Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Mar. 31, 2016 | Apr. 29, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | COMDISCO HOLDING CO INC | |
Entity Central Index Key | 1,179,484 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --09-30 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 4,028,951 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 |
Consolidated Statements of Net
Consolidated Statements of Net Assets in Liquidation (Liquidation Basis) - Liquidation Basis - USD ($) $ in Thousands | Mar. 31, 2016 | Sep. 30, 2015 |
ASSETS | ||
Cash and cash equivalents | $ 30,303 | $ 30,126 |
Cash - legally restricted | 4,000 | 4,000 |
Receivable from securities sold | 0 | 1,911 |
Assets held in trust for deferred compensation plan | 0 | 500 |
Other assets | 168 | 183 |
TOTAL ASSETS | 34,471 | 36,720 |
LIABILITIES | ||
Contingent Distribution Rights Liability | 11,010 | 10,813 |
Supplemental CDR Liability due to Anticipated Litigation Trust Distribution | 370 | 370 |
Accrued compensation | 3,374 | 4,077 |
Accrued professional fees | 776 | 1,374 |
Other accrued costs | 459 | 956 |
Accrued liability for deferred compensation plan | 0 | 500 |
Accrued estimated disposal costs of liquidation | 105 | 588 |
TOTAL LIABILITIES | 16,094 | 18,678 |
NET ASSETS IN LIQUIDATION | $ 18,377 | $ 18,042 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Net Assets in Liquidation (Liquidation Basis) - Liquidation Basis - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2016 | Mar. 31, 2015 | |
Net assets in liquidation, beginning of period | $ 18,361 | $ 27,984 | $ 18,042 | $ 28,158 |
Changes in net assets in liquidation | ||||
Change in other assets | 84 | (236) | 205 | (66) |
Change in Contingent Distribution Rights Liability | (23) | 126 | (210) | 228 |
Change in accrued liabilities | (41) | (148) | (25) | (174) |
Change in accrued estimated disposal costs of liquidation | (4) | 0 | 365 | (420) |
Net Change in equity investments | 0 | 44 | 0 | 44 |
Liquidating distribution to Common Stockholders | 0 | (9,450) | 0 | (9,450) |
Net increase (decrease) in net assets in liquidation | 16 | (9,664) | 335 | (9,838) |
Net assets in liquidation, end of period | $ 18,377 | $ 18,320 | $ 18,377 | $ 18,320 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Liquidation Basis) - Liquidation Basis - USD ($) $ in Thousands | 6 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash flows from operating activities: | ||
Equity investment proceeds net of sharing | $ 1,731 | $ 15,512 |
Bad debt recoveries, interest and other revenue | 94 | 252 |
Selling, general and administrative expenses | (1,737) | (1,292) |
Payment of assets held in trust for deferred compensation plan | (409) | 0 |
Contingent Distribution Rights payments | (13) | (5,550) |
Income tax receipts | 8 | 0 |
Income tax payments | 0 | (200) |
Net cash (used in) provided by operating activities | (326) | 8,722 |
Cash flows from investing/financing: | ||
Dividends paid on Common Stock | 0 | (9,450) |
Receipt of uncashed dividends | 0 | 12 |
Receipt of assets held in trust for deferred compensation plan | 503 | 0 |
Net cash provided by (used in) investing/financing | 503 | (9,438) |
Net increase (decrease) in cash and cash equivalents | 177 | (716) |
Cash and cash equivalents at beginning of period | 30,126 | 31,992 |
Cash and cash equivalents at end of period | $ 30,303 | $ 31,276 |
Reorganization
Reorganization | 6 Months Ended |
Mar. 31, 2016 | |
Reorganization | |
Reorganization | 1. Reorganization On July 16, 2001, Comdisco, Inc. and 50 of its domestic subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division (the “Bankruptcy Court”) (consolidated case number 01-24795). The Company, as the successor company to Comdisco, Inc., emerged from bankruptcy under the Plan that became effective on August 12, 2002. For financial reporting purposes only, however, the effective date for implementation of fresh-start reporting was July 31, 2002. Effective October 1, 2014, the Company has applied the liquidation basis of accounting on a prospective basis. See Note 2 of these Notes to Consolidated Financial Statements (In Liquidation). The Company was formed on August 8, 2002 for the purpose of selling, collecting or otherwise reducing to money in an orderly manner the remaining assets of the Company and all of its direct and indirect subsidiaries, including Comdisco, Inc. The Company’s business purpose is limited to the orderly sale or collection of all its remaining assets. Pursuant to the Plan and restrictions contained in its Certificate, the Company is specifically prohibited from engaging in any business activities inconsistent with its limited