Notes, Series 2 Notes and Series 3 Notes (collectively, the “2011 Notes”), held by Taberna Preferred Funding I, Ltd. (“Taberna I”), Taberna Preferred Funding II, Ltd. (“Taberna II”) and Kodiak CDO I, Ltd. (“Kodiak” and, together with Taberna I and Taberna II, the “Noteholders”), issued pursuant to three Indentures, each dated as of March 22, 2011 (the “Indentures”), between the Company and The Bank of New York Mellon Trust Company, National Association. The HCS Acquisition and the Note Refinancing were completed on July 27, 2017, and are discussed in Note 10 . On July 27, 2017, upon the completion of the HCS Acquisition and the Note Refinancing, and the satisfaction or waiver of all other conditions precedent to effectiveness, the effective date of the Plan occurred and the Company filed a Notice of Occurrence of Effective Date of the Plan with the Bankruptcy Court. Under the Plan, holders of existing equity interests in the Company (i.e., the common stock) retain their interests. As of June 30, 2017 , liabilities subject to compromise include (in thousands): Obligations under the 2011 Notes (see Note 5), including accrued interest $ 91,713 Liabilities associated with the discontinued operations of Advent Financial Services LLC 156 Claims and other liabilities related to operating leases 715 Income tax liabilities 321 Other 111 Liabilities subject to compromise $ 93,016 To the best of our knowledge, we notified all of our known current or potential creditors that the Debtors have filed Chapter 11 Cases. In addition, on August 23, 2016, each of the Debtors filed the Schedules and Statements with the Bankruptcy Court. These documents set forth, among other things, the assets and liabilities of each of the Debtors, including executory contracts to which each of the Debtors is a party. The Schedules and Statements are subject to the qualifications and assumptions included therein, and were subject to amendment or modification as our Chapter 11 Cases proceeded. Many of the claims identified in the Schedules and Statements are listed as disputed, contingent or unliquidated. In addition, there may be differences between the amounts for certain claims listed in the Schedules and Statements and the amounts claimed by our creditors. These differences were investigated and resolved as part of our claims resolution process in our Chapter 11 Cases. We have incurred significant costs associated with our reorganization and the Chapter 11 proceedings. These costs, which are being expensed as incurred, will significantly affect our results of operations through the effective date of the Plan. Reorganization items include (in thousands): Six Months Ended June 30, 2017 Three Months Ended June 30, 2017 Professional fees $ 3,016 $ 1,848 Other 40 (2 ) Reorganization items, net $ 3,056 $ 1,846 |
Divestitures
Divestitures | 6 Months Ended |
Jun. 30, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Divestitures | Divestitures Corvisa LLC On December 21, 2015, the Company entered into the Corvisa Purchase Agreement with Corvisa Services and ShoreTel. Subject to the terms and conditions of the Corvisa Purchase Agreement, ShoreTel agreed to purchase 100% of the membership interests of Corvisa. The Corvisa Sale closed on January 6, 2016. The aggregate consideration for the transaction included $8.4 million in cash, subject to a potential post-closing working capital adjustment, of which $7.0 million was paid at the closing and the following was deposited in escrow: (i) $1.0 million for a period of twelve months to secure certain indemnification obligations of the Company; and (ii) $0.35 million to secure certain obligations of the Company in connection with the post-closing working capital adjustment. In connection with the Corvisa Sale, the Company and ShoreTel also agreed to enter into a Transition Services Agreement pursuant to which each of the Company and ShoreTel would provide the other with specified services for a transition period following the closing. The transition period ended in the second quarter of 2016, the cash flows associated with these services were not significant and the Company has no continuing involvement with Corvisa. The Company recognized a gain on the transaction of $1.4 million during the first quarter of 2016, which is reflected in the income (loss) from discontinued operations. Also included in discontinued operations during the first quarter of 2016 are transaction-related costs that were contingent upon the closing of the sale. These costs include approximately $0.3 million of earned bonus payments to a Corvisa executive, $1.0 million of advisory fees and $0.1 million of other transaction-related costs. During the first quarter of 2017, the Company received $1.0 million from the release of the indemnification escrow which was recorded as a gain and included in discontinued operations. At ShoreTel’s request, the Company disposed of Corvisa’s third-party software implementation consulting business in December 2015. The Company sold the assets related exclusively to this business, including but not limited to customer contracts, computer hardware and marketing materials, to Canpango LLC (“Canpango”), which agreed to hire certain employees of the business, to assume Corvisa’s obligations under the customer contracts and to pay to the Company a portion of the business’s existing accounts receivable collected in the next nine months, less associated collection costs. Canpango is led by a former employee of Corvisa and certain current and former employees of Corvisa have financial interests in Canpango. The sales price, assets and operations related exclusively to this business were not material to the Company’s condensed consolidated financial statements. Results of Discontinued Operations The results of the Company's discontinued operations are summarized below (in thousands): For the Six Months Ended June 30, For the Three Months Ended June 30, 2017 2016 2017 2016 Service fee income $ — $ — $ — $ — Income (loss) from discontinued operations before income taxes $ 1,020 $ (77 ) $ — $ (12 ) Income tax expense (benefit) — — — — Income (loss) from discontinued operations, net of income taxes $ 1,020 $ (77 ) $ — $ (12 ) The assets and liabilities of discontinued operations are not material. |
Marketable Securities
Marketable Securities | 6 Months Ended |
Jun. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Marketable Securities | Marketable Securities The Company's portfolio of available-for-sale securities includes (in thousands): Gross Unrealized Estimated Fair Value Amortized Cost Gains Losses As of June 30, 2017 (unaudited) Marketable securities, current Mortgage securities $ 404 $ 8,416 $ — $ 8,820 Equity securities 116 65 (6 ) 175 Total $ 520 $ 8,481 $ (6 ) $ 8,995 As of December 31, 2016 Marketable securities, current Mortgage securities $ 450 $ 9,341 $ — $ 9,791 Equity securities 112 47 (7 ) 152 Total $ 562 $ 9,388 $ (7 ) $ 9,943 Marketable securities, non-current Agency mortgage-backed securities $ 26,607 $ — $ (62 ) $ 26,545 During the second quarter of 2017, the Company's entire portfolio of agency mortgage-backed securities was sold. Proceeds from the sale were $25.2 million and a gain of $79 thousand recognized, included in Other Income in the Company's condensed consolidated statements of operations and comprehensive income (loss). Prior to 2016, the Company originated, purchased, securitized, sold, invested in and serviced residential nonconforming mortgage loans and mortgage securities. As a result of those activities, the Company holds mortgage securities that continue to be a source of its earnings and cash flow. As of June 30, 2017 and December 31, 2016 , these mortgage securities consisted entirely of the Company's investment in the residual securities issued by securitization trusts sponsored by the Company. Residual securities consist of interest-only, prepayment penalty and overcollateralization bonds. There were no other-than-temporary impairments relating to available-for-sale securities for the three and six months ended June 30, 2017 . Maturities of retained mortgage securities owned by the Company depend on repayment characteristics and experience of the underlying financial instruments. See Note 7 for details on the Company's fair value methodology. The following table relates to the securitizations where the Company retained an interest in the assets issued by the securitization trust (in thousands): Size/Principal Outstanding (A) Assets on Balance Sheet (B) Liabilities on Balance Sheet Maximum Exposure to Loss(C) Year to Date Loss on Sale Year to Date Cash Flows (D) June 30, 2017 $ 2,994,774 $ 8,820 $ — $ 8,820 $ — $ 1,865 December 31, 2016 3,185,270 9,943 — 9,943 — 5,135 (A) Size/Principal Outstanding reflects the estimated principal of the underlying assets held by the securitization trust. (B) Assets on balance sheet are securities issued by the entity and are recorded in the current marketable securities line item on the condensed consolidated balance sheets. (C) The maximum exposure to loss includes the assets held by the Company. The maximum exposure to loss assumes a total loss on the referenced assets held by the securitization trust. (D) Year to date cash flows are for the six months ended June 30, 2017 and year ended December 31, 2016. |
Borrowings - 2011 Notes
