Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2023 | Aug. 07, 2023 | |
Entity Listings [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2023 | |
Entity File Number | 001-39445 | |
Entity Registrant Name | MSP Recovery, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 84-4117825 | |
Entity Address State Or Province | FL | |
Entity Address, City or Town | Coral Gables | |
Entity Address, Postal Zip Code | 33134 | |
City Area Code | 305 | |
Local Phone Number | 614-2222 | |
Entity Address, Address Line One | 2710 Le Jeune Road | |
Entity Address, Address Line Two | Floor 10 | |
Entity Current Reporting Status | No | |
Entity Interactive Data Current | No | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001802450 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Class A Common Stock [Member] | ||
Entity Listings [Line Items] | ||
Title of 12(b) Security | Class A common stock, $0.0001 par value per share | |
Trading Symbol | LIFW | |
Security Exchange Name | NASDAQ | |
Entity Common Stock, Shares Outstanding | 332,445,943 | |
Class V Common Stock [Member] | ||
Entity Listings [Line Items] | ||
Entity Common Stock, Shares Outstanding | 3,106,616,119 | |
Redeemable Warrants Each Whole Warrant Exercisable For One Share Of Class A Common Stock At An Exercise Price Of 11.50 Per Share [Member] | ||
Entity Listings [Line Items] | ||
Title of 12(b) Security | Redeemable warrants, each whole warrant exercisable for one share of Class A common stock at an exercise price of $11.50 per share | |
Trading Symbol | LIFWW | |
Security Exchange Name | NASDAQ | |
Redeemable Warrants Each Whole Warrant Exercisable For One Share Of Class A Common Stock At An Exercise Price Of 0.0001 Per Share [Member] | ||
Entity Listings [Line Items] | ||
Title of 12(b) Security | Redeemable warrants, each whole warrant exercisable for one share of Class A common stock at an exercise price of $0.0001 per share | |
Trading Symbol | LIFWZ | |
Security Exchange Name | NASDAQ |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | |
Current assets: | |||
Cash and cash equivalents | $ 21,583 | $ 3,661 | |
Restricted cash | 11,420 | ||
Accounts receivable | 4,508 | 6,195 | |
Affiliate receivable | [1] | 330 | 2,425 |
Prepaid expenses and other current assets | [1] | 23,744 | 27,656 |
Total current assets | 50,165 | 51,357 | |
Property, plant and equipment, net | 4,116 | 3,432 | |
Intangible assets, net | [2] | 3,495,519 | 3,363,156 |
Total assets | 3,549,800 | 3,417,945 | |
Current liabilities: | |||
Accounts payable | 5,516 | 8,422 | |
Affiliate payable | [1] | 19,861 | 19,822 |
Commission payable | 735 | 545 | |
Derivative liability | 9,613 | ||
Warrant liability | 2,733 | 5,311 | |
Other current liabilities | 80,567 | 72,002 | |
Total current liabilities | 109,412 | 115,715 | |
Guaranty obligation | [1] | 825,010 | 787,945 |
Claims financing obligation & notes payable | [1] | 466,653 | 198,489 |
Loan from related parties | [1] | 130,709 | 125,759 |
Interest payable | [1] | 4,473 | 2,765 |
Total liabilities | 1,536,257 | 1,230,673 | |
Commitments and Contingencies | |||
Class A common stock subject to possible redemption, 1,129,589 shares at redemption value as of December 31, 2022 (None as of March 31, 2023) | 1,807 | ||
Stockholders' Equity (Deficit): | |||
Additional paid-in capital | 153,332 | 136,760 | |
Accumulated deficit | (34,119) | (29,203) | |
Total Stockholders' Equity (Deficit) | 119,535 | 107,879 | |
Non-controlling interest | 1,894,008 | 2,077,586 | |
Total equity | 2,013,543 | 2,185,465 | |
Total liabilities and equity | 3,549,800 | 3,417,945 | |
Class A Common Stock [Member] | |||
Stockholders' Equity (Deficit): | |||
Common stock | 9 | 7 | |
Class V Common Stock [Member] | |||
Stockholders' Equity (Deficit): | |||
Common stock | $ 313 | $ 315 | |
[1] As of March 31, 2023 and December 31, 2022, the total affiliate receivable, affiliate payable, guaranty obligation and loan from related parties balances are with related parties. In addition, the prepaid expenses and other current assets, claims financing obligation and notes payable, and interest payable includes balances with related parties. See Note 13, Related Party Transactions, for furthe r details. As of March 31, 2023 and December 31, 2022, intangible assets, net included $ 2.5 billion and $ 2.3 billion, respectively, related to a consolidated VIE. See Note 9 , Variable Interest Entities , for further details. |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | |
Intangible assets, net | [1] | $ 3,495,519 | $ 3,363,156 |
Class A common stock subject to possible redemption, shares | 0 | 1,129,589 | |
Variable Interest Entities | |||
Intangible assets, net | $ 2,500,000 | $ 2,300,000 | |
Class A Common Stock [Member] | |||
Common stock, par value | $ 0.0001 | $ 0.0001 | |
Common stock, shares authorized | 5,500,000,000 | 5,500,000,000 | |
Common stock, shares issued | 96,002,855 | 74,605,284 | |
Common stock, shares outstanding | 96,002,855 | 74,605,284 | |
Class V Common Stock [Member] | |||
Common stock, par value | $ 0.0001 | $ 0.0001 | |
Common stock, shares authorized | 3,250,000,000 | 3,250,000,000 | |
Common stock, shares issued | 3,128,121,511 | 3,147,979,494 | |
Common stock, shares outstanding | 3,128,121,511 | 3,147,979,494 | |
[1] As of March 31, 2023 and December 31, 2022, intangible assets, net included $ 2.5 billion and $ 2.3 billion, respectively, related to a consolidated VIE. See Note 9 , Variable Interest Entities , for further details. |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | ||
Claims recovery income | $ 3,497 | $ 109 | |
Claims recovery service income | [1] | 498 | 8,076 |
Total Claims Recovery | 3,995 | 8,185 | |
Operating expenses | |||
Cost of claim recoveries | [2] | 1,021 | 7 |
Claims amortization expense | 113,469 | 2,717 | |
General and administrative | [3] | 6,855 | 4,446 |
Professional fees | 9,728 | 1,938 | |
Professional fees - legal | [4] | 8,551 | 2,472 |
Allowance for credit losses | 5,000 | ||
Depreciation and amortization | 9 | 79 | |
Total operating expenses | 144,633 | 11,659 | |
Operating Loss | (140,638) | (3,474) | |
Interest expense | (42,390) | (10,415) | |
Other income (expense), net | 6,627 | (2) | |
Change in fair value of warrant and derivative liabilities | 2,255 | ||
Net loss before provision for income taxes | (174,146) | (13,891) | |
Net loss | [5] | (174,146) | (13,891) |
Less: Net (income) loss attributable to non-controlling members | 169,230 | ||
Net loss attributable to controlling members | $ (4,916) | $ (13,891) | |
Class A Common Stock [Member] | |||
Operating expenses | |||
Weighted average shares outstanding, basic | [6] | 88,609,528 | |
Weighted average shares outstanding, diluted | [6] | 88,609,528 | |
Basic net loss per common share | [6] | $ (0.06) | |
Diluted net loss per common share | [6] | $ (0.06) | |
[1] For th e three months ended March 31, 2023 and 2022, claims recovery service income included $ 0 million and $ 7.3 million , respectively, of claims recovery service income from VRM MSP. See Note 13, Related Party Transactions, for further details. For the three months ended March 31, 2022, cost of claim recoveries included $ 40.5 thousand of related party expenses. This relates to contingent legal exp enses earned from claims recovery income pursuant to legal service agreements with the La Ley con John H. Ruiz P.A., d/b/a MSP Recovery Law Firm (the “Law Firm” ). No such related party expenses were present for the three months ended March 31, 2023. See Note 13, Related Party Transactions, for further details. For the months ended March 31, 2022, general and administrative expenses included $ 0.1 million of related party expenses. See Note 13, Related Party Transactions, for further details. No such related party expenses were present for the three months ended March 31, 2023. For the three months ended March 31, 2023 and 2022, professional fees - legal included $ 4.2 million and $ 4.7 th ousand, respectively, of related party expenses related to the Law Firm. See Note 13, Related Party Transactions, for further details. Balances include related party transactions. See Note 13, Related Party Transactions , f or further details. Earnings pe r share information has not been presented for periods prior to the Business Combination (as defined in Note 3, Business Combination ), as it resulted in values that would not be meaningful to the users of these unaudited condensed consolidated financial statements. Refer to Note 14, Net Loss Per Common Share for further information. |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Operations (Parenthetical) - USD ($) | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | ||
Claims recovery service income | [1] | $ 498,000 | $ 8,076,000 |
General and Administrative Expense [Member] | |||
Related party expenses | 0 | 100,000 | |
VRM [Member] | |||
Claims recovery service income | 0 | 7,300,000 | |
MSP Recovery Law Firm [Member] | |||
Related party expenses | 0 | 40,500 | |
MSP Recovery Law Firm [Member] | Professional Fees Legal [Member] | |||
Related party expenses | $ 4,200,000 | $ 4,700 | |
[1] For th e three months ended March 31, 2023 and 2022, claims recovery service income included $ 0 million and $ 7.3 million , respectively, of claims recovery service income from VRM MSP. See Note 13, Related Party Transactions, for further details. |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Equity - USD ($) $ in Thousands | Total | Common Stock [Member] Class A Common Stock [Member] | Common Stock [Member] Class V Stock [Member] | Additional Paid-in Capital [Member] | Members' Deficit [Member] | Accumulated Deficit [Member] | Non- Controlling Interests [Member] | |
Balance at beginning of period at Dec. 31, 2021 | $ (151,408) | $ (155,756) | $ 4,348 | |||||
Distributions | (102) | (102) | ||||||
Net loss | (13,891) | [1] | (13,891) | |||||
Balance at end of period at Mar. 31, 2022 | (165,401) | $ (169,749) | 4,348 | |||||
Balance at beginning of period at Dec. 31, 2022 | 2,185,465 | $ 7 | $ 315 | $ 136,760 | $ (29,203) | 2,077,586 | ||
Balance at beginning of period, shares at Dec. 31, 2022 | 74,605,284 | 3,147,979,494 | ||||||
Conversion of Warrants | 166 | 336 | (170) | |||||
Conversion of Warrants, shares | 104,152 | |||||||
Class A Issuances | 2,058 | $ 2 | $ (2) | 16,236 | (14,178) | |||
Class A Issuances, shares | 21,293,419 | (19,857,983) | ||||||
Net loss | (174,146) | [1] | (4,916) | (169,230) | ||||
Balance at end of period, shares at Mar. 31, 2023 | 96,002,855 | 3,128,121,511 | ||||||
Balance at end of period at Mar. 31, 2023 | $ 2,013,543 | $ 9 | $ 313 | $ 153,332 | $ (34,119) | $ 1,894,008 | ||
[1] Balances include related party transactions. See Note 13, Related Party Transactions , f or further details. |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | ||
Cash flows from operating activities: | |||
Net loss (1) | [1] | $ (174,146) | $ (13,891) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | |||
Depreciation and amortization | 9 | 79 | |
Claims amortization expense | 113,469 | 2,717 | |
Paid in kind interest | 41,937 | 10,392 | |
Change in fair value of derivatives | (158) | ||
Change in fair value of warrant liability | (2,413) | ||
Allowance for credit losses | 5,000 | ||
Gain sale of intangible assets | (4,599) | ||
Change in operating assets and liabilities: | |||
Accounts receivable | (3,313) | ||
Affiliate receivable | [1] | 2,096 | (83) |
Affiliate payable | [1] | 39 | 3,013 |
Prepaid expenses and other assets | 4,038 | (194) | |
Commission payable | 190 | ||
Accounts payable, accrued liabilities and other current liabilities | 7,875 | 1,400 | |
Deferred service fee income | (249) | ||
Net cash (used in) provided by operating activities | (9,976) | 3,184 | |
Cash flows from investing activities: | |||
Purchases of property, plant, and equipment | (693) | (133) | |
Purchases of intangible assets | (1,234) | (2,000) | |
Proceeds from sale of intangible assets | 10,000 | ||
Net cash provided by (used in) investing activities | 8,073 | (2,133) | |
Cash flows from financing activities: | |||
Proceeds from debt financing | 15,000 | ||
Deferred financing costs | (125) | (823) | |
Proceeds from related party loan | [1] | 4,950 | |
Release of temporary equity | (11,420) | ||
Distributions to members | (102) | ||
Net cash provided (used in) by financing activities | 8,405 | (925) | |
Increase in cash and cash equivalents and restricted cash | 6,502 | 126 | |
Cash and cash equivalents and restricted cash at beginning of year | 15,081 | 1,664 | |
Cash and cash equivalents at end of period | 21,583 | 1,790 | |
Supplemental disclosure of non-cash investing and financing activities: | |||
Sale of intangible assets | 30,897 | ||
Purchase of intangible asset financed by note payable | 250,000 | ||
Release of temporary equity | 1,807 | ||
Original issue discount | $ 10,000 | ||
Cash paid during the period for: | |||
Interest | $ 23 | ||
[1] Balances include related party transactions. See Note 13, Related Party Transactions , f or further details. |
Description of Business
Description of Business | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Note 1. DESCRIPTION OF BUSINESS On May 23, 2022 (the “Closing Date”), MSP Recovery, Inc. d/b/a LifeWallet, a Delaware corporation (formerly known as Lionheart Acquisition Corporation II (“LCAP”) consummated the previously announced business combination pursuant to that certain Membership Interest Purchase Agreement, dated as of July 11, 2021 (as amended, the “MIPA”), by and among the Company, Lionheart II Holdings, LLC, a wholly owned subsidiary of the Company, MSP Recovery, LLC and combined and consolidated subsidiaries (“Legacy MSP”), the members of Legacy MSP (the “Members”), and John H. Ruiz, in his capacity as the representative of the Members (the “Members’ Representative”). Pursuant to the MIPA, the Members sold and assigned all of their membership interests in Legacy MSP to the Company in exchange for non-economic voting shares of Class V common stock, par value $ 0.0001 , of the Company (“Class V Common Stock”) and non-voting economic Class B Units of the Company (“Class B Units,” and each pair consisting of one share of Class V Common Stock and one Class B Unit, an “Up-C Unit”) (such transaction, the “Business Combination”). The Up-C Units are convertible into Class A Common Stock of the Company at the discretion of the holder of the Up-C Unit. See Note 3, Business Combination for details. Subsequent to the Closing Date, the Company’s sole asset is its equity interest in MSP Recovery, LLC. The Company is the managing member and therefore consolidates Legacy MSP. Legacy MSP was organized in 2014 as a Medicaid and Medicare Secondary Pay Act recovery specialist. The Company utilizes its proprietary internal data analytics platform to review health Claims assigned by secondary payers such as health plans, management service organizations , providers of medical services and independent physicians association s. This platform allows the Company to identify Claims cost recovery rights with potential recovery paths where Claims either should not have been paid by the secondary payers or should have been reimbursed by third-party entities. The Company is assigned recovery rights to Claims by secondary payers via Claims Cost Recovery Agreements (“CCRAs”). Prior to executing a CCRA, the Company utilizes its proprietary internal data analytics platform to review the set of Claims of a prospective assignor to identify Claims with probable recovery paths. MSP’s assets are these irrevocable broad assignments of health Claims recovery rights that are supported by federal and state laws and regulations. MSP’s operations are primarily conducted in the U.S. and Puerto Rico. LifeWallet As of March 31, 2023, the Company’s investment related to LifeWallet included in the condensed consolidated statement of operations was limited to activity and expenses incurred during the three months ended March 31, 2023 , which amounted to $ 1.2 million. Committed Equity Facility On May 17, 2022, the Company entered into a Company Common Stock Purchase Agreement (the “CF Agreement”) with an affiliate of Cantor Fitzgerald (“CF”). Pursuant to the CF Agreement, after the closing of the Business Combination, the Company will have the right to sell to CF, from time to time at its option, up to $ 1 billion in Class A Common Stock shares, subject to the terms, conditions and limitations set forth in the CF Agreement. On January 6, 2023 , the Company entered into a Company Common Stock Purchase Agreement (the “Yorkville Purchase Agreement”) with YA II PN, Ltd., a Cayman Island exempted company (“Yorkville”), which replaced the CF Agreement noted above. Pursuant to the Yorkville Purchase Agreement, the Company has the right to sell to Yorkville from time to time at its option up to $ 1 billion in shares of the Company’s Class A Common Stock, subject to the terms, conditions and limitations set forth in the Yorkville Purchase Agreement. Sales of the shares of the Class A Common Stock to Yorkville under the Yorkville Purchase Agreement, and the timing of any such sales, will be determined by the Company from time to time in its sole discretion and will depend on a variety of factors, including, among other things, market conditions, the trading price of the Class A Common Stock, as well as determinations by the Company about the use of proceeds of such stock sales. The net proceeds from any such sales under the