business purpose. Litigation Trust : In February 1998, pursuant to Comdisco, Inc.’s Shared Investment Plan (the “SIP”), 106 employees (the “SIP Participants”) took out full recourse, personal loans to purchase approximately six million shares of Comdisco, Inc.’s common stock. In connection therewith, Comdisco, Inc. executed a guaranty dated February 2, 1998 (the “Guaranty”) providing a guaranty of the loans in the event of default by the SIP Participants to the lenders under the SIP (the “SIP Lenders”). The Company and the SIP Lenders subsequently reached a settlement on the Guaranty that was approved by the Bankruptcy Court on December 9, 2004. The Plan and the litigation trust agreement provided that, under certain circumstances, subrogation rights that the Company may have against the SIP Participants and their respective promissory notes be placed in a trust for the benefit of the C-4 creditors (the “Trust Assets”). Under the Plan, the Litigation Trust is solely responsible for collection of amounts due on the promissory notes of the sixty-nine SIP Participants who did not take advantage of the SIP Relief (as defined in the Plan). The Company has a limited indemnification obligation to the litigation trustee under the litigation trust agreement. SIP Litigation: On February 4, 2005, the Litigation Trust commenced lawsuits both in the United States District Court for the Northern District of Illinois (the “Federal SIP Lawsuits”) and in the Circuit Court of Cook County Illinois (the “State SIP Lawsuits”) to collect on the remaining SIP Participants’ promissory notes. After a series of hearings, motions and counter-motions, amended pleadings, trial and appeals, o n October 1, 2015, the litigation trustee and the remaining SIP Defendants reached a global settlement of the State SIP Lawsuits and the Federal SIP Lawsuits. See update in “Litigation Trust Reports and Settlement Update” below. Litigation Trust Reports and Settlement Update: As stated above in “SIP Litigation” , a global settlement agreement was entered into between the litigation trustee, the Company and the SIP Defendants (the “GSA”) . Such settlement under the GSA does not have a material impact on the consolidated financial statements of the Company. On October 6, 2015, the litigation trustee filed with the Bankruptcy Court a motion (the “Motion”) seeking the entry of an order to (i) approve the GSA, (ii) approve the filing of the final report of the litigation trustee and (iii) upon the wind down of the Comdisco Litigation Trust and final disbursement of its net proceeds to the beneficiaries, terminate the Comdisco Litigation Trust and discharge the litigation trustee and the Comdisco Litigation Trust Advisory Board. On November 23, 2015, a hearing was held in the Bankruptcy Court and the judge granted an order approving the Motion and set a status hearing for May 20, 2016. The GSA provided for the litigation trustee and the State SIP Defendants to execute and file stipulations of dismissal to dismiss with prejudice the State SIP Lawsuits. The Circuit Court of Cook County entered orders dismissing the State SIP Lawsuits on December 17, 2015. The GSA provided for the litigation trustee and the Federal SIP defendants to execute and file stipulations of dismissal to dismiss with prejudice the appeals, cross-appeals, and any other pending appeals or proceedings related to the Federal SIP Lawsuits. On December 24, 2015, the parties filed such Stipulations of Voluntary Dismissal in the Federal SIP Lawsuits, and the Seventh Circuit entered orders dismissing the appeals and cross-appeals on December 28, 2015. For more details regarding the Litigation Trust and related proceedings, please refer to the Status Reports of Comdisco Litigation Trustee filed quarterly in the Bankruptcy Court. Any proceeds collected by the Litigation Trust, net of expenses, will be considered Trust Assets and distributed in accordance with the Plan and the litigation trust agreement. |
Basis of Presentation and Recen
Basis of Presentation and Recently Issued Accounting Pronouncements | 6 Months Ended |
Mar. 31, 2016 | |
Basis of Presentation and Recently Issued Accounting Pronouncements | |