Borrowings - 2011 Notes | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Borrowings - 2011 Notes | Borrowings - 2011 Notes As of June 30, 2017, the Company had outstanding three series of unsecured senior notes (referred to as the "2011 Notes") pursuant to three separate indentures (referred to as the “Indentures”) with an aggregate principal balance of $85.9 million . The 2011 Notes were created through an exchange of the Company's previously outstanding junior subordinated notes that occurred prior to 2016. This exchange was considered a modification of a debt instrument for accounting purposes. Through the Bankruptcy Petition Date, the Company used the effective interest method to accrete from the principal balance as of the modification date to the carrying balance as of any reporting date. As of the Bankruptcy Petition Date, the Company charged off the entire difference between the contractual principal amount of the 2011 Notes and their carrying value as these notes were impacted by the bankruptcy reorganization process. The 2011 Notes accrued interest at a rate of 1.0% per annum until January 1, 2016 and then accrued interest at a rate of three-month LIBOR plus 3.5% per annum (the “Full Rate”). Interest on the 2011 Notes was payable on a quarterly basis and no principal payments were due until maturity on March 30, 2033. The Company did not make the quarterly interest payments due on March 30, 2016 totaling $0.9 million . These interest payments were not made within 30 days after they became due and payable, and remain unpaid, such non-payments constituting events of default under the Indentures . As a result, the 2011 Notes were classified as current liabilities. The trustee under any Indenture or the holders of not less than 25% of the aggregate principal amount of the outstanding 2011 Notes issued pursuant to such Indenture, by notice in writing to the Company (and to the trustee if given by the holders), was able to declare the principal amount of all the 2011 Notes issued under such Indenture to be due and payable immediately. On May 9, 2016, the Company received a notice of acceleration with respect to the Series 1 2011 Notes and the Series 2 2011 Notes, declaring all principal and unpaid interest immediately due and payable. A similar acceleration notice was received on June 6, 2016 with respect to the Series 3 2011 Notes. The aggregate outstanding principal under the 2011 Notes was $85.9 million and the aggregate recorded interest liability is $5.8 million . The principal and recorded unpaid interest are classified as liabilities subject to compromise in the Company's condensed consolidated balance sheet. As discussed in Note 10 , on July 27, 2017 the 2011 Notes were exchanged for the 2017 Notes (as defined in Note 10 ). |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Contingencies . Prior to 2016, the Company originated, purchased, securitized, sold, invested in and serviced residential nonconforming mortgage loans and mortgage securities. The Company has received indemnification and loan repurchase demands with respect to alleged violations of representations and warranties (“defects”) and with respect to other alleged misrepresentations and contractual commitments made in loan sale and securitization agreements. These demands have been received substantially beginning in 2006 and have continued into recent years. Prior to the Company ceasing the origination of loans in its mortgage lending business, it sold loans to securitization trusts and other third parties and agreed to repurchase loans with material defects and to otherwise indemnify parties to these transactions. Beginning in 1997 and ending in 2007, affiliates of the Company sold loans to securitization trusts and third parties with the potential of such obligations. The aggregate original principal balance of these loans was $43.1 billion at the time of sale or securitization. The remaining principal balance of these loans is not available as these loans are serviced by third parties and may have been refinanced, sold or liquidated. Claims to repurchase loans or to indemnify under securitization documents have not been acknowledged as valid by the Company. In some cases, claims were made against affiliates of the Company that have ceased operations and have no or limited assets. The Company has not repurchased any loans or made any such indemnification payments since 2010. Historically, repurchases of loans or indemnification of losses where a loan defect has been alleged have been insignificant and any future losses for alleged loan defects have not been deemed to be probable or reasonably estimable; therefore, the Company has recorded no reserves related to these claims. The Company does not use internal groupings for purposes of determining the status of these loans. The Company is unable to develop an estimate of the maximum potential amount of future payments related to repurchase demands because the Company does not have access to information relating to loans sold and securitized and the number or amount of claims deemed probable of assertion is not known nor is it reasonably estimated. Further, the validity of claims received remains questionable. Also, considering that the Company completed its last sale or securitization of loans during 2007, the Company believes that it will be difficult for a claimant to successfully validate any additional repurchase demands. Management does not expect that the potential impact of claims will be material to the Company's condensed consolidated financial statements. Pending Litigation . The Company is a party to various legal proceedings. Except as set forth below, these proceedings are of an ordinary and routine nature. Any legal fees associated with these proceedings are expensed as incurred. Although it is not possible to predict the outcome of any legal proceeding, in the opinion of management, other than the active proceedings described in detail below, proceedings and actions against the Company should not, individually, or in the aggregate, have a material effect on the Company's financial condition, operations and liquidity. Furthermore, due to the uncertainty of any potential loss as a result of pending litigation and due to the Company's belief that an adverse ruling is not probable, the Company has not accrued a loss contingency related to the following matters in its condensed consolidated financial statements. However, a material outcome in one or more of the active proceedings described below could have a material impact on the results of operations in a particular quarter or fiscal year. See Note 2 for a description of the impact of the Company's Chapter 11 Cases on these proceedings. On May 21, 2008, a purported class action case was filed in the Supreme Court of the State of New York, New York County, by the New Jersey Carpenters' Health Fund, on behalf of itself and all others similarly situated. Defendants in the case included NovaStar Mortgage Funding Corporation (“NMFC”) and NovaStar Mortgage, Inc. ("NMI"), wholly-owned subsidiaries of the Company, and NMFC's individual directors, several securitization trusts sponsored by the Company (“affiliated defendants”) and several unaffiliated investment banks and credit rating agencies. The case was removed to the United States District Court for the Southern District of New York. On June 16, 2009, the plaintiff filed an amended complaint. The plaintiff seeks monetary damages, alleging that the defendants violated sections 11, 12 and 15 of the Securities Act of 1933, as amended, by making allegedly false statements regarding mortgage loans that served as collateral for securities purchased by the plaintiff and the purported class members. On August 31, 2009, the Company filed a motion to dismiss the plaintiff's claims, which the court granted on March 31, 2011, with leave to amend. The plaintiff filed a second amended complaint on May 16, 2011, and the Company again filed a motion to dismiss. On March 29, 2012, the court dismissed the plaintiff's second amended complaint with prejudice and without leave to replead. The plaintiff filed an appeal. On March 1, 2013, the appellate court reversed the judgment of the lower court, which had dismissed the case. Also, the appellate court vacated the judgment of the lower court which had held that the plaintiff lacked standing, even as a class representative, to sue on behalf of investors in securities in which plaintiff had not invested, and the appellate court remanded the case back to the lower court for further proceedings. On April 23, 2013 the plaintiff filed its memorandum with the lower court seeking a reconsideration of the earlier dismissal of plaintiff's claims as to five offerings in which plaintiff was not invested, and on February 5, 2015 the lower court granted plaintiff's motion for reconsideration and vacated its earlier dismissal. On March 8, 2017, the affiliated defendants and all other parties executed an agreement to settle the action, with the contribution of the affiliated defendants to the settlement fund being paid by their insurance carriers. The court certified a settlement class and granted preliminary approval to the settlement on May 10, 2017. One member of the settlement class objected to the settlement and sought a stay of the final settlement approval