Yorkville Purchase Agreement will depend on the frequency with, and the price at, which the shares of Class A Common Stock are sold to Yorkville. Upon the initial satisfaction of the conditions to Yorkville’s obligation to purchase shares of Class A Common Stock set forth under the Yorkville Purchase Agreement (the “Commencement”), including that a registration statement registering the resale by Yorkville of the shares of Class A Common Stock under the Securities Act, purchased pursuant to the Yorkville Purchase Agreement (the “Resale Registration Statement”) is declared effective by the SEC and a final prospectus relating thereto is filed with the SEC, the Company will have the right, but not the obligation, from time to time, at its sole discretion and on the terms and subject to the limitations contained in the Yorkville Purchase Agreement, until no later than the first day of the month following the 36 month anniversary of the date that the Resale Registration Statement is declared effective, to direct Yorkville to purchase a number of shares of Common Stock, in an amount not to exceed 33 % of the total trading volume during the applicable purchase period and not to exceed a total beneficial ownership for Yorkville of 4.99 % of outstanding voting shares, by delivering written notice to Yorkville prior to the commencement of trading on any trading day. The purchase price of the Class A Common Stock that the Company elects to sell to Yorkville pursuant to the Yorkville Purchase Agreement will be 98 % of the volume-weighted average price (“VWAP”) of the stock during the applicable purchase date on which the Company has timely delivered a written notice to Yorkville, directing it to purchase common stock under the Yorkville Purchase Agreement. In connection with the Yorkville Purchase Agreement, the CF Agreement has been terminated. Liquidity As an early-stage growth company, the Company has incurred substantial net losses since inception. As of March 31, 2023, the Company had unrestricted cash and cash equivalents totaling $ 21.6 million . The Company has incurred recurring losses and negative cash flows since inception and has an accumulated deficit of $ 34.1 million as of March 31, 2023. For the three months ended March 31, 2023, the Company used approximately $ 10.0 million of cash in operations. The Company’s liquidity will depend on the ability to generate substantial Claims recovery income and Claims recovery services income in the near future, the timing of which is uncertain, as well as its ability to secure funding from capital sources. The Company’s principal liquidity needs have been capital expenditures, working capital, debt service and Claims financing obligations. The Company anticipates sources of liquidity to include the Working Capital Credit Facility as disclosed in Note 10, Claims Financing Obligations and Notes Payable. The Company anticipates having funding through this source and has taken several actions to address liquidity concerns, including: In response to these conditions, the Company undertook several actions to address these concerns, including: 1. On March 29, 2023, the Company entered into the Working Capital Credit Facility consisting of commitments to fund up to $ 48 million in proceeds. See summary in “ Hazel Transactions ” in Note 10, Claims Financing Obligations and Notes Payable . 2. On April 12, 2023, the Company entered into the Virage MTA Amendment, which extended the due date for the payment obligations to Virage to September 30, 2024. See summary in Note 16, Subsequent Events . 3. On April 12, 2023, the Company entered into an amended and restated promissory note with Nomura, which extended the due date to September 30, 2024. See summary in Note 16, Subsequent Events . 4. Given the uncertainty with regard to the timing and amount of claims recovery income, management implemented a reduction of operating costs in 2023 through the reduction or elimination of certain controllable expenses particularly within the budgeted costs to expand and develop new solutions through LifeWallet platform, advertising expenses and non-contingent legal fees. The Company anticipates that the reductions would contribute approximately $ 21.5 M in savings to operating expenses over the next twelve months. The Company has concluded that such actions alleviate the substantial doubt about the Company’s ability to continue as a going concern beyond one year from the date these financial statements are issued. |
Basis of Presentaton and Summar
Basis of Presentaton and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATON AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Note 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation Basis of presentation These statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and, in accordance with those rules and regulations do not include all information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, the unaudited condensed consolidated interim financial statements (the “Financial Statements”) reflect all adjustments, which consist only of normal recurring adjustments, necessary to state fairly the results of operations, financial condition and cash flows for the interim periods presented herein. Prior to the Business Combination, the Financial Statements reflect Legacy MSP. These Financial Statements should be read in conjunction with the consolidated financial statements and notes thereto included in the 2022 Form 10-K. The year-end condensed consolidated balance sheet data was derived from the audited financial statements but does not include all disclosures required by GAAP. The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the full year. All intercompany transactions and balances are eliminated from the Financial Statements. Principles of consolidation The Company consolidates all entities that it controls through a majority voting interest or otherwise and the accompanying Financial Statements include the accounts of the Company’s wholly owned subsidiaries and these entities for which the Company has a controlling interest in. The Company also consolidates all entities that it controls as the primary beneficiary of a variable interest entity (“VIE”). Under the VIE model, management first assesses whether the Company has a variable interest in an entity, which would include an equity interest. If the Company has a variable interest in an entity, management further assesses whether that entity is a VIE, and if so, whether the Company is the primary beneficiary under the VIE model. Generally, entities that are organized similar to a limited partnership, in which a general partner (or managing member) make the most relevant decisions that affect the entity’s economic performance, are considered to be VIEs which would require consolidation, unless the limited partners have substantive kickout or participating rights. Entities that do not qualify as VIEs are assessed for consolidation under the voting interest model. Under the VIE model, an entity is deemed to be the primary beneficiary of a VIE if it holds a controlling financial interest. A controlling financial interest is defined as (a) the power to direct the activities of a VIE that most significantly affect the entity’s economic performance and (b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. Management determines whether the Company is the primary beneficiary of a VIE at the time it becomes involved with a VIE and reconsiders that conclusion at each reporting date. This analysis includes an evaluation of the Company’s control rights, as well as the economic interests that the Company holds in the VIE, including indirectly through related parties. As a result of the Business Combination, the Company consolidates MSP Recovery under the VIE model. Estimates and Assumptions The preparation of Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting periods. Actual results could differ from the Company’s estimates. Estimates are periodically reviewed considering changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Significant estimates and assumptions reflected in these Financial Statements include but are not limited to Claims recovery income and Claims recovery service income recognition, recoverability of long-lived assets and cost of Claims recoveries. Concentration of credit risk and Off-Balance Sheet Risk Cash and cash equivalents and affiliate receivable are financial instruments that are potentially subject to concentrations of credit risk. See Note 13, Related Party Transactions , fo r disclosure of affiliate receivables. The Company’s cash and cash equivalents and restricted cash are deposited in accounts at large financial institutions, which at times may exceed federally insured limits. The Company has not incurred any losses on these accounts. The Company believes it is not exposed to significant credit risk due to the financial strength of the depository institutions in which the cash and cash equivalents are held. The Company has no other financial instruments with off-balance-sheet risk of loss. Non-controlling Interests As part of the Business Combination and described in Note 3, Business Combination , the Company became the managing member of MSP Recovery, which is consolidated as the Company controls the operating decisions of MSP Recovery. The non-controlling interest relates to the Up-C Units that are convertible into Class A Common Stock of the Company at the discretion of the holder of the Up-C Unit. The Up-C Unit holders retained approximately 99.76 % of the economic ownership percentage of the Company as of the Closing Date. The non-controlling interest is classified as permanent equity within the condensed consolidated balance sheet of the Company. As of March 31, 2023, based on the Class A common stock issuances during the period, the non-controlling interest of Class V Common Stock shareholders w as 97.70 %. Changes in the Company’s ownership interest in MSP Recovery, due to Class V Common Stock shareholders converting their shares to Class A Common Stock, are accounted for as equity transactions. Each issuance of the Company’s Class A Common Stock requires a corresponding issuance of MSP Recovery units to the Company. The issuance would result in a change in ownership and would reduce the balance of non-controlling interest and increase the balance of additional paid-in capital. Claims Rec overy Service Income For the three months ended March 31, 2023 and 2022, the majority of the Company’s Claims recovery service income was related to a servicing agreements with VRM MSP and MSP RH Series 01, which was entered into on March 27, 2018. As part of the Business Combination, the Company acquired rights to cash flows in the assets, after certain required returns to VRM MSP, that had been part of the servicing agreement. As part of this acquisition, the Company no longer receives service income from this agreement and consolidates the entity in which the Company acquired rights to cash flow in the assets as outlined in Note 4, Acquisitions . In connection with the Hazel transactions discussed in Note 4, Acquisitions, the Company terminated its service agreement with MSP Recovery RH Series 01, an affiliate of Hazel. Recent Accounting Pronouncements New Accounting Pronouncements Recently Adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses . In 2016 and subsequently, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments including subsequent amendments to the initial guidance : ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825. Financial Instruments, ASU 2019-05, Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief, ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments - Credit Losses . ASU 326, and ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures and related amendments require credit losses on financial instruments measured at amortized cost basis to be presented at the net amount expected to be collected, replacing the current incurred loss approach with an expected loss methodology that is referred to as CECL. This ASU is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The Company adopted this guidance on January 1, 2023 and it had no material impact on our Financial Statements. |
Business Combination
Business Combination | 3 Months Ended |
Mar. 31, 2023 | |
Business Combinations [Abstract] | |
Business Combinations | Note 3. BUSINESS COMBINATION On May 23, 2022, MSP Recovery, Inc. consummated the previously announced Business Combination pursuant to that certain Membership Interest Purchase Agreement, dated as of July 11, 2021 (as amended, the “MIPA”), by and among the Company, Lionheart II Holdings, LLC, a wholly owned subsidiary of the Company, MSP Recovery, LLC and combined and consolidated subsidiaries (“Legacy MSP”), the members of Legacy MSP (the “Members”), and John H. Ruiz, in his capacity as the representative of the Members (the “Members’ Representative”). Pursuant to the MIPA, the Members sold and assigned all of their membership interests in Legacy MSP to the Company in exchange for non-economic voting shares of Class V common stock, par value $ 0.0001 , of the Company (“Class V Common Stock”) and non-voting economic Class B Units of the Company (“Class B Units,” and each pair consisting of one share of Class V Common Stock and one Class B Unit, an “Up-C Unit”) (such transaction, the “Business Combination”). Subsequent to the Closing Date, the Company ’s sole asset is its equity interest in MSP Recovery. As a result of the closing of the Business Combination (the “Closing”), the Company is organized in an “Up-C” structure in which all of the business of Legacy MSP and its subsidiaries is held directly or indirectly by the Company, the Company is the managing member, consolidates Legacy MSP and the Company owns all of the voting economic Class A Units and the Members and their designees own all of the non-voting economic Class B Units in accordance with the terms of the first amended and restated limited liability company agreement of the Company. Each Up-C Unit may be exchanged for either, at the Company’s option, (a) cash or (b) one share of Class A Common Stock, subject to the provisions set forth in the LLC Agreement. The aggregate consideration paid to the Members (or their designees) at the Closing consisted of (i) 3,250,000,000 Units and (ii) rights to receive payments under the Tax Receivable Agreement, discussed in detail above. Of the 3,250,000,000 Units, 3,154,473,292 Units were issued in connection with the Closing and 95,526,708 Units were designated to the Company and Opco for cancellation (“Canceled Units”). Since the Closing, the Company has issued 50,022,000 Up-C Units to certain designated persons and intends to further issue shares of Class A Common Stock in respect of transaction-related bonuses or certain other designated persons, which together with the 50,022,000 Up-C Units would be equivalent in number to the Canceled Units. In connection with the Closing, the Company changed its name from “Lionheart Acquisition Corporation II” to “MSP Recovery, Inc.” The Business Combination is accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, the Company is treated as the acquirer for financial statement reporting purposes. The reverse recapitalization was treated as the equivalent of Legacy MSP issuing stock for the net assets of LCAP, accompanied by a recapitalization. The net assets of LCAP are stated at historical cost, with no goodwill or other intangible assets recorded. The Company received net proceeds in the business combination tr ansaction of approximately $ 23.4 million, which includes the restricted cash received as part of FEF shares as defined in Note 15, Derivative Liability . The Company incurred direct and incremental costs of approximately $ 79.2 million relat ed to the Business Combination, which consisted primarily of investment banking, legal, accounting and other professional fees. These transaction-related costs were recorded as a reduction of additional paid-in capital in the condensed consolidated balance sheets. During the three months ended March 31, 2023, the Company and CF agreed to terminate their OTC Equity Prepaid Forward Transaction. As a result of this termination, the restricted cash received as part of FEF shares amounting to $ 11.4 million was released and paid to Cantor. Warrants As part of the Business Combination transaction, the Company assumed the liability related to the LCAP public warrants (“Public Warrants”) of $ 12.5 million. Pursuant to the terms of the Existing Warrant Agreement, and after giving effect to the issuance of the New Warrants, as defined below, the exercise price of the Public Warrants decreased to $ 0.0001 per share of Class A Common Stock. During the period from the Closing Date to March 31, 2023 , approximately 8.6 million warrants of the original 11.8 million warrants have been exercised and the fair value of the remaining warrants decreased resulting in other income of $ 2.3 million for the three months ended March 31, 2023. Following anti-dilution adjustments made in connection with the Business Combination, the Public Warrants have an exercise price of $ 0.0001 per share, which have become exercisable as of 10 days after closing of the Business Combination, on a cashless basis. Additionally, in connection with the Business Combination, the Company declared the New Warrant Dividend comprising approximately 1,028 million