Basis of Presentation and Recently Issued Accounting Pronouncements | 2. Basis of Presentation and Recently Issued Accounting Pronouncements The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules of the SEC for quarterly reports on Form 10-Q and do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America. The information furnished herein includes all adjustments, consisting of normal recurring adjustments except where indicated, which are, in the opinion of management, necessary for a fair presentation of the results of operations for these interim periods. The consolidated financial statements are prepared in accordance with ASU 2013-07, Liquidation Basis of Accounting . The liquidation basis of accounting requires the Company to estimate net cash flows from operations and to accrue all costs associated with implementing and completing the plan of liquidation and requires management to make estimates that affect the amounts reported in the consolidated financial statements and the related notes. To the extent there are any changes in the Company’s estimates each quarter, there will be changes reflected in the Statement of Changes in Net Assets in Liquidation. As cash is received or paid, consistent with the Company’s initial estimates, there will be no change to the Net Assets in Liquidation which is the amount expected to be available for eventual distribution to the common stockholders. However, any cash distribution to the common stockholders during a fiscal quarter would be shown as a change in Net Assets in Liquidation during such fiscal quarter. The Company has material restrictions on its ability, and does not expect to make significant investments in new or additional assets. The Company is currently projecting no later than December 31, 2016 as the end date for its wind down of operations. It is anticipated that by this date the Company will have, among other things: complied with all of the terms and conditions of the GSA, reduced all of its assets to cash, resolved its final federal and state tax obligations, determined its final CDR liability (which will include the impact of the actual distribution by the Litigation Trust to the C-4 creditors), made distributions of all available cash to holders of its common stock and CDRs in the manner and priorities set forth in the Plan, canceled such common stock and CDRs and completed all regulatory filings. Accordingly, it has made appropriate expense accruals for such time period in its calculation of Net Assets in Liquidation. However, the projected remaining wind down period could be either shorter or longer as a result of other intervening matters not currently known to management. The costs in liquidation will generally be incurred ratably over the remaining anticipated time frame. If the timing of any of these steps changes, the future accrued costs may change. Results could differ from these estimates and may affect the net assets in liquidation and actual cash flows. From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s consolidated financial statements upon adoption. |
Equity Investments
Equity Investments | 6 Months Ended |
Mar. 31, 2016 | |
Equity Investments | |
Equity Investments | 3. Equity Investments The Company’s estimate of the fair value of its private company investments was previously made in consultation with Windspeed, a professional management group, who managed the Company’s equity investments on an ongoing basis. Since February 21, 2011, Windspeed shared in the net receipts from the sale of the Company’s equity investments at a set percentage in certain designated portions of the portfolio of companies. Realized gains on the sale of equity investments were and are presented on a gross basis. On April 7, 2016, the management agreement with Windspeed was terminated as the last significant proceeds from the sale of an equity investment were received during the quarter ended March 31, 2016. Any management sharing amount payable to Windspeed was and is included in accrued professional fees. The Company has received approximately $91,265,000 in proceeds (prior to management fees and sharing) since the inception of the management agreement with Windspeed. Windspeed has received a combined $15,738,000 in management fees and sharing through March 31, 2016. Marketable equity investments: The Company held a limited number of securities in trust for a deferred compensation plan which were not available for distribution under the Plan. The trust for a deferred compensation plan was paid out during the quarter ended December 31, 2015. Equity investments in private companies: As of March 31, 2016, the Company had no significant investments in private companies. See Note 8 of these Notes to Consolidated Financial Statement (In Liquidation) for the fair value disclosure. |
Income Taxes
Income Taxes | 6 Months Ended |
Mar. 31, 2016 | |
Income Taxes | |