hearing on the ground that it did not receive notice of the settlement and had no opportunity to timely opt out of the class. After the court rejected the motion for a stay, the objector filed an appeal and requested a stay of the district court proceedings pending disposition of the appeal. The court of appeals denied the temporary stay of the district court proceedings pending a decision on the objector’s request for a stay. Assuming the settlement is approved and completed, the Company will incur no loss. The Company believes that the affiliated defendants have meritorious defenses to the case and, if the settlement is not approved, expects them to defend the case vigorously. On June 20, 2011, the National Credit Union Administration Board, as liquidating agent of U.S. Central Federal Credit Union, filed an action against NMFC and numerous other defendants in the United States District Court for the District of Kansas, claiming that the defendants issued or underwrote residential mortgage-backed securities pursuant to allegedly false or misleading registration statements, prospectuses, and/or prospectus supplements. On August 24, 2012, the plaintiff filed an amended complaint making essentially the same claims against NMFC. NMFC filed a motion to dismiss the amended complaint which was denied on September 12, 2013. The defendants had claimed that the case should be dismissed based upon a statute of limitations and sought an appeal of the court's denial of this defense. An interlocutory appeal of this issue was allowed, and on August 27, 2013, the Tenth Circuit affirmed the lower court’s denial of defendants’ motion to dismiss the plaintiff’s claims as being time barred; the appellate court held that the Extender Statute, 12 U.S.C. §1787(b)(14) applied to plaintiff’s claims. On June 16, 2014, the United States Supreme Court granted a petition of NMFC and its co-defendants for certiorari, vacated the ruling of the Tenth Circuit, and remanded the case back to that court for further consideration in light of the Supreme Court’s decision in CTS Corp. v. Waldburger, 134 S. Ct. 2175 (2014). On August 19, 2014, the Tenth Circuit reaffirmed its prior decision, and on October 2, 2014 the defendants filed a petition for writ of certiorari with the Supreme Court, which was denied. On March 22, 2016, NMFC filed motions for summary judgment, and plaintiff filed a motion for partial summary judgment. Those motions remain pending. Given that plaintiff did not file a timely proof of claim in NMFC’s bankruptcy case, the Company believes it is likely that the case will be dismissed. The Company believes that NMFC has meritorious defenses to the case and expects it to defend the case vigorously in the event it proceeds. On February 28, 2013 the Federal Housing Finance Agency, as conservator for the Federal Home Loan Mortgage Corporation (Freddie Mac) and on behalf of the Trustee of the NovaStar Mortgage Funding Trust, Series 2007-1 (the “Trust”), a securitization trust in which the Company retains a residual interest, filed a summons with notice in the Supreme Court of the State of New York, County of New York against the Company and NMI. The notice provides that this is a breach of contract action with respect to certain, unspecified mortgage loans and defendant's failure to repurchase such loans under the applicable agreements. Plaintiff alleges that defendants, from the closing date of the transaction that created the Trust, were aware of the breach of the representations and warranties made and failed to notice and cure such breaches, and due to the failure of defendants to cure any breach, notice to defendants would have been futile. The summons with notice was not served until June 28, 2013. By letter dated June 24, 2013, the Trustee of the Trust forwarded a notice from Freddie Mac alleging breaches of representations and warranties with respect to 43 loans, as more fully set forth in included documentation. The 43 loans had an aggregate, original principal balance of about $6.5 million . On August 19, 2013, Deutsche Bank National Trust Company, as Trustee, filed a complaint identifying alleged breaches of representations and warranties with respect to seven loans that were included in the earlier list of 43 loans. Plaintiff also generally alleged a trust-wide breach of representations and warranties by defendants with respect to loans sold and transferred to the trust. Plaintiff seeks specific performance of repurchase obligations; compensatory, consequential, recessionary and equitable damages for breach of contract; specific performance and damages for anticipatory breach of contract; and indemnification (indemnification against NMI only). On October 9, 2013, the Company and NMI filed a motion to dismiss plaintiff’s complaint. This motion to dismiss was withdrawn after plaintiff filed an amended complaint on January 28, 2014, and on March 4, 2014 the Company and NMI filed a motion to dismiss the amended complaint. Given the stage of the litigation, the Company cannot provide an estimate of the range of any loss. The Company believes that it has meritorious defenses to the case and expects to defend the case vigorously. |
Fair Value Accounting
Fair Value Accounting | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Accounting | Fair Value Accounting Fair Value Measurements The Company's valuation techniques are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's market assumptions. These two types of inputs create the following fair value hierarchy: • Level 1 - Valuations based on quoted prices in active markets for identical assets and liabilities. • Level 2 - Valuations based on observable inputs in active markets for similar assets and liabilities, other than Level 1 prices, such as quoted interest or currency exchange rates. • Level 3 - Valuations based on significant unobservable inputs that are supported by little or no market activity, such as discounted cash flow methodologies based on internal cash flow forecasts. The Company's assets and liabilities, which are measured at fair value on a recurring basis, include (in thousands): Fair Value Measurements at Reporting Date Using: Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) June 30, 2017 Marketable securities, current $ 8,995 $ 175 $ — $ 8,820 December 31, 2016 Marketable securities, current ` $ 9,943 $ 152 — $ — $ 9,791 Marketable securities, non-current: 26,545 26,545 — — Total $ 36,488 $ 26,697 $ — $ 9,791 Note 4 provides risk categories for the Company's marketable securities. Valuation Methods and Processes When available, the Company determines the fair value of its marketable securities using market prices from industry-standard independent data providers. Market prices may be quoted prices in active markets for identical assets (Level 1 inputs) or pricing determined using inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs), such as yield curve, volatility factors, credit spreads, default rates, loss severity, current market and contractual prices for the underlying instruments or debt, broker and dealer quotes, as well as other relevant economic measures. To the extent observable inputs are not available, as is the case with the Company's retained mortgage securities, the Company estimates fair value using present value techniques and generally does not have the option to choose other valuation methods for these securities. The methods and processes used to estimate the fair value of the Company's retained mortgage securities are discussed further below. There have been no significant changes to the Company's valuation techniques. Accordingly, there have been no material changes to the condensed consolidated financial statements resulting from changes to our valuation techniques. The Company's marketable securities are classified as available-for-sale and are reported at their estimated fair value with unrealized gains and losses reported in accumulated other comprehensive income. To the extent that the cost basis of the Company's marketable securities exceeds the fair value and the unrealized loss is considered to be other than temporary, an impairment charge is recognized and the amount recorded in accumulated other comprehensive income or loss is reclassified to earnings as a realized loss. The specific identification method is used in computing realized gains or losses. Mortgage securities - available-for-sale. The Company's mortgage securities include traditional agency mortgage-backed securities, with valuations based on quoted prices in active markets for identical assets (Level 1). Additionally, mortgage securities include investments that were retained during the Company's lending and securitization process, conducted prior to 2016. For the retained mortgage securities, the Company maintains the right to receive excess interest and other cash flow generated through the mortgage loan securitization vehicle. The Company receives the difference between the interest on the mortgage loans and the interest paid to the securitization bondholders. The Company also owns overcollateralization ("OC") classes of various securitization trusts. These OC bonds represent the difference in the principal of the underlying mortgage loans compared to the bonds sold to third parties. This extra collateral serves as a cushion for losses that have and may