New Warrants payable to the holders of record of the Class A Common Stock as of the close of business on the Closing Date, after giving effect to the waiver of the right, title and intere st in, to or under, participation in any such dividend by the Members, on behalf of themselves and any of their designees. The New Warrants will be exercisable 30 days following the Closing Date until their expiration date, which will be the fifth anniversary of the Closing Date or earlier redemption. The record date for the determination of the holders of record of the outstanding shares of Class A Common Stock entitled to receive the New Warrant Dividend was the close of business on the Closing Date. Pursuant to the terms of the LLC Agreement, at least twice a month, to the extent any New Warrants have been exercised in accordance with their terms, the Company is required to purchase from the MSP Principals, proportionately, the number of Up-C Units or shares of Class A Common Stock owned by such MSP Principal equal to the Aggregate Exercise Price divided by the Warrant Exercise Price in exchange for the Aggregate Exercise Price. The Company determined that the New Warrants instruments meet the equity scope excepti on in ASC 815 to be classified in stockholders’ equity, and as the repurchase right noted above has a mirrored value designed to offset the New Warrants, if exercised would be an equity only transaction. The New Warrants are each exercisable for one share of Class A Common Stock at an exercise price of $ 11.50 per share and will be subject to certain anti-dilution adjustments and become exercisable 30 days following the Closing, expiring five years from the date of Closing. Public Warrants and New Warrants are currently listed on Nasdaq under the symbols “LIFWZ” and “LIFWW,” respectively. Tax Receivable Agreement In connection with the Business Combination, the Company also entered into a Tax Receivable Agreement (the “TRA”). Pursuant to the TRA, the Company is required to pay the sellers 85 % of the amount of tax benefits that the Company actually realizes as a result of (i) the Company’s direct and indirect allocable share of existing tax basis acquired in the Business Combination, (ii) increases in the Company’s allocable share of existing tax basis and tax basis adjustments that will increase the tax basis of the tangible and intangible assets of the Company as a result of the Business Combination and as a result of sales or exchanges of Up-C Units for cash or shares of Class A Common Stock, and (iii) certain other tax benefits related to entering into the Tax Receivable Agreement, including tax benefits attributable to payments under the Tax Receivable Agreement. During the three months ended March 31, 2023 , 19,857,983 Class V units were exchanged for Class A common stock of the Company. The Company receives an increase in its share of the tax basis in the net assets of MSP Recovery, LLC due to the interests being redeemed. The Company has assessed the realizability of the net deferred tax assets and in that analysis has considered the relevant positive and negative evidence available to determine whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The Company has recorded a full valuation allowance against the deferred tax assets as of March 31, 2023, which will be maintained until there is sufficient evidence to support the reversal of all or some portion of these allowances. As the tax benefits associated with the TRA have not been recognized, based on estimates of future taxable income, the Company has concluded it is not probable to recognize any tax receivable agreement liability. If the valuation allowance recorded against the deferred tax assets is released in a future period, the Tax Receivable Agreement liability may be considered probable at that time and recorded within earnings. Non-Controlling interest As a result of the Business Combination, the Company reflects non-controlling interests as a result of the Up-C structure. The Company holds all of the voting Class A Units of Opco, whereas the Members (or their designees) hold all of the non-voting economic Class B Units of Opco (these Class B Units represent the non-controlling interest in the Company). The ownership percentage of Class V Common Stock held in the Post-Combination Company by the Members (or their designees) will be equivalent to the number of Class B Units held in the Company, and as such, reflects the non-controlling interest in the Company, which is equivalent to the Class V Common Stock ownership percentage. See Note 11, Noncontrolling Interest , for more information on ownership interests in the Company. Nomura Promissory Note On May 27, 2022, the Company issued an unsecured promissory note to Nomura in a principal amount of approximately $ 24.5 million related to advisory fees and deferred underwriting fees and expenses that became due and payable by the Company to Nomura, in connection with the consummation of the Business Combination. On April 12, 2023, the Company amended the promissory note, increasing the principal amount to approximately $ 26.3 million and extending the maturity date of the promissory note to September 30, 2024 . The amended note carries an interest rate of 16 % per annum and is payable in kind or in cash, at the Company’s discretion, every 30 calendar days after April 12, 2023. Upon two days prior written notice to Nomura, the Company may prepay all or any portion of the then outstanding principal amount under the promissory note together with all accrued and unpaid interest thereon. The balance of the unsecured promissory note and related interest are included within Claims financing obligations and notes payable in the condensed consolidated balance sheet. |
Asset Acquisitions
Asset Acquisitions | 3 Months Ended |
Mar. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Asset Acquisitions | Note 4. ASSET ACQUISITIONS VRM On May 23, 2022 as part of the closing of th e Business Combination, the Company acquired assets through the issuance of Up-C units. In exchange for approximately 196.6 million Up-C units, the Company acquired Claims previously held by Series MRCS, an affiliate of MSP. The Claims are included as I ntangible Assets, net in the condensed consolidated balance sheet. The Claims are held at cost, which was determined using the opening market price of the Company’ s Class A Common Stock as of the day subsequent to the Closing Date discounted by 4.5 % or lack of marketability due to timing before shares are sellable. The Company determined the appropriate measurement date was the opening of the first trading day of the Class A Common Stock after the Closing Date as this reflects the equivalent value of the Up-C units provided to the sellers. The Up-C units provided to the sellers did not include New Warrants and as such the Class A Common Stock value excluding the New Warrants was reflected at the Close of the first trading day after the Closing Date. The Claims are treated as finite life intangible a ssets similar to other Claims that the Company has acquired and have a useful life of 8 years. For further details on this Claims acquisition, see Note 7, Intangible Assets, Net . On May 23, 2022 as part of the closing of the Business Combination, the Company acquired assets through the issuance of Up-C units. In exchange for approximately 356.8 million Up-C units, the Company acquired the rights to receive the distributable net proceeds (the “Proceeds”) of a portfolio of Claims owned by VRM MSP, a Delaware limited liability company and joint investment vehicle of VRM and Series MRCS. Under this asset acquisition structure, the Company determined that the arrangements to acquire the rights to proceeds from certain Claims recovery rights along with the guarantee of the VRM Full Return (noted and defined below) result in the Company consolidating the Series. Upon consolidation, the Company included the value of the Up-C units provided and the value of the guarantee as Intangible Assets, net in the condensed consolidated balance sheet. These are held at cost and treated as finite life intangible assets similar to other CCRAs that the Company has acquired and have a useful life of 8 years. In connection with such transaction the Company agreed to pay Virage an amount equal to the contributions by Virage to VRM MSP plus an annual rate of return of 20 % (the “VRM Full Return”). Pursuant to the terms of the agreement with Virage, such amount is payable exclusively by any of the following means (or any combination thereof): (a) the Proceeds, (b) a sale of certain reserved shares of Messrs. John Ruiz and Frank Quesada, and the delivery of the resulting net cash proceeds thereof to VRM, or (c) a sale of shares by the Company and delivery of the net cash proceeds thereof to VRM. The amount of the VRM Full Return was $ 825.0 million as of March 31, 2023. Upon payment of the VRM Full Return, VRM and Series MRCS would assign and transfer to the Company their respective rights to receive all Proceeds. As the Company incurred debt related to the VRM Full Return as included in the guarantee obligation within the consolidated balance sheet, this value was included in the purchase price and is included in Intangible Assets, net, in the consolidated balance sheet for the full value of the VRM Full Return at the acquisition date. Any subsequent interest accrual is reflected within interest expense in the consolidated statement of operations. Separately, the VRM Full Return was guaranteed provided that such obligation was limited as per the payment methods described above by Messrs. John Ruiz and Frank Quesada for any remaining required payment of the VRM Full Return. Upon payment of the VRM Full Return, VRM and Series MRCS would assign and transfer to the Company their respective rights to receive all Proceeds. As the Company incurred debt related to the VRM Full Return as included in the guarantee obligation within the condensed consolidated balance sheet, this value was included in the purchase price and is included in Intangible Assets, net, in the condensed consolidated balance sheet for the full value of the VRM Full Return at the acquisition date. Any subsequent interest accrual is reflected within interest expense in the condensed consolidated statement of operations. Separately, the VRM Full Return was guaranteed by Messrs. John Ruiz and Frank Quesada for any remaining required payment of the VRM Full Return as of May 23, 2023. On April 12, 2023, the Company and Messrs. Quesada and Ruiz entered into an amendment (the “Virage MTA Amendment”) to the agreement with Virage and the related Guaranty pursuant to which the payment date for the VRM Full Return was extended from May 23, 2023 until September 30, 2024, subject to acceleration upon certain triggering events. In addition, the Virage MTA Amendment changed the payment methods to Virage to exclusively be, in the following order of priority: (a) the Proceeds and any other sources of revenue or liquidity of the Company (and its subsidiaries) that are not encumbered by a lien of a party other than Virage and to the extent such revenues and liquidity exceed the amount of net of revenues necessary to establish and maintain an operating reserve of $ 70 million for certain Company expenses, (b) a sale of certain reserved shares of Messrs. John Ruiz and Frank Quesada, and the delivery of the resulting net cash proceeds thereof to VRM, (c) Parent’s sale of additional shares and delivery of proceeds to Virage, subject to certain anti-dilution provisions, (d) if not satisfied by the foregoing, a sale of other shares of the Company by Messrs. John Ruiz and Frank Quesada, and the delivery of the resulting net cash proceeds thereof to VRM; provided that if the VRM Full Return is not fully paid by September 30, 2024 the VRM Full Return shall be payable by any of such payment methods in any order of priority. See Note 16, Subsequent Events . Hazel Transactions Claims Transactions and Purchase Money Loan On March 29, 2023, the Company acquired a controlling interest in nine legal entities whose sole assets are CCRAs from Hazel Holdings I LLC (together with its affiliates, “Hazel”). This is referred to as the “Claims Purchase.” The purchase price for the Claims Purchase was funded by (i) a purchase money loan between Hazel, as a lender, and the Company, as a borrower, in the amount of $ 250 million (the “Purchase Money Loan”) and (ii) proceeds from the sale of certain, separate CCRAs in the Claims Sale (as defined below). Also, on March 29, 2023 , the Company sold a controlling interest in three legal entities whose sole assets are CCRAs to Hazel. The agreement provided that the Company and Hazel would share in the recovery proceeds therefrom in accordance with an agreed waterfall after Hazel had realized the first $ 150 million in claims recoveries. This transaction is referred to as the “Claims Sale,” and together with the Claims Purchase, the “Claims Transactions.” As the Claims Transactions were negotiated together in contemplation of one another, they have been combined for accounting purposes. The Company analyzed the Claims Sale and determined that this transaction would be treated as the sale of in-substance nonfinancial assets, in exchange for noncash consideration in the form of the CCRAs from the Claims Purchase measured at fair value. The variable consideration related to future recoveries is fully constrained, because, at this time, it is not probable that any amounts will be owed above the $ 150 million recovery threshold that would trigger additional payments. The Company analyzed the Claims Purchase and determined it results in the initial consolidation of variable interest entities that are not businesses. The acquired CCRAs held by those entities are recognized at fair value. The fair value of the assets sold in the Claims Sale was determined to be $ 45.5 million. The Company’s carrying value of those CCRAs surrendered was $ 40.9 million. Because there are no other observable prices for such transactions, the Company determined the fair value by reference to the purchase price for those CCRAs in a recent transaction. The fair value of the acquired CCRAs was determined to be $ 285.5 million, and the Company recognized the Purchase Money Loan recognized at $ 250 million, as any implicit discount or premium to current market rates at the time of issuance were insignificant. This resulted in a gain on the Claims Transactions of $ 4.6 million, which largely corresponds to the previously recognized amortization of the CCRAs that were sold in the Claims Sale. Amounts borrowed and obligations under the Purchase Money Loan and the Working Capital Credit Facility (See Note 10, Claims Financing Obligation and Note Payable ) are secured by a pledge of proceeds from specific Claims in the Company’s Claims portfolio, with the lien securing the Purchase Money Loan being subordinated and junior to the lien securing the Working Capital Credit Facility. Pursuant to the Purchase Money Loan and the Working Capital Credit Facility, the Company entered into a collateral administrative agreement between the Company and Hazel, which sets forth certain arrangements between the Company and Hazel in relation to Claims owned by the Company, the proceeds of which are due to the Company were pledged to Hazel to secure the Purchase Money Loan and the Working Capital Credit Facility. |
Investment In Equity Method Inv
Investment In Equity Method Investees | 3 Months Ended |
Mar. 31, 2023 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investment In Equity Method Investees | Note 5. INVESTMENT IN EQUITY METHOD INVESTEES The Company holds three investments which are accounted for using the equity method : MAO-MSO Recovery II LLC Series PMPI (“Series PMPI”), MAO-MSO Recovery LLC, and MAO-MSO Recovery II LLC (both collectively the “MAO-MSO entities”). Series PMPI is a series of MAO-MSO Recovery II LLC. The Company exercises significant influence over the operating and financial activities of Series PMPI, but does not exercise control of the entity. In accordance with Series PMPI’s operating agreement, the controlling member is entitled to a preferred return of 20 % per annum (the “Preferred Return”). Once the Preferred Return has been met, the controlling member is entitled to 50 % of claim s recoveries by PMPI. The noncontrolling member is allocated 100 % of the costs of PMPI. Since the Preferred Return exceeds the total members’ equity of PMPI as of both March 31, 2023 and December 31, 2022, the value of the equity method investment in the condensed consolidated balance sheet is $ 0 . The MAO-MSO entities are Delaware limited liability companies formed as master series entities whose central operations are to form other series legal entities that will hold and pursue claims recovery rights. The MAO-MSO entities are not designed to hold or pursue claims recoveries themselves. The Company holds a 50 % economic interest in both entities, and has significant influence through its equity investment, but does not control either entity. As equity method investments, the Company recognizes its proportionate share of net earnings or losses as equity earnings in Other income. The activity of these entities has been insignificant for the three months ended March 31, 2023 and 2022. Since the Company did not make a contribution to the MAO-MSO entities and the entities have recorded losses, the value of the equity method investment in the condensed consolidated balance sheets is $ 0 as of both March 31, 2023 and December 31, 2022. Summary financial information for equity accounted investees, not adjusted for the percentage ownership of the Company is as follows: For the three months ended March 31, Series PMPI (in thousands) 2023 2022 Revenue - - Amortization 500 500 Other expenses - - Profit (Loss) ( 500 ) ( 500 ) Series PMPI (in thousands) March 31, 2023 December 31, 2022 Total Assets $ 2,890 3,341 Total Liabilities $ 317 274 |