Income Taxes | 4. Income Taxes The Company files income tax returns in the U.S. federal jurisdiction and the State of Illinois. As of the date of this filing, the federal tax years open to examination in the U.S. are fiscal years ended September 30, 2014 through September 30, 2015. The Company filed the U.S. federal and Illinois income tax returns for the fiscal year ended September 30, 2015 on February 12, 2016. As of March 31, 2016, the Company has no estimated income tax payable recorded based on the estimated full year taxable loss. On March 17, 2016, the Company received a Return Correction Notice from the Department of Revenue of the State of Illinois (the “Department”) assessing an amount of $968,453 (including penalties and interest) for the 2015 tax year. The Company and its tax advisors have responded to the Notice and provided information to the Department evidencing that the income was properly offset by Net Loss Deductions previously audited by the Department. No tax provision has been made for the assessment as the Company has determined it is not more likely than not that any amount will be due. As of the date of this filing, the Company is still awaiting the Department’s response. Uncertain Tax Positions: The Company has no uncertain tax positions included in the Company’s consolidated statement of net assets in liquidation. |
Other Assets
Other Assets | 6 Months Ended |
Mar. 31, 2016 | |
Other Assets. | |
Other Assets | 5. Other Assets During the quarter ended March 31, 2016, the Company received $2,026,000 in proceeds (before Windspeed management sharing) which were released from escrow in connection with the Ebates transaction. As of March 31, 2016 and September 30, 2015, the Company holds legally restricted cash in the amount of $4,000,000 which is an indemnification reserve set aside by the Company for any potential indemnified losses in lieu of the litigation trustee purchasing insurance coverage. As of the date of this filing, there have been no claims against this indemnification reserve. Assets held in trust for deferred compensation plan were assets that were held in a Rabbi Trust for the benefit of deferred employee compensation. These assets were distributed to the respective employees during the quarter ended December 31, 2015. Other assets on the Consolidated Statement of Net Assets in Liquidation include such assets as accounts receivable, estimated recoveries and estimated accrued interest income expected to be received before liquidation. |
Other Financial Information
Other Financial Information | 6 Months Ended |
Mar. 31, 2016 | |
Other Financial Information | |
Other Financial Information | 6. Other Financial Information The liability for accrued compensation includes payroll and estimated amounts payable under the Company’s approved compensation plans . On October 13, 2015, the Company approved payments from the Assets Held in Trust for the Deferred Compensation Plan and Accrued Compensation. Substantially all of the payments were made on November 20, 2015. There is no change in Net Assets in Liquidation as these payments were previously accrued. The liability for accrued professional fees includes projected future costs for outside counsel for the corporate, bankruptcy, liquidation and SEC requirements, outside accounting and audit services, consulting fees and corporate bankruptcy required work. The liability for other accrued costs includes projected future costs for rent, insurance, travel, miscellaneous other corporate expenses and an accrued VAT liability for a foreign jurisdiction. The $200,000 liability pursuant to the GSA was paid during the quarter ended December 31, 2015. The liability for accrued estimated disposal costs of liquidation includes projected future costs to dispose of the Company’s paper and electronic records. The majority of these paper and electronic records have been destroyed. Contingent Distribution Rights Although the CDRs trade over-the-counter, for financial reporting purposes, the Company records CDRs as a liability under the liquidation basis of accounting. The Plan entitled holders of CDRs to previously share at increasing percentages in the proceeds realized from the Company’s assets based upon the present value of distributions to certain C-4 creditors in the bankruptcy estate of Comdisco, Inc. However, as of March 31, 2016, the sharing percentage is 37%, which is the maximum sharing percent. As of the date of this filing, there were 1,832 holders of record of the Company’s CDRs and there were 148,448,188 outstanding CDRs. In furtherance of the GSA, the Company anticipates that it will repurchase and cancel approximately 3,000,000 CDRs held by the litigation trustee at a discounted purchase price of approximately $0.06898 per CDR. The CDRs were acquired by the litigation trustee in the SIP Litigation. The number of holders of CDRs may, or may not, be affected by such repurchase