occur in the underlying mortgage pool. The OC bonds may receive cash if and when it is determined that actual losses are less than expectations. As of June 30, 2017, the aggregate overcollateralization was approximately $27.0 million . The timing and amount of cash to be generated by the OC bonds is contingent upon the performance of the underlying mortgage loan collateral. The independent loan servicer controls and manages the individual mortgage loans and therefore the Company has no control over the loan performance. Collectively, these mortgage securities are identified by the Company as "retained mortgage securities," in order to distinguish them from the Company's traditional agency mortgage-backed securities. Retained mortgage-backed securities are valued at each reporting date using significant unobservable inputs (Level 3) by discounting the expected cash flows. An independent valuation specialist has been engaged to assist management in estimating cash flows and values for the Company's mortgage securities as of December 31, 2016. It is the Company's responsibility for the overall resulting valuation. The critical assumptions used in estimating the value of the mortgage securities include market interest rates, rate and severity of default, prepayment speeds and how long the security will continue to provide cash flow. To determine the assumptions, the Company and its independent valuation specialist rely primarily on historical results mortgage loan performance and appropriate general economic indicators. The Company continuously reviews the assumptions used and monitors the efforts of the independent valuation specialist. As a result of this review during the year ended December 31, 2016, the Company and its independent valuation specialist revised key assumptions, leading to an increase in the expected cash flow and estimated value of these securities. The significant assumptions used in preparing the fair value estimates are: June 30, 2017 December 31, 2016 Weighted average: Loss severity 49.6 % 49.6 % Default rate 2.1 % 2.1 % Prepayment speed 9.8 % 9.8 % Servicer's optional redemption date None None While the assumptions used in forecasting future cashflow have not changed, the actual cashflows during 2017 were used in our valuation, to the extent the actual cashflows are available. Furthermore, with each reporting date, there is less future cash forecasted to be received. Therefore, the estimated value of the Company's retained mortgage securities has declined. Management and its valuation specialist previously relied heavily on the general historical performance of nonprime mortgage loans in developing assumptions. Management and the valuation specialist believed that the overall performance of non-prime loans was a predictor for how the loans underlying the Company's retained mortgage securities would perform. However, market trends for housing prices, labor statistics and other economic factors have consistently improved for several years. The performance of the specific loans underlying the Company's retained mortgage securities is substantially better than that of non-prime loans in general. Sufficient time has passed to suggest that these trends are sustainable. Therefore, the revised assumptions used as of December 31, 2016 rely more heavily on the specific loan performance. Better performance by the underlying mortgage loans generally results in more estimated cash flow and higher values for our retained mortgage securities. Furthermore, while management and its valuation specialist assumed that a reasonable servicer would exercise its optional redemption, this has not occurred and there is no indication it will occur. Therefore, we have revised the assumption regarding the time at which the servicer will exercise its option. This serves to extend the term over which the Company expects to receive cash from the excess interest securities, which also results in higher estimate fair values. The improving loan performance and therefore the changes in our assumptions resulted in a change in estimate of the value of retained mortgage securities, resulting in an increase in marketable securities, current and other comprehensive income and a decrease in the total stockholders’ deficit by $8.2 million in 2016. Adjustments to assets and liabilities measured at fair value on a recurring and nonrecurring basis did not have a material impact on the earnings of continuing operations for any period presented. The following table provides a reconciliation of the beginning and ending balances for the Company's retained mortgage securities – available-for-sale, which are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands): For the Six Months Ended June 30, 2017 2016 Balance, beginning of period $ 9,791 $ 2,011 Increases (decreases) to mortgage securities – available-for-sale: Total proceeds from paydowns of securities (A) (209 ) (223 ) Accretion 163 215 Market value adjustment (925 ) (237 ) Net decrease to mortgage securities – available-for-sale (971 ) (245 ) Balance, end of period $ 8,820 $ 1,766 (A) Cash received on mortgage securities with no cost basis was $1.7 million and $2.0 million for the six months ended June 30, 2017 and 2016 , respectively. Adjustments to assets and liabilities measured at fair value on a recurring and nonrecurring basis did not have a material impact on the earnings of continuing operations for any period presented. The following disclosure of the estimated fair value of financial instruments presents amounts that have been determined using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that could be realized in a current market exchange. The use of different market assumptions or estimation methodologies could have a material impact on the estimated fair value amounts. The fair value of short-term financial assets and liabilities, such as service fees receivable, notes receivable, and accounts payable and accrued expenses are not included in the following table as their carrying value approximates their fair value. The estimated fair values of the Company's financial instruments are (in thousands): As of June 30, 2017 (unaudited) As of December 31, 2016 Carrying Value Fair Value Carrying Value Fair Value Financial assets: Marketable securities $ 8,995 $ 8,995 $ 36,488 $ 36,488 Financial liabilities: Senior notes $ 85,937 $ 26,133 $ 85,937 $ 23,349 For the items in the table above not measured at fair value in the statement of financial position but for which the fair value is disclosed, the fair value has been estimated using Level 3 methodologies, based on significant unobservable inputs that are supported by little or no market activity, such as discounted cash flow calculations based on internal cash flow forecasts. No assets or liabilities have been transferred between levels during any period presented. 2011 Notes. The fair value is estimated by discounting future projected cash flows using a discount rate commensurate with the risks involved. The value of the 2011 Notes was calculated assuming that the Company would be required to pay interest at a rate of 1.0% per annum until January 2016, at which time the Company would be required to start paying the Full Rate of three-month LIBOR plus 3.5% per annum until maturity in March 2033. The three-month LIBOR used in the analysis was projected using a forward interest rate curve. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Prior to 2016, the Company determined that it was no longer more likely than not that it will recognize a portion of its deferred tax assets. Therefore, as of June 30, 2017 and December 31, 2016 , the Company maintained a full valuation allowance against its net deferred tax assets of $293.7 million and $292.2 million , respectively. The Company's determination of the extent to which its deferred tax assets will be realized requires the exercise of significant judgment, based in part on business plans and expectations about future outcomes. In the event the actual results differ from these estimates in future periods, the Company may need to adjust the valuation allowance, which could materially impact our financial position and results of operations. The Company will continue to assess the need for a valuation allowance in future periods. Because of the full valuation allowance, the Company's effective tax rate is expected to be near 0% and therefore the consolidated income tax expense is not material for any period presented. As of June 30, 2017 and December 31, 2016 , the total gross amount of unrecognized tax benefits was $0.3 million . This amount also represents the total amount of unrecognized tax benefits that would impact the effective tax rate in the respective periods. The Company does not anticipate a material reduction of the unrecognized tax benefits due to the lapse of the related statute of limitations in the next twelve months. |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic earnings (loss) per share is computed by dividing net earnings available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share include the effect of conversions of stock options and nonvested shares. For the Six Months Ended June 30, For the Three Months Ended June 30, 2017 2016 2017 2016 Numerator: Net loss from continuing operations $ (4,822 ) $ (1,493 ) $ (2,695 ) $ (168 ) Net income (loss) from discontinued operations 1,020 (77 ) — (12 ) Net loss available to common shareholders $ (3,802 ) $ (1,570 ) $ (2,695 ) $ (180 ) Denominator: Weighted average common shares outstanding – basic 92,778,583 91,338,420 92,776,846 91,355,821 Weighted average common shares outstanding – dilutive: Weighted average common shares outstanding – basic 92,778,583 91,338,420 92,776,846 91,355,821 Stock options — — — — Nonvested shares — — — — Weighted average common shares outstanding – dilutive 92,778,583 91,338,420 92,776,846 91,355,821 Basic earnings (loss) per share: Net loss from continuing operations $ (0.05 ) $ (0.02 ) $ (0.03 ) $ — Net income from discontinued operations 0.01 — — — Net loss available to common shareholders $ (0.04 ) $ (0.02 ) $ (0.03 ) $ — Diluted earnings (loss) per share: Net loss from continuing operations $ (0.05 ) $ (0.02 ) $ (0.03 ) $ — Net income from discontinued operations 0.01 — — — Net loss available to common shareholders $ (0.04 ) $ (0.02 ) $ (0.03 ) $ — Options to purchase shares of common stock were outstanding during each period as presented below (in thousands, except exercise prices), but were not included in the computation of diluted earnings per share because the calculated number of shares assumed to be repurchased was greater than the number of shares to be obtained upon exercise, therefore, the effect would be anti-dilutive. For the Six Months Ended June 30, For the Three Months Ended June 30, 2017 2016 2017 2016 Number of stock options 1,869 5,203 1,869 5,203 Weighted average exercise price of stock options $ 0.89 $ 0.70 $ 0.89 $ 0.70 There have been no options granted during 2016 or 2017. As of June 30, 2017 and 2016, the Company had 0.1 million and 1.5 million nonvested shares outstanding, respectively. These shares, on weighted-average basis, are not included in the calculation of earnings per share for any period presented as they are anti-dilutive. While the nonvested shares granted during 2017and 2016 vest one year from the date of grant, the nonvested shares granted in prior years vest ratably over their original term of six years. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Acquisition of Healthcare Staffing, Inc . On February 1, 2017, the Company entered into a Stock Purchase Agreement (the “HCS Purchase Agreement”) with Novation Holding, Inc., a wholly-owned subsidiary of the Company (“NHI”), HCS and Butler America, LLC, the owner of HCS (“Butler” and, together with HCS, the “Seller Parties”). Pursuant to the HCS Purchase Agreement, NHI agreed to purchase from Butler all of the outstanding capital stock of HCS for $24.0 million in cash, subject to terms and conditions as provided therein, including but not limited to the Company’s receipt of bankruptcy court approval for the HCS Acquisition in its Chapter 11 case. The purchase price is subject to a potential working capital adjustment, based on HCS having $5.0 million of working capital at closing. On July 27, 2017, in connection with the anticipated closing of the HCS Acquisition, the Company, NHI, HCS and Butler entered into a Closing Agreement, dated as of the same date (the “Closing Agreement”), relating to certain closing matters and the terms of the HCS Purchase Agreement. The Closing Agreement provided for the following: (i) eliminate the $240,000 indemnification escrow under the HCS Purchase Agreement; (ii) provide for NHI’s reimbursement to Butler of $100,000 in costs and expenses incurred by Butler in consideration for the delay in closing the HCS Acquisition; (iii) clarify the treatment of certain of HCS’s outstanding tax obligations; (iv) provide that an adjustment to the purchase price under the HCS Purchase Agreement will be made in connection with the calculation of final closing date net working capital of HCS only if there is a difference between such amount and the pre-closing estimate of greater than three percent; and (v) make certain other changes to the HCS Purchase Agreement. On July 27, 2017, the Company and NHI completed the HCS Acquisition pursuant to the terms of the HCS Purchase Agreement and the Closing Agreement, as a result of which HCS became a wholly-owned subsidiary of NHI. The net purchase price was allocated as follows (in thousands): Cash $ 1,013 Accounts receivable 6,929 Property and equipment 568 Other assets 45 Intangible assets: Customer relationships 6,041 Trademarks 906 Non-compete agreement 583 Goodwill 11,472 Liabilities assumed - accrued payroll and related liabilities (3,411 ) Net assets acquired $ 24,146 The purchase price was allocated to the tangible and intangible assets acquired and the liabilities assumed at their estimated fair values as of the acquisition date. The fair value measurements of the assets acquired and liabilities assumed were based on valuations involving significant unobservable inputs, or Level 3 in the valuation hierarchy. The allocation of the purchase price above to the assets and liabilities are based on our preliminary assessment and is subject to further review pending the completion of an appraisal of the assets and liabilities acquired. The gross contractual amount of accounts receivable is $6.9 million , which was determined to approximate fair value. Goodwill and trademarks are considered indefinite-lived assets and are not subject to future amortization, but will be tested for impairment at least annually. Goodwill is comprised primarily of processes for services and knowhow, assembled workforces and other intangible assets that do not qualify for separate recognition. The full amount of goodwill is expected to be deductible for tax purposes. The amortization period for the intangibles for customer relationships and the non-compete agreement are seven and three years, respectively. The Company incurred approximately $1.2 million in fees associated with the HCS Acquisition, including $0.9 million in investment advisor fees. Note Refinancing On July 27, 2017, the Company entered into a Senior Secured Note Purchase Agreement, dated as of the same date (the “Note Purchase Agreement”), with NHI and HCS as guarantors (together with the Company, collectively, the “Credit Parties”), the Noteholders and Wilmington Savings Fund Society, FSB, as collateral agent for the benefit of the Noteholders, to refinance $85,937,500 of principal indebtedness of the Company under the 2011 Notes. Pursuant to the Note Purchase Agreement, the Noteholders exchanged their 2011 Notes for new notes from the Company in the same aggregate principal amount (collectively, the “2017 Notes”) on the terms and conditions set forth therein. The unpaid principal amounts of the 2017 Notes bear interest at a variable rate equal to LIBOR plus 3.5% per annum, payable quarterly in arrears until maturity on March 30, 2033. The 2017 Notes generally rank senior in right of payment to any existing or future subordinated indebtedness of the Credit Parties. The Company may at any time upon 30 days’ notice to the Noteholders redeem all or part of the 2017 Notes at a redemption price equal to 101% of the principal amount redeemed plus any accrued and unpaid interest thereon. Pursuant to the Note Purchase Agreement, in connection with the Note Refinancing, the Company paid all overdue and unpaid accrued interest on the 2011 Notes in the agreed, reduced aggregate amount of $5.8 million, and paid $0.5 million in fees and expenses incurred by the Noteholders. The Note Purchase Agreement contains customary affirmative and negative covenants, including but not limited to certain financial covenants. The Note Purchase Agreement also contains customary events of default, including but not limited to payment defaults, cross defaults with certain other indebtedness, breaches of covenants and bankruptcy events. In the case of an event of default, the Noteholders may, among other remedies, accelerate the payment of all obligations under the Note Purchase Agreement and the 2017 Notes. In connection with the Note Purchase Agreement, on July 27, 2017, the Credit Parties entered into a Pledge and Security Agreement, dated as of the same date, pursuant to which each of the Credit Parties granted a first priority lien generally covering all of its assets, other than accounts receivable and inventory, for the benefit of the Noteholders, to secure the obligations under the Note Purchase Agreement and the 2017 Notes. Revolving Credit Agreement On November 17, 2017, HCS entered into a Revolving Credit and Security Agreement, dated as of the same date (the “FNCC Credit Agreement”), with Federal National Payables, Inc. (d/b/a Federal National Commercial Credit) (“FNCC”) providing HCS with a line of credit of up to $5,000,000 . Availability under the FNCC Credit Agreement is based on a formula tied to HCS’s eligible accounts receivable, and borrowings under the FNCC Credit Agreement bear interest at the prime rate plus 1.25% . The FNCC Credit Agreement also provides for customary origination and collateral monitoring fees payable to FNCC during its term. The initial term of the FNCC Credit Agreement expires on November 17, 2018, but it will be renewed automatically for consecutive one-year terms thereafter unless the FNCC Credit Agreement is terminated pursuant to its terms. The obligations of HCS under the FNCC Credit Agreement are secured by HCS’s inventory and accounts receivable. The FNCC Credit Agreement contains customary representations, warranties and affirmative and negative covenants, including but not limited to financial covenants. The FNCC Credit Agreement also contains customary events of default, including but not limited to payment defaults, cross defaults with certain other indebtedness, breaches of covenants and bankruptcy events. In the case of an event of default, FNCC may, among other remedies, accelerate payment of all obligations under the FNCC Credit Agreement. In connection with the FNCC Credit Agreement, the Company and NHI, the sole stockholder of HCS, executed guaranties in favor of FNCC guaranteeing all of HCS’s obligations under the FNCC Credit Agreement. |