Property, plant and equipment,
Property, plant and equipment, net | 3 Months Ended |
Mar. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property, plant and equipment, net | Note 6. PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net consist of the following: March 31, December 31, (In thousands) 2023 2022 Office and computer equipment $ 432 $ 430 Leasehold improvements 113 113 Internally developed software 4,742 4,050 Other software 67 68 Property, plant and equipment, gross $ 5,354 $ 4,661 Less: accumulated depreciation and amortization of software ( 1,238 ) ( 1,229 ) Property, plant and equipment, net $ 4,116 $ 3,432 For the three months ended March 31, 2023 and 2022, depreciation expense and amortization expense was $ 9 thousand and $ 79 thousand , respectively. |
Intangible Assets, Net
Intangible Assets, Net | 3 Months Ended |
Mar. 31, 2023 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Intangible Assets, Net | Note 7. INTANGIBLE ASSETS, NET The Company holds CCRAs held by Series MRCS, which were acquired through the issuance of equity as part of the Business Combination in 2022. In addition, during the three months ended March 31, 2023, the Company acquired additional CCRAs . These assets are held at cost and treated as a finite intangible asset with a useful life of 8 years. Intangible assets, net consists of the following: (in thousands) March 31, 2023 December 31, 2022 Intangible assets, gross $ 3,872,056 $ 3,630,823 Accumulated amortization ( 376,537 ) ( 267,667 ) Net $ 3,495,519 $ 3,363,156 During the three months ended March 31, 2023, the Company purchased $ 286.7 million of CCRAs included in Intangible Assets, net, of which $ 285.5 was through the Hazel transaction (See Note 4, Asset Acquisitions ), $ 0.8 million was through a Class A Common Stock issuance completed in July 2023, which is recorded within other current liabilities in the condensed consolidated balance sheet as of March 31, 2023, and $ 0.4 million was paid in cash during the three months ended March 31, 2023. For the three months ended March 31, 2023 and 2022, claims amortization expense was $ 113.5 million and $ 2.7 million , respectively. Future amortization for CCRAs, for the remainder of 2023 and thereafter is expected to be as follows: (in thousands) CCRAs Amortization 2023 475,061 2024 484,007 2025 483,934 2026 483,882 2027 483,882 Thereafter 1,084,753 Total $ 3,495,519 There were no impairment indicators in the three months ended March 31, 2023 and 2022 related to the intangible assets. The following table presents the changes in the Company’s intangibles assets for the three months ended March 31, 2023: (in thousands) Intangible Assets Balance as of December 31, 2022 $ 3,363,156 Acquisitions of CCRAs 286,744 Amortization expense ( 113,469 ) Sale of CCRAs ( 40,912 ) Total $ 3,495,519 |
Short Term Leases
Short Term Leases | 3 Months Ended |
Mar. 31, 2023 | |
Leases [Abstract] | |
Short Term Leases | Note 8. SHORT TERM LEASES The Company leases office space under a non-cancellable operating lease expiring November 2023 . In addition, the Company rents an office space from the Law Firm, which is on a month-to-month basis and therefore is not included in the future minimum lease payments below. Rent expense for the three months ended March 31, 2023 and 2022 was $ 0.3 million and $ 0.2 million , respectively. The future minimum lease payments under non-cancellable operating leases as of March 31, 2023 for the next five years and thereafter are as follows: (In thousands) Lease Payments Year Ending December 31, 2023 $ 136 Total $ 136 |
Variable Interest Entities
Variable Interest Entities | 3 Months Ended |
Mar. 31, 2023 | |
Variable Interest Entity Disclosure [Abstract] | |
Variable Interest Entities | Note 9. VARIABLE INTEREST ENTITIES Investments in Consolidated Variable Interest Entities The Company evaluates its ownership, contractual, and other interests in entities to determine if they are VIEs, if the Company has a variable interest in those entities, and the nature and extent of those interests. These evaluations are highly complex and involve management judgment and the use of estimates and assumptions based on available historical information, among other factors. Based on its evaluations, if the Company determines it is the primary beneficiary of such VIEs, it consolidates such entities into its financial statements. VIEs information below is presented on an aggregate basis based on similar risk and reward characteristics and MSP’s involvement with the VIEs. The Company includes a number of entities that are determined to be VIEs and for which the common control group can direct the use of the entities’ assets and resources for other purposes. The Company consolidates VIEs in which one of the combined entities is the primary beneficiary. The assets of the consolidated VIEs may only be used to settle obligations of these VIEs and to settle any investors’ ownership liquidation requests. There is no recourse to MSP for the consolidated VIEs’ liabilities. The assets of the consolidated VIEs are not available to MSP’s creditors. Total assets and liabilities included in its consolidated balance sheets for these VIEs were $ 2.5 billion and $ 0.4 million, respectively, at March 31, 2023 and $ 2.3 billion and $ 0.4 million, respectively, at December 31, 2022. The assets at March 31, 2023 and December 31, 2022 include the Intangible Assets, net included in the Series of $ 2.5 billion and $ 2.3 billion, respectively. Investments in Unconsolidated Variable Interest Entities The Company is involved with VIEs in which it has investments in equity but does not consolidate because it does not have the power to direct the activities that most significantly impact their economic performance and thus is not considered the primary beneficiary of the entities. Those VIEs are reflected as equity method investments. Total assets and liabilities for these VIEs were $ 2.9 million and $ 1.0 million , respectively, at March 31, 2023 and $ 3.4 million and $ 0.3 million , respectively, at December 31, 2022. Generally, MSP’s exposure is limited to its investment in those VIEs (see Note 5, Investment in Equity Method Investees ). For MAO-MSO Recovery II, LLC and Series PMPI, MSP may be exposed to providing additional recovery services at its own cost if recovery proceeds allocated to it are insufficient to recover the costs of those services. MSP does n ot have any other exposures or any obligation to provide additional funding. |
Claims Financing Obligations an
Claims Financing Obligations and Notes Payable | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Claims Financing Obligations and Notes Payable | Note 10. CLAIMS FINANCING OBLIGATIONS AND NOTES PAYABLE Based on claims financing obligations and notes payable agreements, as of March 31, 2023 and December 31, 2022, the present value of amounts owed under these obligations were $ 477.4 million and $ 198.5 million , respectively, including unpaid interest to date of $ 0.5 million and $ 0.0 million , respectively. The weighted average interest rate is 14.0 % based on the current book value of $ 477.4 million with rates that range from 2 % to 20 % . The Company is expected to repay these obligations from cash flows from claim recovery income or potentially for the renegotiated debt through class A common stock issuances. As of March 31, 2023, the minimum required payments on these agreements are $ 631.0 million . Certain of these agreements have priority of payment regarding any proceeds until full payment of the balance due is satisfied. The maturity of the commitments range from the date sufficient claims recoveries are received to cover the required return or in some cases by 2031. Brickell Key Investment Amendment In 2015, the Company entered into a Claims Proceeds Investment Agreement (“CPIA”), as amended, with Brickell Key Investments LP (the “Holder”). Pursuant to the CPIA, as amended, the Company grants to the Holder the right to purchase Class A common shares in the Company (the “Class A Shares”) up to a maximum amount of 66,666,666 (the “Amount”) for a purchase price equal to $ 6,666.67 ($ 0.0001 per Class A Share), and is payable in cash. This Warrant (the “Warrant”) will expire at 5:00 p.m. (Eastern Time), on September 30, 2027 and may be exercised in whole or in part by Holder at any time prior to such date. In exchange for the Company issuing the Warrant, the amounts owed to the Holder pursuant to CPIA are amended to equal $ 80 million. The Holder has the right to receive the $ 80 million owed through proceeds as outlined in the CPIA, cash paid by the Company or monetization of the Warrant (through the sale of the Warrant or sale of the underlying Class A Shares). If the Holder monetizes the Warrant, the amount owed will be reduced at a measure of $ 1.20 per Class A Share. In connection with the Amendment and Warrant Agreement, the Holder also executed a Stock Pledge Agreement (the “Pledge Agreement”) with MSP Founders, John H. Ruiz and Frank Quesada (the “Founders”). As part of the Pledge Agreement, the Founders agreed to pledge 50 million shares to secure payment of the original principal amount of the CPIA. In addition, the Pledge Agreement provides the right to repurchase the Warrant from the Holder on or before June 30, 2023. The Founders entered into an agreement with the Company where this repurchase right has been assigned to the Company (the “Side Agreement”). As the Company has, at its option, the ability to pay its obligation through cash proceeds or through monetization of the Warrants, the $ 80.0 million of amounts owed as of March 31, 2023 was included as Claims financing obligation and notes payable on the condensed consolidated balance sheet. Subsequent to March 31, 2023, the Founders did not exercise the option to repurchase the Warrants on or before June 30, 2023. The Company recognized the Warrants at fair value, which considering the price of the Company’s common stock was below $ 1.20 as of both March 31, 2023 and June 30, 2023, it was determined to be zero . Hazel Working Capital Credit Facility and Hazel Purchase Money Loan On March 29, 2023 , the Company entered into an Amended and Restated Credit Agreement (the “Working Capital Credit Facility”) with Hazel Partners Holdings LLC (“HPH”), an affiliate of Hazel, as the lender and administrative agent, which provides for up to $ 80 million (with a 40 % original issue discount), consisting of a Term Loan A commitment to fund up to $ 30 million (in multiple installments) in proceeds, and a Term Loan B Commitment to fund up to $ 18 million (in multiple installments) in proceeds, the funding of each conditioned on certain milestones. An initial $ 10 million in proceeds was drawn under the Term Loan A on March 6, 2023. On March 29, 2023, an additional $ 5 million was disbursed to the Company under the Term Loan A. On May 11, 2023 and June 13, 2023, HPH notified us that it would not disburse additional funds under the Working Capital Credit Facility until the Company satisfies certain funding conditions, including the filing of Annual Report on Form 10-K, which was filed on July 27, 2023. The parties subsequently agreed that $ 5.5 million will be funded under Term Loan A in accordance with the terms of the Working Capital Credit Facility subsequent to the filing of the 2022 Form 10-K and receipt of funding notices, deeming funding conditions satisfied or waived. Following such funding, the Term Loan A commitment would be terminated, with total funding of $ 20.5 million. In addition, the parties agreed to increase the Term Loan B commitment from $ 18 million to $ 27.5 million, which will be funded in multiple installments and in accordance with the terms of the Working Capital Credit Facility. Funding will be at a rate of $ 2.25 million per month until December 2023, and thereafter at $ 1.75 million per month, subject to potential further reductions in the case of certain agreed cost savings and funds availability. On August 4, 2023, the Company received from HPH funding amounting to $ 5.5 million from Term Loan A and $ 2.25 million installment under Term Loan B. In addition, as discussed in Note 4 Asset Acquisitions , the Company on March 29, 2023 entered into the Purchase Money Loan with Hazel in the amount of $ 250.0 million. Loans under the Working Capital Credit Facility accrue interest at a Term Secured Overnight Financing Rate for 12-month interest period, plus an applicable margin of 10 % per annum. Accrued interest on the Working Capital Credit Facility is payable in kind and will be capitalized. The Working Capital Credit Facility has a stated maturity date of March 31, 2026 , and HPH may extend for up to one year in its sole discretion. The Purchase Money Loan accrues interest at a rate of 20 % per annum, payable in kind or in cash at the Company’s discretion. The Purchase Money Loan has a maturity date of March 31, 2026 , extendable up to one year in Hazel’s sole discretion. The Company is permitted to prepay the loans under the Working Capital Credit Facility from time to time without prepayment premium. Prepayment of the Purchase Money Loans will be permitted after the prepayment or repayment of loans under the Working Capital Credit Facility, and such prepayment of the Purchase Money Loans may be subject to prepayment penalty, as applicable. The Purchase Money Loan and the Working Capital Credit Facility contains certain representations, warranties and covenants of the Company and its subsidiaries, including restrictions on debt incurrence, liens, investments, affiliate transactions, distributions and dividends, fundamental changes, certain debt prepayments and Claim settlement. As discussed in Note 4, Asset Acquisitions, amounts borrowed and obligations under the Purchase Money Loan and the Working Capital Credit Facility are secured by a pledge of proceeds from certain Claims in the Company’s Claims portfolio, with the lien securing the Purchase Money Loan being subordinated and junior to the lien securing the Working Capital Credit Facility. Pursuant to the Purchase Money Loan and the Working Capital Credit Facility, the Company entered into a collateral administrative agreement between the Company and HPH, which sets forth certain arrangements between the Company and HPH in relation to the management of the litigation of certain Claims owned by the Company, the proceeds of which are due to the Company were pledged to Hazel and HPH to secure the Purchase Money Loan and the Working Capital Credit Facility, respectively. |
Non-controlling Interest
Non-controlling Interest | 3 Months Ended |
Mar. 31, 2023 | |
Noncontrolling Interest [Abstract] | |