and cancellation. As of October 1, 2014, the Company has adopted the liquidation basis of accounting. The CDR liability is an amount that is calculated as Total Assets less Total Liabilities (excluding the CDR liability) times 37%. The Company continues to estimate an additional CDR liability in the amount of $370,000 (based on the likely anticipated distribution reported by the litigation trustee of Trust Assets in its supplement to the final report filed with the Bankruptcy Court on October 6, 2015) and that amount is reflected on the Consolidated Statement of Net Assets in Liquidation as of March 31, 2016 (Liquidation Basis) under Liabilities at Supplemental CDR Liability Due To Anticipated Litigation Trust Distribution. |
Financial Information by Geogra
Financial Information by Geographic Area | 6 Months Ended |
Mar. 31, 2016 | |
Financial Information by Geographic Area | |
Financial Information by Geographic Area | 7. Financial Information by Geographic Area Since the year ended September 30, 2013, all revenues generated and assets held are in North America. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Mar. 31, 2016 | |
Fair Value Measurements | |
Fair Value Measurements | 8. Fair Value Measurements The three levels of inputs used to measure fair value are as follows: · Level 1 - Quoted prices in active markets for identical assets and liabilities · Level 2 - Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. · Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. As of March 31, 2016, the only financial assets that are measured at fair value on a recurring basis in the Consolidated Statements of Net Assets in Liquidation are $30,130,000 held in money market accounts. The Company currently holds no financial liabilities that are measured at fair value on a recurring basis. |
Reorganization (Details)
Reorganization (Details) - Predecessor shares in Millions | Jul. 16, 2001item | Feb. 28, 1998itemshares |
Reorganization | ||
Number of domestic subsidiaries filed voluntary petitions for relief under Chapter 11 | 50 | |
Number of participants who took out full recourse, personal loans to purchase shares of the entity's common stock | 106 | |
Number of shares of Comdisco, Inc.'s common stock purchased by the SIP Participants | shares | 6 | |
Number of SIP Participants for which the Litigation Trust is solely responsible for collection of amounts due on the promissory notes | 69 |
Equity Investments (Details)
Equity Investments (Details) - Windspeed - Management agreement With Windspeed - Liquidation Basis | 146 Months Ended |
Mar. 31, 2016USD ($) | |
Equity Investments | |
Proceeds from sale of equity investments prior to management fees and sharing | $ 91,265,000 |
Amount paid to for management fees and sharing | $ 15,738,000 |
Income Taxes (Details)
Income Taxes (Details) - Liquidation Basis - USD ($) | Mar. 17, 2016 | Mar. 31, 2016 |
Income Taxes | ||
Estimated income tax payable | $ 0 | |
Net uncertain tax positions | $ 0 | |
Department of Revenue of the State of Illinois | ||
Income Taxes | ||
Amount assessed including penalties and interest | $ 968,453 | |
Tax provision made for the assessment | $ 0 |
Other Assets (Details)
Other Assets (Details) - Liquidation Basis - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Sep. 30, 2015 | |
Receivable from Securities sold | ||
Cash - legally restricted | $ 4,000,000 | $ 4,000,000 |
Amount of claims against the indemnification reserve in lieu of the litigation trustee purchasing insurance coverage | 0 | |
Ebates | ||
Receivable from Securities sold | ||
Proceeds received from escrow release | $ 2,026,000 |
Other Financial Information (De
Other Financial Information (Details) - Liquidation Basis | 3 Months Ended | ||
Dec. 31, 2015USD ($) | Mar. 31, 2016USD ($)item$ / sharesshares | Sep. 30, 2015USD ($) | |
Other financial information | |||
Maximum sharing percentage of CDR holders | 37.00% | ||
Number of CDR holders | item | 1,832 | ||
Contingent distribution rights outstanding | shares | 148,448,188 | ||
Additional estimated CDR liability | $ | $ 370,000 | $ 370,000 | |
GSA | |||
Other financial information | |||
Accrued liabilities paid | $ | $ 200,000 | ||
GSA | Litigation Trustee | |||
Other financial information | |||
Number of CDRs to be repurchased and cancelled | shares | 3,000,000 | ||
Discounted purchase price (USD per share) | $ / shares | $ 0.06898 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Fair Value, Measurements, Recurring - Liquidation Basis | Mar. 31, 2016USD ($) |
Fair Value Measurements | |
Liabilities Fair Value | $ 0 |
Money market accounts | |
Fair Value Measurements | |
Assets Fair Value | $ 30,130,000 |