Financial Statement Presentat17
Financial Statement Presentation (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Accounting | The Company’s condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). |
Consolidation | The condensed consolidated financial statements of the Company include the accounts of all wholly-owned and majority-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. The Company's condensed consolidated financial statements are unaudited. In the opinion of management, all necessary adjustments have been made, which were of a normal and recurring nature, for a fair presentation of the condensed consolidated financial statements. The Company's condensed consolidated financial statements should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements of the Company and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2016 (the "2016 Form 10-K"). |
Cash and Cash Equivalents | Cash equivalents consist of liquid investments with an original maturity of three months or less. Cash equivalents are stated at cost, which approximates fair value. |
Valuation Methods and Processes | The Company's valuation techniques are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's market assumptions. These two types of inputs create the following fair value hierarchy: • Level 1 - Valuations based on quoted prices in active markets for identical assets and liabilities. • Level 2 - Valuations based on observable inputs in active markets for similar assets and liabilities, other than Level 1 prices, such as quoted interest or currency exchange rates. • Level 3 - Valuations based on significant unobservable inputs that are supported by little or no market activity, such as discounted cash flow methodologies based on internal cash flow forecasts. |
Earnings per Share | Basic earnings (loss) per share is computed by dividing net earnings available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share include the effect of conversions of stock options and nonvested shares. |
Reorganization (Tables)
Reorganization (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Reorganizations [Abstract] | |
Liabilities Subject to Compromise | As of June 30, 2017 , liabilities subject to compromise include (in thousands): Obligations under the 2011 Notes (see Note 5), including accrued interest $ 91,713 Liabilities associated with the discontinued operations of Advent Financial Services LLC 156 Claims and other liabilities related to operating leases 715 Income tax liabilities 321 Other 111 Liabilities subject to compromise $ 93,016 |
Reorganization Items | Reorganization items include (in thousands): Six Months Ended June 30, 2017 Three Months Ended June 30, 2017 Professional fees $ 3,016 $ 1,848 Other 40 (2 ) Reorganization items, net $ 3,056 $ 1,846 |
Divestitures (Tables)
Divestitures (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Income Statement by Disposal Groups, Including Discontinued Operations | The results of the Company's discontinued operations are summarized below (in thousands): For the Six Months Ended June 30, For the Three Months Ended June 30, 2017 2016 2017 2016 Service fee income $ — $ — $ — $ — Income (loss) from discontinued operations before income taxes $ 1,020 $ (77 ) $ — $ (12 ) Income tax expense (benefit) — — — — Income (loss) from discontinued operations, net of income taxes $ 1,020 $ (77 ) $ — $ (12 ) |
Marketable Securities (Tables)
Marketable Securities (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Available-for-sale Securities | The Company's portfolio of available-for-sale securities includes (in thousands): Gross Unrealized Estimated Fair Value Amortized Cost Gains Losses As of June 30, 2017 (unaudited) Marketable securities, current Mortgage securities $ 404 $ 8,416 $ — $ 8,820 Equity securities 116 65 (6 ) 175 Total $ 520 $ 8,481 $ (6 ) $ 8,995 As of December 31, 2016 Marketable securities, current Mortgage securities $ 450 $ 9,341 $ — $ 9,791 Equity securities 112 47 (7 ) 152 Total $ 562 $ 9,388 $ (7 ) $ 9,943 Marketable securities, non-current Agency mortgage-backed securities $ 26,607 $ — $ (62 ) $ 26,545 |
Schedule of Securitization Trust | The following table relates to the securitizations where the Company retained an interest in the assets issued by the securitization trust (in thousands): Size/Principal Outstanding (A) Assets on Balance Sheet (B) Liabilities on Balance Sheet Maximum Exposure to Loss(C) Year to Date Loss on Sale Year to Date Cash Flows (D) June 30, 2017 $ 2,994,774 $ 8,820 $ — $ 8,820 $ — $ 1,865 December 31, 2016 3,185,270 9,943 — 9,943 — 5,135 (A) Size/Principal Outstanding reflects the estimated principal of the underlying assets held by the securitization trust. (B) Assets on balance sheet are securities issued by the entity and are recorded in the current marketable securities line item on the condensed consolidated balance sheets. (C) The maximum exposure to loss includes the assets held by the Company. The maximum exposure to loss assumes a total loss on the referenced assets held by the securitization trust. (D) Year to date cash flows are for the six months ended June 30, 2017 and year ended December 31, 2016. |
Fair Value Accounting (Tables)
Fair Value Accounting (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements, Recurring and Nonrecurring | The Company's assets and liabilities, which are measured at fair value on a recurring basis, include (in thousands): Fair Value Measurements at Reporting Date Using: Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) June 30, 2017 Marketable securities, current $ 8,995 $ 175 $ — $ 8,820 December 31, 2016 Marketable securities, current ` $ 9,943 $ 152 — $ — $ 9,791 Marketable securities, non-current: 26,545 26,545 — — Total $ 36,488 $ 26,697 $ — $ 9,791 |
Fair Value Inputs, Assets and Liabilities, Quantitative Information | The significant assumptions used in preparing the fair value estimates are: June 30, 2017 December 31, 2016 Weighted average: Loss severity 49.6 % 49.6 % Default rate 2.1 % 2.1 % Prepayment speed 9.8 % 9.8 % Servicer's optional redemption date None None |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | The following table provides a reconciliation of the beginning and ending balances for the Company's retained mortgage securities – available-for-sale, which are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands): For the Six Months Ended June 30, 2017 2016 Balance, beginning of period $ 9,791 $ 2,011 Increases (decreases) to mortgage securities – available-for-sale: Total proceeds from paydowns of securities (A) (209 ) (223 ) Accretion 163 215 Market value adjustment (925 ) (237 ) Net decrease to mortgage securities – available-for-sale (971 ) (245 ) Balance, end of period $ 8,820 $ 1,766 (A) Cash received on mortgage securities with no cost basis was $1.7 million and $2.0 million for the six months ended June 30, 2017 and 2016 , respectively. |
Fair Value, by Balance Sheet Grouping | The estimated fair values of the Company's financial instruments are (in thousands): As of June 30, 2017 (unaudited) As of December 31, 2016 Carrying Value Fair Value Carrying Value Fair Value Financial assets: Marketable securities $ 8,995 $ 8,995 $ 36,488 $ 36,488 Financial liabilities: Senior notes $ 85,937 $ 26,133 $ 85,937 $ 23,349 |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | Diluted earnings per share include the effect of conversions of stock options and nonvested shares. For the Six Months Ended June 30, For the Three Months Ended June 30, 2017 2016 2017 2016 Numerator: Net loss from continuing operations $ (4,822 ) $ (1,493 ) $ (2,695 ) $ (168 ) Net income (loss) from discontinued operations 1,020 (77 ) — (12 ) Net loss available to common shareholders $ (3,802 ) $ (1,570 ) $ (2,695 ) $ (180 ) Denominator: Weighted average common shares outstanding – basic 92,778,583 91,338,420 92,776,846 91,355,821 Weighted average common shares outstanding – dilutive: Weighted average common shares outstanding – basic 92,778,583 91,338,420 92,776,846 91,355,821 Stock options — — — — Nonvested shares — — — — Weighted average common shares outstanding – dilutive 92,778,583 91,338,420 92,776,846 91,355,821 Basic earnings (loss) per share: Net loss from continuing operations $ (0.05 ) $ (0.02 ) $ (0.03 ) $ — Net income from discontinued operations 0.01 — — — Net loss available to common shareholders $ (0.04 ) $ (0.02 ) $ (0.03 ) $ — Diluted earnings (loss) per share: Net loss from continuing operations $ (0.05 ) $ (0.02 ) $ (0.03 ) $ — Net income from discontinued operations 0.01 — — — Net loss available to common shareholders $ (0.04 ) $ (0.02 ) $ (0.03 ) $ — |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | Options to purchase shares of common stock were outstanding during each period as presented below (in thousands, except exercise prices), but were not included in the computation of diluted earnings per share because the calculated number of shares assumed to be repurchased was greater than the number of shares to be obtained upon exercise, therefore, the effect would be anti-dilutive. For the Six Months Ended June 30, For the Three Months Ended June 30, 2017 2016 2017 2016 Number of stock options 1,869 5,203 1,869 5,203 Weighted average exercise price of stock options $ 0.89 $ 0.70 $ 0.89 $ 0.70 |