Non-controlling Interest | Note 11. NONCONTROLLING INTEREST The non-controlling interest balance primarily represents the Up-C Units of the Company held by the Members. The following table summarizes the ownership of Units in the Company as of March 31, 2023: Common Units Ownership Percentage Ownership of Class A Common Units 96,002,855 3.0 % Ownership of Class V Common Units 3,128,121,511 97.0 % Balance at end of period 3,224,124,366 100.0 % The non-controlling interest holders have the right to exchange Up-C Units, at the Company’s option, for (i) cash or (ii) one share of Class A Common Stock, subject to the provisions set forth in the LLC Agreement. As such, future exchanges of Up-C Units by non-controlling interest holders will result in a change in ownership and reduce or increase the amount recorded as non-controlling interest and increase or decrease additional paid-in-capital or retained earnings when the Company has positive or negative net assets, respectively. As of March 31, 2023, 26.4 million Up-C Units have been exchanged into Class A shares. In addition to the non-controlling interest related to Up-C Units, the Company also has non-controlling interests related to MAO-MSO Recovery LLC Series FHCP (“FHCP”), which is a non-wholly owned subsidiary of MSP Recovery, LLC. In accordance with FHCP’s operating agreement, the noncontrolling member is entitled to a preferred return of 20 % per annum (the “Preferred Return”). Once the Preferred Return has b een met, the noncontrolling member is entitled to 80 % of claims recoveries by FHCP. The controlling member is allocated 100 % of the costs of FHCP. Since the Preferred Return exceeds the total members’ equity of FHCP as of both March 31, 2023 and December 31, 2022, the non-controlling interest also includes $ 4.3 million representing the entire members’ equity of FHCP. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 12. COMMITMENTS AND CONTINGENCIES The Company is subject to certain legal proceedings, claims, investigations, and administrative proceedings in the ordinary course of its business. The Company records a provision for a liability when it is both probable that the liability has been incurred and the amount of the liability can be reasonably estimated. These provisions, if any, are reviewed and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. Depending on the nature and timing of any such proceedings that may arise, an unfavorable resolution of a matter could materially affect the Company’s future results of operations, cash flows or financial position in a particular period. The Company pursues claims recoveries through settlement, arbitration and legal proceedings. The accounting policy for these activities is discussed under Claims recovery income in Note 2, Basis of Presentation And Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the year ended December 31, 2022. A significant majority of the Company’s expected recoveries arise from Claims being brought under the Medicare Secondary Payer Act private cause of action of the Social Security Act. This law allows the Company to pursue recoveries against primary payers for reimbursement of medical expenses that the Company’s assignors paid for when primary payers (i.e., liability insurers) were responsible for payment. On May 16, 2023, the Repair Abuses of MSP Payments Act (the “RAMP Act”) was introduced in the U.S. Senate and the U.S. House of Representatives, respectively, seeking to amend the private cause of action under the Medicare Secondary Payer Act, by striking “primary plan” and inserting “group health plan” into the existing text. As there is no indication that the RAMP Act is intended to be enacted retroactively, it should not have any effect on the recoverability of historical claims. To the extent that the Company has recovery rights in claims that have not yet been sought, or to the extent that the Company is assigned additional claims that may otherwise have been entitled to recoveries under the MSP Act, the passing of the RAMP Act could impact the Company’s ability to pursue recoveries on those prospective claims. Investigations As previously disclosed on Form 8-K, on August 11, 2022, the Securities and Exchange Commission (the "SEC") initiated an investigation of the Company, and requested documents relating to, among other matters, the business combination transaction with Lionheart Acquisition Corporation II consummated on May 23, 2022 and related matters. The Company received a subpoena dated March 1, 2023 from the SEC regarding the aforementioned subject matter, and subsequently received a subpoena on May 10, 2023 requesting documents in connection with the Company’s financial statements for the periods ended June 30, 2022 and September 30, 2022 that required restatements as disclosed in the Company’s Form 8-K filed with the SEC on April 14, 2023. In addition, on March 10, 2023, the Company received a subpoena from the U.S. Attorney’s Office in connection with a grand jury investigation in the U.S. District Court for the Southern District of Florida requesting certain information concerning the Company. To the best of the Company’s knowledge, the Department of Justice has not issued any target letters to anyone associated with the Company as a result of this investigation. (The United States Attorney’s Manual states that a "target" is a person as to whom the prosecutor or the grand jury has substantial evidence linking him or her to the commission of a crime and who, in the judgment of the prosecutor, is a putative defendant.) The Company has cooperated, and will continue to cooperate, fully with these inquiries. In connection with its review of the matters related to the preparation and filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, a special committee of the Company’s board of directors, along with external advisors retained thereby, also reviewed the subject matter of information requests related to the foregoing subpoenas. Based on this review, the Company believes that these investigations will be resolved without any material developments; however, there can be no assurance as to the outcome or future direction thereof. On August 16, 2023, the Company received an additional subpoena from the SEC regarding certain funding sources of the Company prior to the Business Combination, as well as various statements and disclosures by the Company in connection with and following the Business Combination. The Company intends to fully cooperate with such subpoena, as it has with the aforementioned investigations. Cano Health On August 10, 2023, the Company sued Cano Health, LLC (“Cano”) in the Circuit Court of the Eleventh Judicial Circuit in and for Miami-Dade County, Florida for declaratory relief and anticipatory breach of the CCRA, Purchase Agreement, and a service agreement (collectively, the “Cano Agreements”) between the parties. On the following day, Cano sued the Company in the same court, alleging fraud in the inducement, breach of contract, tortious interference, and unjust enrichment relating to the Cano Agreements. While it is inherently difficult to predict the eventual outcomes of pending actions, the Company denies all liability alleged by Cano and intends to defend the litigation vigorously. |
Related Party
Related Party | 3 Months Ended |
Mar. 31, 2023 | |
Related Party Transactions [Abstract] | |
Related Party | Note 13. RELATED PARTY TRANSACTIONS Loans from related parties During the year ended December 31, 2022, the Company issued an unsecured promissory note in an aggregate principal amount of $ 112.8 million ( the “Promissory Note”) to John H. Ruiz and Frank C. Quesada, the Company’s Chief Executive Officer and director and Chief Legal Officer and director, respectively (collectively, the “MSP Principals”), in exchange for the MSP Principals agreeing t o provide cash to pay transaction costs related to the Merger, pay down affiliate payable balances, and provide operating cash to the Company. In addition to the amounts in the Promissory Note, at the merger date with LCAP, the MSP Principals contributed $ 13.0 million through funds that had been loaned to VRM MSP to cover related service fees. The Promissory Note as well as the amount contributed at the merger date bears interest at an annual rate of 4 %, payable in kind, and will mature on the four-year anniversary of the issuance. The Promissory Note is payable by the Company at any time, without prepayment penalties, fees, or other expenses. During the three months ended March 31, 2023 , the Company recorded $ 1.3 million on interest expense related to the Promissory Note. A portion of the proceeds under the Promissory Note in an amount equal to $ 36.5 million was advanced to the Law Firm, an affiliate of certain Members, for certain operating expenses as contemplated by the Legal Services Agreement. This amount is reflected in prepaid expenses and other current assets within the condensed consolidated balance sheets and had a balance o f $ 22.7 million as of March 31, 2023. The payments of Law Firm expenses are reflected in Professional fees - legal within the condensed consolidated statement of operations. The payments are expensed as incurred as the Company does not have recourse to these amounts, but if the Law Firm earns fees under the legal service agreements (the “Existing LSAs”) noted below, the Company would not be obligated to pay these costs until the amount of fees earned were in excess of the payments of Law Firm expenses and payments the Company has made to co-counsels. As of March 31, 2023, the Company has paid Law Firm expenses and co-counsel fees equal to $ 22.7 million in excess of the fees earned under the Existing LSAs. Therefore, the Company would not be required to pay or incur expenses through cost of Claims recoveries until the amount of fees earned were in excess of the amounts already paid. As of March 31, 2023 , this represents prepayments that would cover recoveries of $ 113.5 million assuming the 40 % fees on the half owned by the Company as fees are not incurred on the half owned by the assignors. Legal Services – MSP Recovery Law Firm Certain Company entities have previously entered into the Existing LSAs with the Law Firm, an affiliate of certain Members, for the recovery of Claims. Pursuant to the terms of the Existing LSAs, the Law Firm provides the Company with investigation, case management, research and legal services in the pursuit of recovery of Claims in exchange for a portion of the recovered proceeds relating to such Claims. The Existing LSAs also provide that the Law Firm serves as lead counsel or co-lead counsel for any litigation relating to such Claims. As of March 31, 2023 and December 31, 2022 there was no amount due, amount due as amounts paid through the prepaid noted above had covered amounts of existing LSAs due to the Law Firm for Claim recoveries. For the three months ended March 31, 2023, $ 4.2 million was included in Professional Fees–Legal, for expenses related to the Law Firm in the condensed consolidated statements of operations. The amounts were largely due to the payment of Law Firm expenses per the related party loan as noted above. For the three months ended March 31, 2022, the amounts were de minimus . For the three months ended March 31, 2023 and 2022 , no amounts were included cost of claims recoveries for expenses related to the Law Firm in the condensed consolidated statements of ope rations. During the three months ended March 31, 2023, the Company issued an unsecured promissory note in an aggregate principal amount of $ 4.95 million to the Law Firm, to provide general operational funding. The aggregate unpaid principal amount of this promissory note is due 24 months from the date of the last advance from the Purchase Money Loan is made. This promissory note is payable by the Company at any time, without prepayment penalties, fees, or other expenses. The note does not carry any interest and can be repaid at any time or from time to time without a prepayment penalty. The Law Firm may also collect and/or hold cash on behalf of the Company in the ordinary course of business. As of March 31, 2023 and December 31, 2022, $ 0.0 million and $ 2.1 million , respectively, was due from the Law Firm and included in the condensed consolidated balance sheets in Affiliate Receivable. In addition, the Company rents office space from the Law Firm as discussed in Note 8, Short Term Leases . MSP Recovery Aviation, LLC The Company may make payments related to operational expenses on behalf of its affiliate, MSP Recovery Aviation, LLC (“MSP Aviation”). The Company has made payments in the periods of the financial statements only related to specifically billed flights. As of both March 31, 2023 and December 31, 2022, $ 0.2 million was due from MSP Aviation and included in the condensed consolidated balance sheets in Affiliate Receivable. For the three months ended March 31, 2022, $ 0.1 million , was included in General and Administrative expenses related to MSP Aviation in the condensed consolidated statements of operations. For the three months ended March 31, 2023 there were no expenses related to MSP Aviation included in the condensed consolidated statements of operations. Funds held for other entities The Company may collect and/or hold cash on behalf of its affiliates in the ordinary course of business. As of March 31, 2023 and December 31, 2022, $ 19.8 million and $ 19.8 million was due to affiliates of the Company and included in the condensed consolidated balance sheets in Affiliate Payable. These amounts were primarily due to Series MRCS, and will be repaid either through excess cash flows from operations or other financing. During the year ended December 31, 2022, the Company also entered into a note payable with Series MRCS as outlined in Note 7, Intangible Assets, Net . As of March 31, 2023 and December 31, 2022, the balance of the note payable was $ 0.5 milli on and included in the condensed consolidated balance sheets in Claims financing obligation and notes payable. As of March 31, 2023 and December 31, 2022, there were additional receivables from other affiliates of $ 177 thousand and $ 148 thousand , respectively. These were included in the condensed consolidated balance sheets in Affiliate Receivable. VRM Historically, MSP Recovery has received Claims recovery service income for services provided to VRM MSP. The Company concluded that VRM MSP is a related party due to ownership interests in the entity held by Series MRCS LLC. During the three months ended March 31, 2023 and 2022, $ 0 million and $ 7.3 million , respectively, of claims recovery service income was received from VRM MSP as part of the servicing agreement and was included in the condensed consolidated statements of operations. |
Net Loss Per Common Share
Net Loss Per Common Share | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Net Loss Per Common Share | Note 14. N ET LOSS PER COMMON SHARE Basic earnings per share of Class A Common Stock is computed by dividing net income attributable to common shareholders by the weighted-average number of shares of Class A Common Stock outstanding during the period. Diluted earnings per share of Class A Common Stock is computed by dividing net income attributable to common shareholders adjusted for the assumed exchange of all potentially dilutive securities, by the weighted-average number of shares of Class A Common Stock outstanding adjusted to give effect to potentially dilutive elements. Diluted loss per share for all periods presented is the same as basic loss per share as the inclusion of the potentially issuable shares would be anti-dilutive. Prior to the Business Combination, the equity structure of MSP Recovery included units which shared in the profits and losses of MSP Recovery. In reviewing the calculation of earnings per unit for periods prior to the Business Combination, the Company concluded that it resulted in values that would not be meaningful to the users of the unaudited consolidated financial statements. As such, earnings per share information for the three months ended March 31, 2022 has not been presented. The basic and diluted earnings per share for the three months ended March 31, 2023 represent income (loss) from only the period from the Closing Date to March 31, 2023 for the Company. The following table sets forth the computation of basic and diluted earnings per share of Class A Common Stock: (In thousands except shares and per share amounts) Three Months Ended March 31, 2023 Numerator - basic and diluted: Net loss $ ( 174,146 ) Less: Net loss attributable to MSP Recovery, LLC pre Business Combination - Less: Net loss attributable to the noncontrolling interest post Business Combination 169,230 Net loss attributable to common shareholders $ ( 4,916 ) Denominator - basic and diluted: Weighted-average shares of Class A common stock outstanding - basic 88,609,528 Effect of dilutive securities: Weighted-average shares of Class A common stock outstanding - dilutive 88,609,528 Loss per share of Class A common stock - basic $ ( 0.06 ) Loss per share of Class A common stock - diluted $ ( 0.06 ) Shares of the Company’s Class V Common Stock do not participate in the earnings or losses of the Company and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class V Common Stock under the two-class method has not been presented. In the calculation for earnings per share for the three months ended March 31, 2023 , the Company excluded from the calculation of diluted earnings per share 3,128,121,511 shares of Class V Common Stock, 3,215,505 Public Warrants outstanding, 66,666,666 CPIA Warrants, and 1,028,046,326 shares of New Warrants ou tstanding because their effect would have been anti-dilutive. |
Derivative Liability
Derivative Liability | 3 Months Ended |
Mar. 31, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Liability | Note 15. DERIVATIVE LIABILITY The Company and CF entered into an agreement for an OTC Equity Prepaid Forward Transaction, pursuant to which CF agreed to (a) transfer to the Company for cancellation any warrants to purchase shares received as a result of being the stockholder of record of a share as of the close of business on the closing date of the Business Combination, pursuant to the previously announced and declared LCAP dividend and (b) waive any redemption right that would require the redemption of the Subject Shares (as defined below) in exchange for a pro rata amount of the funds held in LCAP’s Trust account. At Closing of the Business Combination, the Company transferred from the Trust Account to an escrow account an amount equal to (a) the aggregate number of such Subject Shares (approximately 1.1 million shares), multiplied by (b) the per share redemption price for shares out of the Trust Account, as a prepayment to CF of the amount to be paid to CF in settlement of the OTC Equity Prepaid Forward Transaction for the number of shares owned by CF at the closing of the Business Combination (the “FEF Shares”). CF may sell the Subject Shares at its sole discretion in one or more transactions, publicly or privately. Any such sale shall constitute an optional early termination of the OTC Equity Prepaid Forward Transaction upon which (a) CF will receive from the escrow account an amount equal to the positive excess, if any, of (x) the product of the redemption price and the aggregate number of shares over (y) an amount equal to the proceeds received by CF in connection with sales of the shares, and (b) the Company will receive from the escrow account the amount set forth in (y) above. The Company concluded that the instrument includes an embedded derivative for the change in value of the Company’s Class A common stock and as such, at the end of each period the Company will mark to market the shares through booking a derivative liability/asset. The calculation of the derivative liability/asset would be the difference between the restricted cash and current fair value of the outstanding FEF shares (number of FEF shares multiplied by market price of the Company’s Class A common stock as of period end). On January 6, 2023, the Company and CF entered into an agreement Omnibus Fee Amendment Agreement (“Fee Amendment Agreement”). Pursuant to the terms of the Fee Amendment Agreement, in satisfaction of the deferred underwriting commissions under a previous agreement, the Company and CF agreed that to release from escrow the $ 11.4 million of restricted cash and release the FEF shares previously held as Class A common stock subject to possible redemption within temporary equity. Prior to the Fee Amendment Agreement, CF had not sold any FEF shares. As a result of the Fee Amendment Agreement and termination of the OTC Forward Transaction, as of March 31, 2023, the Company no longer has any restricted cash, Class A common stock subject to possible redemption or derivative liability in the condensed consolidated balance sheets. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 16. SUBSEQUENT EVENTS Notice of Non-Compliance with Nasdaq Listing Requirements On April 24, 2023, the Company was notified by Nasdaq that the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1) as a result of not having timely filed its 2022 Form 10-K. The Company was also deemed non-compliant with Nasdaq’s Bid Price Requirement as the closing bid price for the Company’s Class A common stock had fallen below $1.00 per share for 30 consecutive business days (March 13, 2023 through April 23, 2023). Pursuant to Nasdaq Marketplace Rule 5810(c)(3)(A), the Company has been provided with a compliance cure period of 180 calendar days, or until October 23, 2023, to regain compliance with the Bid Price Requirement. On July 27, 2023, the Company filed its 2022 Form 10-K; the Company is currently evaluating various courses of action to regain compliance with the Bid Price Requirement, including implementing a reverse stock split if such action is authorized by the Company’s stockholders at its annual meeting of stockholders. On May 24, 2023, the Company was notified by Nasdaq that it was not in compliance with the requirements of Nasdaq Listing Rule 5250(c) as a result of not having timely filed this Form 10-Q for the period ended March 31, 2023 with the SEC. On August 7, 2023, Nasdaq granted the Company an extension until August 30, 2023 to file its Quarterly Reports on Form 10-Q for the quarters ending March 31, 2023 and June 30, 2023. Virage Amendment On April 12, 2023, we entered into an amendment (the “Virage MTA Amendment”) to the Virage MTA an d Virage Guaranty pursuant to which the payment date was extended from May 23, 2023 until September 30, 2024, subject to acceleration upon certain triggering events. The payment obligation will become current after September 30, 2023, and the Company does not currently have available liquidity to satisfy such obligations. Under the Virage MTA Amendment, Virage will receive a first priority lien on all sources of revenue of the Company not otherwise encumbered as of the date of the Virage MTA Amendment, to the extent in excess of the amount of revenues necessary to establish and maintain an operating reserve of $ 70 million for overhead expenses and applicable taxes. On July 24, 2023, the operating reserve was adjusted to $ 47.5 million and MSP Recovery agreed not to increase its 2023 operating budget without Virage’s consent. On January 1, 2024, the Company will be required to make a one-time, lump sum payment to Virage for the period starting May 24, 2023 and ending December 31, 2023, in one or a combination of: (a) cash, in an amount equal to 1.0% of each calendar month-end balance (which month-end balance shall be increased daily up to 20% per annum based on a formula set forth in the Virage MTA Amendment) of the amount owing to Virage as of each preceding calendar month end and/or (b) warrants to purchase Class A Common Stock at $ 0.0001 per share, in an amount equal to the quotient of 1.0% of each calendar month-end balance (which month-end balance shall be increased daily up to 20% per annum based on a formula set forth in the Virage MTA Amendment) of the amount owing to Virage as of each preceding calendar month end and the volume weighted average price of a share of our Class A Common Stock for the five day period prior to the issuance. If paid in warrants, such warrants will expire on January 1, 2026 . Further, for each calendar month beginning with January 31, 2024 until the obligations to Virage are paid in full, the Company has agreed to pay to Virage an amount monthly, in one or a combination of: (a) cash, in an amount equal to 1.0% of each calendar month-end balance (which month-end balance shall be increased daily up to 20% per annum based on a formula set forth in the Virage MTA Amendment) of the amount owing to Virage as of each preceding calendar month end and/or (b) warrants to purchase Class A Common Stock at $ 0.0001 per share, in an amount equal to the quotient of 1.0% of each calendar month-end balance (which month-end balance shall be increased daily up to 20% per annum based on a formula set forth in the Virage MTA Amendment) of the amount owing to Virage as of each preceding calendar month end and the volume weighted average price of a share of our Class A Common Stock. If paid in warrants, such warrants will expire two years from the date of issuance. The warrants will contain customary provisions for a transaction of this type, including that each warrant will be exercisable in whole or in part at any time prior to the expiration date, be freely transferable, subject only to applicable securities laws, and be subject to customary anti-dilution protection regarding the exercise price and number of shares of Class A Common Stock to be issued upon the exercise of each warrant. In addition, the Virage MTA Amendment changed the payment methods to Virage to exclusively be, in the following order of priority: (a) the Proceeds and any other sources of revenue or liquidity of the Company (and its subsidiaries) that are not encumbered by a lien of a party other than Virage and to the extent such revenues and liquidity exceed the amount of net of revenues necessary to establish and maintain an operating reserve of $ 70 million for certain Company expenses, (b) a sale of certain reserved shares of Messrs. John Ruiz and Frank Quesada, and the delivery of the resulting net cash proceeds thereof to VRM, (c) Parent’s sale of additional shares and delivery of proceeds to Virage, subject to certain anti-dilution provisions, (d) if not satisfied by the foregoing, a sale by Messrs. Ruiz and Quesada other shares of Messrs. John Ruiz and Frank Quesada, and the delivery of the resulting net cash proceeds thereof to VRM; provided that if the VRM Full Return is not fully paid by September 30, 2024 the VRM Full Return shall be payable by any of such payment methods in any order of priority. In addition, in connection therewith, Messrs. Quesada and Ruiz agreed to certain transfer restrictions applicable to their common stock, and agreed to effectuate sales of Company common stock in certain circumstances. Amended and Restated Nomura Promissory Note On April 12, 2023, the Company amended the promissory note to Nomura originally issued on May 27, 2022, which amendment increased the principal amount to approximately $ 26.3 million and extended the maturity date of the promissory note to September 30, 2024 . The note will become current at September 30, 2023, and the Company does not currently have available liquidity to satisfy said obligation. The amended note carries an interest rate of 16 % per annum and is payable in kind or in cash, at the Company’s discretion, every 30 calendar days after April 12, 2023. Upon two days prior written notice to Nomura, the Company may prepay all or any portion of the then outstanding principal amount under the promissory note together with all accrued and unpaid interest thereon. Cano Health On July 7, 2023, the Company issued 199,000,001 shares of Class A Common Stock to Cano Health, LLC (“Cano”) as payment for $ 61.7 million in deferred compensation related to the following agreements, which the Company had the option to pay in cash or in stock and has elected to pay in stock, of which (i) 80,645,162 shares of Common Stock were issued as a deferred consideration for the assignment of certain claims pursuant to that certain Purchase Agreement, effective as of September 30, 2022, as amended to date, by and between the Company and Cano, and (ii) 118,354,839 shares of Common Stock were issued as deferred consideration for the assignment of certain claims pursuant to that certain Amended and Restated Claims Recovery and Assignment Agreement effective as of December 31, 2021, as amended to date, by and between the Company and Cano. On August 10, 2023, the Company sued Cano in the Circuit Court of the Eleventh Judicial Circuit in and for Miami-Dade County, Florida for declaratory relief and anticipatory breach of the CCRA, Purchase Agreement, and a service agreement (collectively, the “Cano Agreements”) between the parties. On the following day, Cano sued the Company in the same court, alleging fraud in the inducement, breach of contract, tortious interference, and unjust enrichment relating to the Cano Agreements. As of March 31, 2023, the Company had outstanding a $ 5.0 million receivable from Cano, which the Company believes it will ultimately collect; however, due to Cano ’s recent Quarterly Report on Form 10-Q filing which includes a substantial doubt about its ability to continue as a going concern, the Company established a reserve for the balance due under such receivable during this first quarter ending March 31, 2023. VRM Swap On July 28, 2023, VRM exercised its option to exchange Claims with service dates prior to January 1, 2014 for more recent Claims. To do so, the VRM MSP agreement was amended to reflect that: (a) rights to recovery proceeds arising from Claims held by VRM MSP, with dates of service before January 1, 2014, were transferred to MSP Recovery; (b) MSP Recovery contributed capital to VRM MSP in the form of in-kind ownership interests to certain series entities holding Claims; however, recovery proceeds associated with said entities with service dates prior to January 1, 2014 and after March 31, 2023 were retained by MSP Recovery; and (c) as a result of such capital contributions, MSP Recovery was admitted as a member of VRM MSP. Hazel Transactions On May 11, 2023 and June 13, 2023, HPH notified us that until the Company satisfies certain funding conditions, including the filing of Annual Report on Form 10-K, HPH would not disburse additional funds under the Amended and Restated Credit Agreement (the “Working Capital Credit Facility”) with HPH, as the lender and administrative agent, which provides for up to $ 80 million (with a 40 % original issue discount), consisting of a Term Loan A commitment to fund up to $ 30 million (in multiple installments) in proceeds, and a Term Loan B Commitment to fund up to $ 18 million (in multiple installments) in proceeds, the funding of each conditioned on certain milestones. The Company subsequently filed its Annual Report on Form 10-K on July 27, 2023, and the parties subsequently agreed that $ 5.5 million will be funded under Term Loan A in accordance with the terms of the Working Capital Credit Facility subsequent to the filing of the 2022 Form 10-K and receipt of funding notices, deeming funding conditions satisfied or waived. Following such funding, the Term Loan A commitment would be terminated, with total funding of $ 20.5 million. In addition, the parties agreed to increase the Term Loan B commitment from $ 18 million to $ 27.5 million, which will be funded in multiple installments and in accordance with the terms of the Working Capital Credit Facility. Funding will be at a rate of $ 2.25 million per month until December 2023, and thereafter at $ 1.75 million per month, subject to potential further reductions in the case of certain agreed cost savings and funds availability. On August 4, 2023, the Company received from HPH funding amounting to $ 5.5 million from Term Loan A and $ 2.25 million installment under Term Loan B. |
Basis of Presentaton and Summ_2
Basis of Presentaton and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation These statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and, in accordance with those rules and regulations do not include all information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, the unaudited condensed consolidated interim financial statements (the “Financial Statements”) reflect all adjustments, which consist only of normal recurring adjustments, necessary to state fairly the results of operations, financial condition and cash flows for the interim periods presented herein. Prior to the Business Combination, the Financial Statements reflect Legacy MSP. These Financial Statements should be read in conjunction with the consolidated financial statements and notes thereto included in the 2022 Form 10-K. The year-end condensed consolidated balance sheet data was derived from the audited financial statements but does not include all disclosures required by GAAP. The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the full year. All intercompany transactions and balances are eliminated from the Financial Statements. |
Principles of Consolidation | Principles of consolidation The Company consolidates all entities that it controls through a majority voting interest or otherwise and the accompanying Financial Statements include the accounts of the Company’s wholly owned subsidiaries and these entities for which the Company has a controlling interest in. The Company also consolidates all entities that it controls as the primary beneficiary of a variable interest entity (“VIE”). Under the VIE model, management first assesses whether the Company has a variable interest in an entity, which would include an equity interest. If the Company has a variable interest in an entity, management further assesses whether that entity is a VIE, and if so, whether the Company is the primary beneficiary under the VIE model. Generally, entities that are organized similar to a limited partnership, in which a general partner (or managing member) make the most relevant decisions that affect the entity’s economic performance, are considered to be VIEs which would require consolidation, unless the limited partners have substantive kickout or participating rights. Entities that do not qualify as VIEs are assessed for consolidation under the voting interest model. Under the VIE model, an entity is deemed to be the primary beneficiary of a VIE if it holds a controlling financial interest. A controlling financial interest is defined as (a) the power to direct the activities of a VIE that most significantly affect the entity’s economic performance and (b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. Management determines whether the Company is the primary beneficiary of a VIE at the time it becomes involved with a VIE and reconsiders that conclusion at each reporting date. This analysis includes an evaluation of the Company’s control rights, as well as the economic interests that the Company holds in the VIE, including indirectly through related parties. As a result of the Business Combination, the Company consolidates MSP Recovery under the VIE model. |
Estimates and Assumptions | Estimates and Assumptions The preparation of Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting periods. Actual results could differ from the Company’s estimates. Estimates are periodically reviewed considering changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Significant estimates and assumptions reflected in these Financial Statements include but are not limited to Claims recovery income and Claims recovery service income recognition, recoverability of long-lived assets and cost of Claims recoveries. |
Concentration of credit risk and Off-Balance Sheet Risk | Concentration of credit risk and Off-Balance Sheet Risk Cash and cash equivalents and affiliate receivable are financial instruments that are potentially subject to concentrations of credit risk. See Note 13, Related Party Transactions , fo r disclosure of affiliate receivables. The Company’s cash and cash equivalents and restricted cash are deposited in accounts at large financial institutions, which at times may exceed federally insured limits. The Company has not incurred any losses on these accounts. The Company believes it is not exposed to significant credit risk due to the financial strength of the depository institutions in which the cash and cash equivalents are held. The Company has no other financial instruments with off-balance-sheet risk of loss. |