Subsequent Events (Tables)
Subsequent Events (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The net purchase price was allocated as follows (in thousands): Cash $ 1,013 Accounts receivable 6,929 Property and equipment 568 Other assets 45 Intangible assets: Customer relationships 6,041 Trademarks 906 Non-compete agreement 583 Goodwill 11,472 Liabilities assumed - accrued payroll and related liabilities (3,411 ) Net assets acquired $ 24,146 |
Financial Statement Presentat24
Financial Statement Presentation (Details) - USD ($) $ in Thousands | 6 Months Ended | ||||
Jun. 30, 2017 | Dec. 31, 2016 | May 09, 2016 | Mar. 30, 2016 | Dec. 31, 2015 | |
Operations [Line Items] | |||||
Cash and cash equivalents | $ 32,263 | $ 4,805 | |||
Available-for-sale securities, current | $ 8,995 | 9,943 | |||
Default threshold | 30 days | ||||
Debt instrument, call by trustees/holders, percentage | 25.00% | ||||
Debt instrument, debt default, amount | $ 85,900 | ||||
Cash | |||||
Operations [Line Items] | |||||
Restricted cash and cash equivalents | 200 | ||||
Mortgage securities | |||||
Operations [Line Items] | |||||
Available-for-sale securities, current | 8,820 | $ 152 | |||
Corvisa LLC | |||||
Operations [Line Items] | |||||
Ownership percentage | 100.00% | ||||
Post-Modification Notes | |||||
Operations [Line Items] | |||||
Due and unpaid interest | $ 900 | ||||
Debt instrument, debt default, amount | 85,900 | ||||
Debt instrument, aggregate recorded interest liability | $ 5,800 |
Reorganization - Liabilities Su
Reorganization - Liabilities Subject to Compromise (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Liabilities Subject to Compromise [Line Items] | ||
Liabilities subject to compromise | $ 93,016 | $ 90,966 |
Obligations under the 2011 Notes (see Note 5), including accrued interest | ||
Liabilities Subject to Compromise [Line Items] | ||
Liabilities subject to compromise | 91,713 | |
Liabilities associated with the discontinued operations of Advent Financial Services LLC | ||
Liabilities Subject to Compromise [Line Items] | ||
Liabilities subject to compromise | 156 | |
Claims and other liabilities related to operating leases | ||
Liabilities Subject to Compromise [Line Items] | ||
Liabilities subject to compromise | 715 | |
Income tax liabilities | ||
Liabilities Subject to Compromise [Line Items] | ||
Liabilities subject to compromise | 321 | |
Other | ||
Liabilities Subject to Compromise [Line Items] | ||
Liabilities subject to compromise | $ 111 |
Reorganization - Reorganization
Reorganization - Reorganization Items (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Mar. 31, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Reorganization Items [Line Items] | |||||
Reorganization items | $ 1,846 | $ 1,846 | $ 0 | $ 3,056 | $ 0 |
Professional Services | |||||
Reorganization Items [Line Items] | |||||
Reorganization items | 1,848 | 3,016 | |||
Other Reorganization Items | |||||
Reorganization Items [Line Items] | |||||
Reorganization items | $ (2) | $ 40 |
Divestitures - Narrative (Detai
Divestitures - Narrative (Details) - USD ($) $ in Thousands | Jan. 06, 2016 | Dec. 31, 2015 | Jun. 30, 2017 | Mar. 31, 2017 | Jun. 30, 2016 | Mar. 31, 2016 | Jun. 30, 2017 | Jun. 30, 2016 |
Divestitures Narrative | ||||||||
Income (loss) from discontinued operations | $ 0 | $ (12) | $ 1,020 | $ (77) | ||||
Business combination, contingent consideration, accounts receivable, net of collection costs, period | 9 months | |||||||
Discontinued Operations, Disposed of by Sale | Corvisa LLC | ||||||||
Divestitures Narrative | ||||||||
Disposal groups, including discontinued operations, ownership percentage | 100.00% | |||||||
Aggregate consideration | $ 8,400 | |||||||
Cash received at closing | 7,000 | |||||||
Consideration held In escrow, indemnification obligations | 1,000 | |||||||
Consideration held in escrow, working capital adjustment | 350 | |||||||
Gain on sale of subsidiary before taxes | $ 1,400 | |||||||
Bonus payments to employees | 300 | |||||||
Transaction-related costs | 1,000 | |||||||
Other transaction costs | $ 100 | |||||||
Income (loss) from discontinued operations | $ 0 | $ 1,000 | $ (12) | $ 1,020 | $ (77) |
Divestitures - Income Statement
Divestitures - Income Statement of Discontinued Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Mar. 31, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Income (loss) from discontinued operations, net of income taxes | $ 0 | $ (12) | $ 1,020 | $ (77) | |
Discontinued Operations, Disposed of by Sale | Corvisa LLC | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Service fee income | 0 | 0 | 0 | 0 | |
Income (loss) from discontinued operations before income taxes | 0 | (12) | 1,020 | (77) | |
Income tax expense (benefit) | 0 | 0 | 0 | 0 | |
Income (loss) from discontinued operations, net of income taxes | $ 0 | $ 1,000 | $ (12) | $ 1,020 | $ (77) |
Marketable Securities - Availab
Marketable Securities - Available-for-Sale (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Marketable Securities, Current [Abstract] | ||
Amortized cost basis, current | $ 520 | $ 562 |
Accumulated gross unrealized gains, current | 8,481 | 9,388 |
Accumulated gross unrealized losses, current | (6) | (7) |
Fair value, current | 8,995 | 9,943 |
Mortgage securities | ||
Marketable Securities, Current [Abstract] | ||
Amortized cost basis, current | 404 | 112 |
Accumulated gross unrealized gains, current | 8,416 | 47 |
Accumulated gross unrealized losses, current | 0 | (7) |
Fair value, current | 8,820 | 152 |
Equity securities | ||
Marketable Securities, Current [Abstract] | ||
Amortized cost basis, current | 116 | |
Accumulated gross unrealized gains, current | 65 | |
Accumulated gross unrealized losses, current | (6) | |
Fair value, current | $ 175 | |
Corporate notes and bonds | ||
Marketable Securities, Current [Abstract] | ||
Amortized cost basis, current | 450 | |
Accumulated gross unrealized gains, current | 9,341 | |
Accumulated gross unrealized losses, current | 0 | |
Fair value, current | 9,791 | |
Marketable Securities, Noncurrent [Abstract] | ||
Amortized cost basis, non-current | 26,607 | |
Accumulated gross unrealized gains, non-current | 0 | |
Accumulated gross unrealized losses, non-current | (62) | |
Fair value, non-current | $ 26,545 |
Marketable Securities - Narrati
Marketable Securities - Narrative (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2017 | Mar. 31, 2017 | Jun. 30, 2017 | |
Schedule of Available-for-sale Securities [Line Items] | |||
Other than temporary impairment losses, investments, portion recognized in earnings, net, available-for-sale securities | $ 0 | $ 0 | |
Corporate notes and bonds | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Proceeds from sale of available-for-sale securities | $ 25,200,000 | ||
Available-for-sale securities, gross realized gains | $ 79,000 |
Marketable Securities - Securit
Marketable Securities - Securitization Trusts (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2017 | Dec. 31, 2016 | |
Securitization Trust [Line Items] | ||
Available-for-sale securities, current | $ 8,995 | $ 9,943 |
Securitization Trust, Primary Beneficiary | ||
Securitization Trust [Line Items] | ||
Size/Principal Outstanding | 2,994,774 | 3,185,270 |
Assets on Balance Sheet | 9,943 | |
Liabilities on Balance Sheet | 0 | 0 |
Maximum exposure to loss | 8,820 | 9,943 |
Year To Date Loss On Sale | 0 | 0 |
Year To Date Cash Flows | $ 1,865 | $ 5,135 |
Borrowings - 2011 Notes - Senio
Borrowings - 2011 Notes - Senior Notes (Details) - USD ($) $ in Millions | Mar. 22, 2011 | Mar. 22, 2011 | Jun. 30, 2017 | May 09, 2016 | Mar. 30, 2016 |
Debt Instrument [Line Items] | |||||
Debt instrument, debt default, amount | $ 85.9 | ||||
Default threshold | 30 days | ||||
Debt instrument, call by trustees/holders, percentage | 25.00% | ||||
Post-Modification Notes | |||||
Debt Instrument [Line Items] | |||||
Due and unpaid interest | $ 0.9 | ||||
Description of event of default | These interest payments were not made within 30 days after they became due and payable, and remain unpaid, such non-payments constituting events of default under the Indentures | ||||
Description of notice of default | As a result, the 2011 Notes were classified as current liabilities. The trustee under any Indenture or the holders of not less than 25% of the aggregate principal amount of the outstanding 2011 Notes issued pursuant to such Indenture, by notice in writing to the Company (and to the trustee if given by the holders), was able to declare the principal amount of all the 2011 Notes issued under such Indenture to be due and payable immediately. On May 9, 2016, the Company received a notice of acceleration with respect to the Series 1 2011 Notes and the Series 2 2011 Notes, declaring all principal and unpaid interest immediately due and payable. A similar acceleration notice was received on June 6, 2016 with respect to the Series 3 2011 Notes. | ||||