Non-controlling Interests | Non-controlling Interests As part of the Business Combination and described in Note 3, Business Combination , the Company became the managing member of MSP Recovery, which is consolidated as the Company controls the operating decisions of MSP Recovery. The non-controlling interest relates to the Up-C Units that are convertible into Class A Common Stock of the Company at the discretion of the holder of the Up-C Unit. The Up-C Unit holders retained approximately 99.76 % of the economic ownership percentage of the Company as of the Closing Date. The non-controlling interest is classified as permanent equity within the condensed consolidated balance sheet of the Company. As of March 31, 2023, based on the Class A common stock issuances during the period, the non-controlling interest of Class V Common Stock shareholders w as 97.70 %. Changes in the Company’s ownership interest in MSP Recovery, due to Class V Common Stock shareholders converting their shares to Class A Common Stock, are accounted for as equity transactions. Each issuance of the Company’s Class A Common Stock requires a corresponding issuance of MSP Recovery units to the Company. The issuance would result in a change in ownership and would reduce the balance of non-controlling interest and increase the balance of additional paid-in capital. |
Claims Recovery Service Income | Claims Rec overy Service Income For the three months ended March 31, 2023 and 2022, the majority of the Company’s Claims recovery service income was related to a servicing agreements with VRM MSP and MSP RH Series 01, which was entered into on March 27, 2018. As part of the Business Combination, the Company acquired rights to cash flows in the assets, after certain required returns to VRM MSP, that had been part of the servicing agreement. As part of this acquisition, the Company no longer receives service income from this agreement and consolidates the entity in which the Company acquired rights to cash flow in the assets as outlined in Note 4, Acquisitions . In connection with the Hazel transactions discussed in Note 4, Acquisitions, the Company terminated its service agreement with MSP Recovery RH Series 01, an affiliate of Hazel. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements New Accounting Pronouncements Recently Adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses . In 2016 and subsequently, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments including subsequent amendments to the initial guidance : ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825. Financial Instruments, ASU 2019-05, Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief, ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments - Credit Losses . ASU 326, and ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures and related amendments require credit losses on financial instruments measured at amortized cost basis to be presented at the net amount expected to be collected, replacing the current incurred loss approach with an expected loss methodology that is referred to as CECL. This ASU is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The Company adopted this guidance on January 1, 2023 and it had no material impact on our Financial Statements. |
Investment In Equity Method I_2
Investment In Equity Method Investees (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Summarized Financial Information Of Equity Method Investees | Summary financial information for equity accounted investees, not adjusted for the percentage ownership of the Company is as follows: For the three months ended March 31, Series PMPI (in thousands) 2023 2022 Revenue - - Amortization 500 500 Other expenses - - Profit (Loss) ( 500 ) ( 500 ) Series PMPI (in thousands) March 31, 2023 December 31, 2022 Total Assets $ 2,890 3,341 Total Liabilities $ 317 274 |
Property, plant and equipment_2
Property, plant and equipment, net (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment [Table Text Block] | Property, plant and equipment, net consist of the following: March 31, December 31, (In thousands) 2023 2022 Office and computer equipment $ 432 $ 430 Leasehold improvements 113 113 Internally developed software 4,742 4,050 Other software 67 68 Property, plant and equipment, gross $ 5,354 $ 4,661 Less: accumulated depreciation and amortization of software ( 1,238 ) ( 1,229 ) Property, plant and equipment, net $ 4,116 $ 3,432 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Finite-Lived Intangible Assets [Line Items] | |
Summary of Intangible Assets Net | Intangible assets, net consists of the following: (in thousands) March 31, 2023 December 31, 2022 Intangible assets, gross $ 3,872,056 $ 3,630,823 Accumulated amortization ( 376,537 ) ( 267,667 ) Net $ 3,495,519 $ 3,363,156 |
Schedule of Expected Future Amortization Expense of Intangible Assets | Future amortization for CCRAs, for the remainder of 2023 and thereafter is expected to be as follows: (in thousands) CCRAs Amortization 2023 475,061 2024 484,007 2025 483,934 2026 483,882 2027 483,882 Thereafter 1,084,753 Total $ 3,495,519 |
Claims Cost Recovery Rights [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Summary of Intangible Assets Net | The following table presents the changes in the Company’s intangibles assets for the three months ended March 31, 2023: (in thousands) Intangible Assets Balance as of December 31, 2022 $ 3,363,156 Acquisitions of CCRAs 286,744 Amortization expense ( 113,469 ) Sale of CCRAs ( 40,912 ) Total $ 3,495,519 |
Short Term Leases (Tables)
Short Term Leases (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
Schedule Of Future Minimum Lease Payments Under Non-cancelable Operating Leases | The future minimum lease payments under non-cancellable operating leases as of March 31, 2023 for the next five years and thereafter are as follows: (In thousands) Lease Payments Year Ending December 31, 2023 $ 136 Total $ 136 |
Noncontrolling Interest (Tables
Noncontrolling Interest (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Noncontrolling Interest [Abstract] | |
Summary of Ownership Units | The following table summarizes the ownership of Units in the Company as of March 31, 2023: Common Units Ownership Percentage Ownership of Class A Common Units 96,002,855 3.0 % Ownership of Class V Common Units 3,128,121,511 97.0 % Balance at end of period 3,224,124,366 100.0 % |
Net Loss Per Common Share (Tabl
Net Loss Per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Computation of Basic and Diluted Earnings Per Share | The following table sets forth the computation of basic and diluted earnings per share of Class A Common Stock: (In thousands except shares and per share amounts) Three Months Ended March 31, 2023 Numerator - basic and diluted: Net loss $ ( 174,146 ) Less: Net loss attributable to MSP Recovery, LLC pre Business Combination - Less: Net loss attributable to the noncontrolling interest post Business Combination 169,230 Net loss attributable to common shareholders $ ( 4,916 ) Denominator - basic and diluted: Weighted-average shares of Class A common stock outstanding - basic 88,609,528 Effect of dilutive securities: Weighted-average shares of Class A common stock outstanding - dilutive 88,609,528 Loss per share of Class A common stock - basic $ ( 0.06 ) Loss per share of Class A common stock - diluted $ ( 0.06 ) |
Description of Business - Addit
Description of Business - Additional Information (Detail) - USD ($) | 3 Months Ended | |||||||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 29, 2023 | Jan. 06, 2023 | Dec. 31, 2022 | May 23, 2022 | May 17, 2022 | ||
Nature Of Operations [Line Items] | ||||||||
Unrestricted cash and cash equivalents | $ 21,583,000 | $ 3,661,000 | ||||||
Accumulated deficit | (34,119,000) | (29,203,000) | ||||||
Anticipated savings in operating expenses over next twelve months | 21,500,000 | |||||||
Cash in operations | (9,976,000) | $ 3,184,000 | ||||||
Remaining amount | [1] | 23,744,000 | $ 27,656,000 | |||||
Life Wallet LLC [Member] | ||||||||
Nature Of Operations [Line Items] | ||||||||
Activity and expenses incurred on investments | $ 1,200,000 | |||||||
Working Capital Credit Agreement [Member] | ||||||||
Nature Of Operations [Line Items] | ||||||||
Line of credit facility, maximum borrowing capacity | $ 48,000,000 | |||||||
Common Stock Purchase Agreement [Member] | Cantor Fitzgerald [Member] | ||||||||
Nature Of Operations [Line Items] | ||||||||
Percentage of volume of weighted average price of common stock to sell under purchase agreement | 98% | |||||||
Common Stock [Member] | Common Stock Purchase Agreement [Member] | YA II PN, Ltd | ||||||||
Nature Of Operations [Line Items] | ||||||||
Option to sell maximum shares value under purchase agreement | $ 1,000,000,000 | |||||||
Class V Common Stock Units [Member] | Non Economic Voting Shares [Member] | ||||||||
Nature Of Operations [Line Items] | ||||||||
Common stock par or stated value per share | $ 0.0001 | |||||||
Common Class A [Member] | ||||||||
Nature Of Operations [Line Items] | ||||||||
Common stock par or stated value per share | $ 0.0001 | $ 0.0001 | ||||||
Common Class A [Member] | Common Stock Purchase Agreement [Member] | Cantor Fitzgerald [Member] | ||||||||
Nature Of Operations [Line Items] | ||||||||
Option to sell maximum shares value under purchase agreement | $ 1,000,000,000 | |||||||
Date of termination | Jan. 06, 2023 | |||||||
Maximum [Member] | Common Stock Purchase Agreement [Member] | Cantor Fitzgerald [Member] | ||||||||
Nature Of Operations [Line Items] | ||||||||
Percentage of number of shares of common shares of trading volume | 33% | |||||||
Percentage of beneficial ownership of outstanding shares | 4.99% | |||||||
[1] As of March 31, 2023 and December 31, 2022, the total affiliate receivable, affiliate payable, guaranty obligation and loan from related parties balances are with related parties. In addition, the prepaid expenses and other current assets, claims financing obligation and notes payable, and interest payable includes balances with related parties. See Note 13, Related Party Transactions, for furthe r details. |
Basis of Presentaton and Summ_3
Basis of Presentaton and Summary of Significant Accounting Policies - Additional Information (Detail) | Mar. 31, 2023 |
ASU 2016-13 [Member] | |
Accounting Policies [Line Items] | |
Change in accounting principle, accounting standards update, adopted [true false] | true |
Change in accounting principle, accounting standards update, adoption date | Jan. 01, 2023 |
Change in accounting principle, accounting standards update, immaterial effect [true false] | true |
Up-C Unit Holders [Member] | Class A Common Stock [Member] | |
Accounting Policies [Line Items] | |
Non-controlling interests ownership percentage | 99.76% |
Class V Shareholders [Member] | Class A Common Stock [Member] | |
Accounting Policies [Line Items] | |
Non-controlling interests ownership percentage | 97.70% |
Business Combination - Addition
Business Combination - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||||
Apr. 12, 2023 | May 23, 2022 | Mar. 31, 2023 | Dec. 31, 2022 | May 27, 2022 | |
Business Acquisition [Line Items] | |||||
Change in fair value of warrant liability | $ (2,413) | ||||
Warrants or rights exercise price | $ 0.0001 | ||||
Period of new warrants exercisable closing date | 30 days | ||||
Nomura Promissory Note [Member] | |||||
Business Acquisition [Line Items] | |||||
Principal amount of unsecured promissory note | $ 26,300 | $ 24,500 | |||
Debt instrument maturity date | Sep. 30, 2024 | ||||
Interest rate of promissory note | 16% | ||||
Debt description | The amended note carries an interest rate of 16% per annum and is payable in kind or in cash, at the Company’s discretion, every 30 calendar days after April 12, 2023. Upon two days prior written notice to Nomura, the Company may prepay all or any portion of the then outstanding principal amount under the promissory note together with all accrued and unpaid interest thereon. | ||||
Tax Receivable Agreement [Member] | |||||
Business Acquisition [Line Items] | |||||
Percentage of pay sellers to amount of tax benefit | 85% | ||||
Warrants [Member] | |||||
Business Acquisition [Line Items] | |||||
Class of warrants or rights exercisable period | 10 days | ||||
Common Stock [Member] | |||||
Business Acquisition [Line Items] | |||||
Exchange of stock units to common stock | 19,857,983 | ||||
Cantor Fitzgerald [Member] | FEF Shares [Member] | |||||
Business Acquisition [Line Items] | |||||
Restricted cash received | $ 11,400 | ||||
Common Class A [Member] | |||||
Business Acquisition [Line Items] | |||||
Common stock, par value | $ 0.0001 | $ 0.0001 | |||
Business combination units issued | 3,250,000,000 | ||||
Warrant, exercise price, decrease per share | $ 0.0001 | ||||
Change in fair value of warrant liability | $ (2,300) | ||||
Warrants exercised | 11,800,000 | ||||
Period of subject to certain ant dilution adjustments exercisable | 30 days | ||||
Warrants or rights exercise price | $ 11.50 | ||||
Dividend comprising number of new warrants payable holders | 1,028,000,000 | ||||
Subject to certain ant dilution adjustments exercisable term | 5 years | ||||
Warrants issued | 8,600,000 | ||||
Common Class A [Member] | Membership Interest Purchase Agreement [Member] | |||||
Business Acquisition [Line Items] | |||||
Business combination units issued | 3,154,473,292 | ||||
Business combination, direct and incremental costs | $ 79,200 | ||||
Common Class A [Member] | FEF Shares [Member] | |||||
Business Acquisition [Line Items] | |||||
Net proceeds in business combination | 23,400 | ||||
Common Class A [Member] | Warrants [Member] | |||||
Business Acquisition [Line Items] | |||||
Business combination transaction, assumed liability | $ 12,500 | ||||
Common Class A [Member] | Canceled Units [Member] | |||||
Business Acquisition [Line Items] | |||||
Business combination units issued | 95,526,708 | ||||
Common Class A [Member] | Up-C Units [Member] | |||||
Business Acquisition [Line Items] | |||||
Business combination units issued | 50,022,000 | ||||
Class V Common Stock Units [Member] | Non Economic Voting Shares [Member] | |||||
Business Acquisition [Line Items] | |||||
Common stock, par value | $ 0.0001 |
Asset Acquisitions - Additional
Asset Acquisitions - Additional Information (Detail) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | ||||
Mar. 29, 2023 | May 23, 2022 | Mar. 31, 2023 | Jul. 24, 2023 | Apr. 12, 2023 | |
Subsequent Event [Member] | Virage MTA Amendment [Member] | |||||
Business Acquisition [Line Items] | |||||
Operating reserve maintained | $ 47.5 | $ 70 | |||
Claims Cost Recovery Agreements [Member] | |||||
Business Acquisition [Line Items] | |||||
Net gain on sale of claims transactions | $ 4.6 | ||||
Realized claim recoveries | 150 | ||||
Carrying value of claims | 40.9 | ||||
Fair value of claims | 285.5 | ||||
Claims Cost Recovery Agreements [Member] | Purchase Money Loan [Member] | |||||
Business Acquisition [Line Items] | |||||
Fair value of claims | $ 250 | ||||
Series MRCS LLC [Member] | Claims Cost Recovery Agreements [Member] | |||||
Business Acquisition [Line Items] | |||||
Number of Up C units issued in exchange of assets acquired | 196.6 | ||||
Finite life intangible assets acquired useful life | 8 years | ||||
Series MRCS LLC [Member] | Class A [Member] | Claims Cost Recovery Agreements [Member] | |||||
Business Acquisition [Line Items] | |||||
Percentage of discount on shares lack of marketability | 4.50% | ||||
VRM MSP Recovery Partners LLC [Member] | Investment in Rights to Claim Recovery Cash Flows [Member] | |||||
Business Acquisition [Line Items] | |||||
Number of Up C units issued in exchange of assets acquired | 356.8 | ||||
VRM [Member] | Reserved Shares [Member] | |||||
Business Acquisition [Line Items] | |||||
Annual compounded return percentage on contribution | 20% | ||||
Value of full return | $ 825 | ||||
Hazel Transactions [Member] | |||||
Business Acquisition [Line Items] | |||||
Credit facility, agreement date | Mar. 29, 2023 | ||||
Purchase money loan | $ 250 | ||||
Realized claim recoveries | 150 | ||||
Fair value of claims | $ 45.5 | ||||
Hazel Transactions [Member] | Amended and Restated Credit Agreement [Member] | |||||
Business Acquisition [Line Items] | |||||
Credit facility, agreement date | Mar. 29, 2023 |
Investment In Equity Method I_3
Investment In Equity Method Investees - Additional Information (Detail) | 3 Months Ended | |
Mar. 31, 2023 USD ($) Investment | Dec. 31, 2022 USD ($) | |
Schedule of Equity Method Investments [Line Items] | ||
Number of holding investments | Investment | 3 | |
PMPI [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity Method Investments | $ 0 | $ 0 |
Percentage of preferred return for the controlling member | 20% | |
Percentage of recovery claims for the controlling member | 50% | |
Percentage of costs allocated to non controlling member | 100% | |
MAO [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity Method Investments | $ 0 | 0 |
Equity method investments ownership percentage | 50% | |
MSO [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity Method Investments | $ 0 | $ 0 |
Equity method investments ownership percentage | 50% |
Investment In Equity Method I_4
Investment In Equity Method Investees - Summary of Financial Information For Equity Accounted Investees (Detail) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | ||
Disclosure In Tabular Form Of Summarized Financial Information Of Equity Method Investees [Line Items] | ||||
Profit (Loss) | [1] | $ (174,146) | $ (13,891) | |
Total assets | 3,549,800 | $ 3,417,945 | ||
Total Liabilities | 1,536,257 | 1,230,673 | ||
Equity Method Investee [Member] | ||||
Disclosure In Tabular Form Of Summarized Financial Information Of Equity Method Investees [Line Items] | ||||
Revenue | 0 | 0 | ||