Debt instrument, debt default, amount | $ 85.9 | ||||
Debt instrument, aggregate recorded interest liability | $ 5.8 | ||||
Senior Notes | Post-Modification Notes | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, face amount | $ 85.9 | $ 85.9 | |||
Senior Notes | Post-Modification Notes | Interest Rate, Pre-Trigger | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 1.00% | 1.00% | |||
Senior Notes | Post-Modification Notes | Interest Rate, Post-Trigger | |||||
Debt Instrument [Line Items] | |||||
Variable rate, description | three-month LIBOR | ||||
Basis spread on variable rate | 3.50% | 3.50% |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Jun. 24, 2013USD ($)loan | Dec. 31, 2007USD ($) |
Loss Contingencies [Line Items] | ||
Mortgage loans on real estate, number of loans | loan | 43 | |
Loans summoned In litigation case | $ 6.5 | |
Claims to repurchase securitized loans | ||
Loss Contingencies [Line Items] | ||
Principal amount outstanding on loans securitized or asset-backed financing arrangement | $ 43,100 |
Fair Value Accounting - Recurri
Fair Value Accounting - Recurring Basis (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value, current | $ 8,995 | $ 9,943 |
Mortgage securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value, current | 8,820 | 152 |
Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value, current | 8,995 | 9,943 |
Fair value, non-current | 26,545 | |
Assets, Fair Value Disclosure | 36,488 | |
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value, current | 175 | 152 |
Fair value, non-current | 26,545 | |
Assets, Fair Value Disclosure | 26,697 | |
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value, current | 0 | 0 |
Fair value, non-current | 0 | |
Assets, Fair Value Disclosure | 0 | |
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value, current | $ 8,820 | 9,791 |
Fair value, non-current | 0 | |
Assets, Fair Value Disclosure | $ 9,791 |
Fair Value Accounting - Signifi
Fair Value Accounting - Significant Unobservable Inputs (Details) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2017 | Dec. 31, 2016 | |
Fair Value Inputs [Abstract] | ||
Loss severity | 49.60% | 49.60% |
Default rate | 2.10% | 2.10% |
Prepayment speed | 9.80% | 9.80% |
Fair Value Accounting - Reconci
Fair Value Accounting - Reconciliation of Changes in Level 3 Balances (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Stockholders' equity, period increase (decrease) | $ (8,200) | ||
Available-for-sale Securities | Mortgage securities | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Balance, beginning of period | $ 9,791 | $ 2,011 | 2,011 |
Total proceeds from paydowns of securities | (209) | (223) | |
Accretion | 163 | 215 | |
Market value adjustment | (925) | (237) | |
Net decrease to mortgage securities – available-for-sale | (971) | (245) | |
Balance, end of period | 8,820 | 1,766 | $ 9,791 |
Cash received on mortgage securities with no cost basis | $ 1,700 | $ 2,000 |
Fair Value Accounting - Carryin
Fair Value Accounting - Carrying Values and Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Marketable securities | $ 8,995 | $ 36,488 |
Senior Notes | 85,937 | 85,937 |
Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Marketable securities | 8,995 | 36,488 |
Senior Notes | $ 26,133 | $ 23,349 |
Fair Value Accounting - Narrati
Fair Value Accounting - Narrative (Details) - USD ($) $ in Millions | Mar. 22, 2011 | Mar. 22, 2011 | Jun. 30, 2017 |
Post-Modification Notes | Interest Rate, Pre-Trigger | Senior Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 1.00% | 1.00% | |
Post-Modification Notes | Interest Rate, Post-Trigger | Senior Notes | |||
Debt Instrument [Line Items] | |||
Variable rate, description | three-month LIBOR | ||
Basis spread on variable rate | 3.50% | 3.50% | |
Mortgage securities | |||
Debt Instrument [Line Items] | |||
Aggregate overcollateralization on overcollateralization bonds held | $ 27 |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Deferred tax assets, valuation allowance | $ 293.7 | $ 292.2 |
Effective income tax rate reconciliation, percent | 0.00% |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 |
Income Tax Disclosure [Abstract] | ||
Unrecognized tax benefits | $ 0.3 | $ 0.3 |
Earnings (Loss) Per Share - Com
Earnings (Loss) Per Share - Computation of Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Numerator: | ||||
Net loss from continuing operations | $ (2,695) | $ (168) | $ (4,822) | $ (1,493) |
Income (loss) from discontinued operations, net of income taxes | 0 | (12) | 1,020 | (77) |
Net loss available to common shareholders | $ (2,695) | $ (180) | $ (3,802) | $ (1,570) |
Denominator: | ||||
Weighted average common shares outstanding, basic | 92,776,846 | 91,355,821 | 92,778,583 | 91,338,420 |
Weighted average number of shares outstanding, diluted | 92,776,846 | 91,355,821 | 92,778,583 | 91,338,420 |
Basic earnings per share: | ||||
Net loss from continuing operations (per share) | $ (0.03) | $ 0 | $ (0.05) | $ (0.02) |
Net income from discontinued operations (per share) | 0 | 0 | 0.01 | 0 |
Net loss available to common shareholders (per share) | (0.03) | 0 | (0.04) | (0.02) |
Diluted earnings per share: | ||||
Net loss from continuing operations (per share) | (0.03) | 0 | (0.05) | (0.02) |
Net income from discontinued operations (per share) | 0 | 0 | 0.01 | 0 |
Net loss available to common shareholders (per share) | $ (0.03) | $ 0 | $ (0.04) | $ (0.02) |
Stock Options | ||||
Denominator: | ||||
Incremental shares related to share-based compensation | 0 | 0 | 0 | 0 |
Nonvested Shares | ||||
Denominator: | ||||
Incremental shares related to share-based compensation | 0 | 0 | 0 | 0 |
Earnings (Loss) Per Share - Ant
Earnings (Loss) Per Share - Antidilutive Securities (Details) - Stock Options - $ / shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Number of stock options (in shares) | 1,869 | 5,203 | 1,869 | 5,203 |
Weighted average exercise price of stock options (in dollars per share) | $ 0.89 | $ 0.70 | $ 0.89 | $ 0.70 |
Earnings (Loss) Per Share - Nar
Earnings (Loss) Per Share - Narrative (Details) - shares | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | Jun. 30, 2016 | |
Class of Stock [Line Items] | |||
Share-based compensation arrangement by share-based payment award, options, grants in period, net of forfeitures | 0 | 0 | |
Restricted Stock [Member] | |||
Class of Stock [Line Items] | |||
Nonvested shares oustanding | 100,000 | 1,500,000 |
Subsequent Events - HCS Purchas
Subsequent Events - HCS Purchase Agreement Narrative (Details) - USD ($) | Jul. 27, 2017 | Feb. 01, 2017 |
Subsequent Event | ||
Subsequent Event [Line Items] | ||
Consideration held In escrow, indemnification obligations | $ 240,000 | |
Business combination, contingent consideration, liability | $ 100,000 | |
Pre closing estimate change percent threshold | 3.00% | |
HCS Purchase Agreement | ||
Subsequent Event [Line Items] | ||
Sale of stock, consideration received on transaction | $ 24,000,000 | |
Sale of stock, consideration received on transaction, working capital adjustment | $ 5,000,000 |
Subsequent Events - HCS Purch45
Subsequent Events - HCS Purchase Agreement (Details) - Subsequent Event $ in Thousands | Jul. 27, 2017USD ($) |
HCS Acquisition | |
Subsequent Event [Line Items] | |
Cash | $ 1,013 |
Accounts receivable | 6,929 |
Property and equipment | 568 |
Other assets | 45 |
Goodwill | 11,472 |
Liabilities assumed - accrued payroll and related liabilities | (3,411) |
Net assets acquired | 24,146 |
Business acquisition, transaction costs | 1,200 |
Business Combination, Investment Advisory Fees | $ 900 |
Customer Relationships | |
Subsequent Event [Line Items] | |
Finite-Lived Intangible Asset, Useful Life | 7 years |
Customer Relationships | HCS Acquisition | |
Subsequent Event [Line Items] | |
Intangible assets: | $ 6,041 |
Trademarks | HCS Acquisition | |
Subsequent Event [Line Items] | |
Intangible assets: | $ 906 |
Noncompete Agreements | |
Subsequent Event [Line Items] | |
Finite-Lived Intangible Asset, Useful Life | 3 years |
Noncompete Agreements | HCS Acquisition | |
Subsequent Event [Line Items] | |
Intangible assets: | $ 583 |
Subsequent Events - Note Refina
Subsequent Events - Note Refinancing (Details) - Senior Notes - Notes 2017 - Subsequent Event | Jul. 27, 2017USD ($)Rate |
Subsequent Event [Line Items] | |
Debt instrument, face amount | $ 85,937,500 |
Redemption notice | 30 days |
Debt instrument, redemption price, percentage of principal amount redeemed | 101.00% |
Interest expense, debt | $ 5,800,000 |
Debt instrument, fee amount | $ 500,000 |
London Interbank Offered Rate (LIBOR) | |
Subsequent Event [Line Items] | |
Debt instrument, basis spread on variable rate | Rate | 3.50% |
Subsequent Events - Revolving C
Subsequent Events - Revolving Credit Agreement (Details) - Subsequent Event | Nov. 17, 2017USD ($)Rate |
Subsequent Event [Line Items] | |
Line of credit facility, maximum amount outstanding during period | $ | $ 5,000,000 |
Prime Rate | Revolving Credit Facility | |
Subsequent Event [Line Items] | |
Debt instrument, basis spread on variable rate | Rate | 1.25% |