Amortization | 500 | 500 | ||
Other expenses | 0 | 0 | ||
Profit (Loss) | (500) | $ (500) | ||
Total assets | 2,890 | 3,341 | ||
Total Liabilities | $ 317 | $ 274 | ||
[1] Balances include related party transactions. See Note 13, Related Party Transactions , f or further details. |
Property, plant and equipment_3
Property, plant and equipment, net (Detail) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 5,354 | $ 4,661 |
Less: accumulated depreciation and amortization of software | (1,238) | (1,229) |
Property, plant and equipment, net | 4,116 | 3,432 |
Office and computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 432 | 430 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 113 | 113 |
Internally developed software | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 4,742 | 4,050 |
Other software | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 67 | $ 68 |
Property, plant and equipment_4
Property, plant and equipment, net (Parenthetical) (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Property, Plant and Equipment [Line Items] | ||
Depreciation and amortization expense | $ 9 | $ 79 |
Intangible Assets, Net - Additi
Intangible Assets, Net - Additional Information (Detail) - USD ($) | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Intangible Assets, Net [Line Items] | |||
Impairment of long lived assets | $ 0 | $ 0 | |
Claims Cost Recovery Rights [Member] | |||
Intangible Assets, Net [Line Items] | |||
Purchase of Intangible assets | 286,744,000 | ||
Intangible Assets, net | 3,495,519,000 | $ 3,363,156,000 | |
Amortization expense | $ 113,469,000 | $ 2,700,000 | |
Claims Cost Recovery Rights [Member] | Series MRCS LLC [Member] | |||
Intangible Assets, Net [Line Items] | |||
Finite life intangible assets acquired useful life | 8 years | ||
Additional purchase of intangible assets | $ 286,700,000 | ||
Payment of cash for assets purchase | 400,000 | ||
Claims Cost Recovery Rights [Member] | Series MRCS LLC [Member] | Class A Common Stock [Member] | Other Current Liabilities [Member] | |||
Intangible Assets, Net [Line Items] | |||
Issuance of stock value for purchase of assets | 800,000 | ||
Claims Cost Recovery Rights [Member] | Hazel Transactions [Member] | |||
Intangible Assets, Net [Line Items] | |||
Intangible Assets, net | $ 285,500,000 |
Intangible Assets, Net - Summar
Intangible Assets, Net - Summary of Intangible Assets Net (Detail) - Claims Cost Recovery Rights [Member] - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 3,872,056 | $ 3,630,823 |
Accumulated amortization | (376,537) | (267,667) |
Total | $ 3,495,519 | $ 3,363,156 |
Intangible Assets, Net - Schedu
Intangible Assets, Net - Schedule Of Expected Future Amortization Expense Of Intangible Assets (Detail) - Claims Cost Recovery Rights [Member] - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Finite Lived Intangible Assets Future Amortization Expense [Line Items] | ||
2023 | $ 475,061 | |
2024 | 484,007 | |
2025 | 483,934 | |
2026 | 483,882 | |
2027 | 483,882 | |
Thereafter | 1,084,753 | |
Total | $ 3,495,519 | $ 3,363,156 |
Intangible assets, net - Summ_2
Intangible assets, net - Summary of changes in the Company's intangibles assets (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Finite-Lived Intangible Assets [Line Items] | ||
Sale of CCRAs | $ (30,897) | |
Claims Cost Recovery Rights [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Balance as of December 31, 2022 | 3,363,156 | |
Acquisitions of CCRAs | 286,744 | |
Amortization expense | (113,469) | $ (2,700) |
Sale of CCRAs | (40,912) | |
Total | $ 3,495,519 |
Short Term Leases - Schedule Of
Short Term Leases - Schedule Of Future Minimum Lease Payments Under Non-cancelable Operating Leases (Detail) $ in Thousands | Mar. 31, 2023 USD ($) |
Lessee, Operating Lease, Liability, to be Paid [Abstract] | |
2023 | $ 136 |
Total | $ 136 |
Short Term Leases - Additional
Short Term Leases - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Leases [Abstract] | ||
Rent expense | $ 0.3 | $ 0.2 |
Lease expiration period | November 2023 |
Variable Interest Entities - Ad
Variable Interest Entities - Additional Information (Detail) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | |
Variable Interest Entity [Line Items] | |||
Assets | $ 3,549,800 | $ 3,417,945 | |
Liabilities | 1,536,257 | 1,230,673 | |
Intangible assets, net | [1] | 3,495,519 | 3,363,156 |
Variable Interest Entity, Primary Beneficiary [Member] | |||
Variable Interest Entity [Line Items] | |||
Assets | 2,500,000 | 2,300,000 | |
Liabilities | 400 | 400 | |
Intangible assets, net | 2,500,000 | 2,300,000 | |
Variable Interest Entity, Not Primary Beneficiary [Member] | |||
Variable Interest Entity [Line Items] | |||
Assets | 2,900 | 3,400 | |
Liabilities | $ 1,000 | $ 300 | |
[1] As of March 31, 2023 and December 31, 2022, intangible assets, net included $ 2.5 billion and $ 2.3 billion, respectively, related to a consolidated VIE. See Note 9 , Variable Interest Entities , for further details. |
Claims Financing Obligations _2
Claims Financing Obligations and Notes Payable - Additional Information (Detail) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||||
Jan. 01, 2024 | Aug. 04, 2023 | Jul. 27, 2023 | Jun. 30, 2023 | Mar. 29, 2023 | Mar. 06, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2015 | ||
Claims Financing Obligations and Notes Payable [Line Items] | ||||||||||
Warrants or rights exercise price | $ 0.0001 | |||||||||
Fair value of warrants | $ (2,413,000) | |||||||||
Claims financing obligation and notes payable | [1] | $ 466,653,000 | $ 198,489,000 | |||||||
Hazel Transactions [Member] | ||||||||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||||||||
Purchase money loan | $ 250,000,000 | |||||||||
Credit facility, agreement date | Mar. 29, 2023 | |||||||||
Purchase Money Loan accrues interest | 20% | |||||||||
Hazel Transactions [Member] | Term Loan A [Member] | ||||||||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||||||||
Proceeds from loan | $ 10,000,000 | |||||||||
Disbursed loan amount | $ 5,000,000 | |||||||||
Hazel Transactions [Member] | Purchase Money Loan [Member] | ||||||||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||||||||
Debt instrument maturity date | Mar. 31, 2026 | |||||||||
Amended and Restated Credit Agreement [Member] | Hazel Transactions [Member] | ||||||||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||||||||
Credit facility, agreement date | Mar. 29, 2023 | |||||||||
Credit Agreement [Member] | Hazel Transactions [Member] | ||||||||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||||||||
Line of credit facility, Maximum borrowing capacity | $ 80,000,000 | |||||||||
Debt instrument original issue discount | 40% | |||||||||
Credit Agreement [Member] | Hazel Transactions [Member] | Term Loan A [Member] | ||||||||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||||||||
Line of credit facility, Maximum borrowing capacity | $ 30,000,000 | |||||||||
Credit Agreement [Member] | Hazel Transactions [Member] | Term Loan B [Member] | ||||||||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||||||||
Line of credit facility, Maximum borrowing capacity | $ 18,000,000 | |||||||||
Working Capital Credit Facility [Member] | Hazel Transactions [Member] | ||||||||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||||||||
Interest period, plus an applicable margin | 10% | |||||||||
Debt instrument maturity date | Mar. 31, 2026 | |||||||||
Forecast [Member] | Credit Agreement [Member] | Hazel Transactions [Member] | ||||||||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||||||||
Debt instrument, frequency of periodic payment | $ 1,750,000 | |||||||||
Subsequent Event [Member] | ||||||||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||||||||
Fair value of warrants | $ 0 | |||||||||
Subsequent Event [Member] | Credit Agreement [Member] | Hazel Transactions [Member] | ||||||||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||||||||
Debt instrument, frequency of periodic payment | $ 2,250,000 | |||||||||
Debt instrument, frequency of periodic payment | per month | |||||||||
Subsequent Event [Member] | Credit Agreement [Member] | Hazel Transactions [Member] | Term Loan A [Member] | ||||||||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||||||||
Line of credit facility, Maximum borrowing capacity | $ 5,500,000 | |||||||||
Proceeds from credit facility | $ 5,500,000 | |||||||||
Terminated funding, value | 20,500,000 | |||||||||
Subsequent Event [Member] | Credit Agreement [Member] | Hazel Transactions [Member] | Term Loan B [Member] | ||||||||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||||||||
Line of credit facility, Maximum borrowing capacity | $ 27,500,000 | |||||||||
Proceeds from credit facility | $ 2,250,000 | |||||||||
Common Class A [Member] | ||||||||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||||||||
Maximum amount of common shares to be purchased | 5,500,000,000 | 5,500,000,000 | ||||||||
Common stock issued | $ 9,000 | $ 7,000 | ||||||||
Common stock par or stated value per share | $ 0.0001 | $ 0.0001 | ||||||||
Warrants or rights exercise price | $ 11.50 | |||||||||
Fair value of warrants | $ (2,300,000) | |||||||||
Warrant [Member] | ||||||||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||||||||
Price of common stock | $ 1.20 | |||||||||
Warrant [Member] | Subsequent Event [Member] | ||||||||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||||||||
Price of common stock | $ 1.20 | |||||||||
Maximum [Member] | Hazel Transactions [Member] | Purchase Money Loan [Member] | ||||||||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||||||||
Debt instrument extended maturity year | 1 year | |||||||||
Claims Financing Obligation and Notes Payable [Member] | Warrant [Member] | ||||||||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||||||||
Warrant and rights outstanding | $ 80,000,000 | |||||||||
Financing Obligations and Notes Payable Agreements [Member] | ||||||||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||||||||
Line of credit facility, Maximum borrowing capacity | 477,400,000 | $ 198,500,000 | ||||||||
Interest expense, Debt | $ 500,000 | $ 0 | ||||||||
Weighted average interest rate | 14% | 14% | ||||||||
Line of credit facility, Current borrowing capacity | $ 477,400,000 | $ 477,400,000 | ||||||||
Financing Obligations and Notes Payable Agreements [Member] | Minimum [Member] | ||||||||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||||||||
Line of credit facility, Interest rate during period | 2% | 2% | ||||||||
Financing Obligations and Notes Payable Agreements [Member] | Maximum [Member] | ||||||||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||||||||
Line of credit facility, Interest rate during period | 20% | 20% | ||||||||
Minimum Required Payment [Member] | ||||||||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||||||||
Repayments of lines of credit | $ 631,000,000 | |||||||||
Brickell Key Investment Amendment [Member] | ||||||||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||||||||
Shares pledged under agreement | 50,000,000 | |||||||||
Brickell Key Investment Amendment [Member] | Common Class A [Member] | ||||||||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||||||||
Maximum amount of common shares to be purchased | 66,666,666 | |||||||||
Common stock issued | $ 6,666.67 | |||||||||
Common stock par or stated value per share | $ 0.0001 | |||||||||
Brickell Key Investment Amendment [Member] | Warrant [Member] | ||||||||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||||||||
Warrants or rights exercise price | $ 1.20 | |||||||||
Warrant and rights outstanding | $ 80,000,000 | |||||||||
[1] As of March 31, 2023 and December 31, 2022, the total affiliate receivable, affiliate payable, guaranty obligation and loan from related parties balances are with related parties. In addition, the prepaid expenses and other current assets, claims financing obligation and notes payable, and interest payable includes balances with related parties. See Note 13, Related Party Transactions, for furthe r details. |
Noncontrolling Interest - Summa
Noncontrolling Interest - Summarizes the ownership of Units (Details) - UP-C Units [Member] | Mar. 31, 2023 shares |
Noncontrolling Interest [Line Items] | |
Common units issued | 3,224,124,366 |
Ownership percentage | 100% |
Class A Common Units [Member] | |
Noncontrolling Interest [Line Items] | |
Common units issued | 96,002,855 |
Ownership percentage | 3% |
Class V Common Units [Member] | |
Noncontrolling Interest [Line Items] | |
Common units issued | 3,128,121,511 |
Ownership percentage | 97% |
Noncontrolling Interest - Addit
Noncontrolling Interest - Additional Information (Detail) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Noncontrolling Interest [Line Items] | ||
Non-controlling interest | $ 1,894,008 | $ 2,077,586 |
MAOMSO Recovery LLC Series FHCP [Member] | MSP Recovery LLC [Member] | ||
Noncontrolling Interest [Line Items] | ||
Percentage of entitled preferred return by non-controlling member | 20% | |
Entitled claims recover percentage by non-controlling member | 80% | |
Percentage of non-controlling member allocated cost | 100% | |
Non-controlling interest | $ 4,300 | $ 4,300 |
UP-C Units [Member] | ||
Noncontrolling Interest [Line Items] | ||
Common unit exchange value | $ 26,400 |
Related Party - Additional Info
Related Party - Additional Information (Detail) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | ||
Related Party Transaction [Line Items] | ||||
Prepaid expenses and other current assets | [1] | $ 23,744,000 | $ 27,656,000 | |
Claims recovery service income | [2] | 498,000 | $ 8,076,000 | |
General and Administrative Expenses [Member] | ||||
Related Party Transaction [Line Items] | ||||
Related party expenses | 0 | 100,000 | ||
Existing Legal Services Agreements [Member] | Cost of Claims Recoveries [Member] | ||||
Related Party Transaction [Line Items] | ||||
Related party expenses | 113,500,000 | |||
Funds Held For Other Entities [Member] | Affiliate Payable [Member] | ||||
Related Party Transaction [Line Items] | ||||
Due to related party current | 19,800,000 | 19,800,000 | ||
Unsecured Promissory Notes [Member] | ||||
Related Party Transaction [Line Items] | ||||
Interest expense | 1,300,000 | |||
MSP Principals [Member] | Service fees | ||||
Related Party Transaction [Line Items] | ||||
Aggregate principal amount | 13,000,000 | |||
MSP Principals [Member] | Unsecured Promissory Notes [Member] | ||||
Related Party Transaction [Line Items] | ||||
Aggregate principal amount | $ 112,800,000 | |||
Interest rate, payable in kind | 4% | |||
Debt instrument, maturity term | 4 years | |||
MSP Recovery Law Firm [Member] | ||||
Related Party Transaction [Line Items] | ||||
Related party expenses | 0 | 40,500 | ||
Payment of law firm expenses and co-counsel fees | 22,700,000 | |||
MSP Recovery Law Firm [Member] | Professional Fees - Legal [Member] | ||||
Related Party Transaction [Line Items] | ||||
Related party expenses | $ 4,200,000 | 4,700 | ||
MSP Recovery Law Firm [Member] | Existing Legal Services Agreements [Member] | ||||
Related Party Transaction [Line Items] | ||||
Percentage of expected recoveries from fees | 40% | |||
MSP Recovery Law Firm [Member] | Existing Legal Services Agreements [Member] | Professional Fees - Legal [Member] | ||||
Related Party Transaction [Line Items] | ||||
Related party expenses | $ 4,200,000 | |||
MSP Recovery Law Firm [Member] | Existing Legal Services Agreements [Member] | Cost of Claims Recoveries [Member] | ||||
Related Party Transaction [Line Items] | ||||
Related party expenses | 0 | 0 | ||
MSP Recovery Law Firm [Member] | Existing Legal Services Agreements [Member] | Affiliate Payable [Member] | ||||
Related Party Transaction [Line Items] | ||||
Due to related party current | 0 | $ 0 | ||
MSP Recovery Law Firm [Member] | Existing Legal Services Agreements [Member] | Affiliate Receivable [Member] | ||||
Related Party Transaction [Line Items] | ||||
Due from related party current | 0 | 2,100,000 | ||
MSP Recovery Law Firm [Member] | Unsecured Promissory Notes [Member] | ||||
Related Party Transaction [Line Items] | ||||
Proceeds from promissory notes | 36,500,000 | |||
Prepaid expenses and other current assets | 22,700,000 | |||
MSP Recovery Law Firm [Member] | Unsecured Promissory Notes [Member] | Existing Legal Services Agreements [Member] | ||||
Related Party Transaction [Line Items] | ||||
Aggregate principal amount | $ 4,950,000 | |||
Debt instrument, maturity term | 24 months | |||
MSP Recovery Aviation, LLC [Member] | ||||
Related Party Transaction [Line Items] | ||||
Related party expenses | $ 0 | |||
MSP Recovery Aviation, LLC [Member] | General and Administrative Expenses [Member] | ||||
Related Party Transaction [Line Items] | ||||
Related party expenses | 100,000 | |||
MSP Recovery Aviation, LLC [Member] | Affiliate Receivable [Member] | ||||
Related Party Transaction [Line Items] | ||||
Due from related party current | 200 | 200 | ||
Series MRCS LLC [Member] | Claims Financing Obligation and Notes Payable [Member] | ||||
Related Party Transaction [Line Items] | ||||
Note payable related party | 500,000 | 500,000 | ||
Other Affiliates [Member] | Additional Receivables From Other Affiliates [Member] | Affiliate Receivable [Member] | ||||
Related Party Transaction [Line Items] | ||||
Due from related party current | 177,000 | $ 148,000 | ||
VRM [Member] | ||||
Related Party Transaction [Line Items] | ||||
Claims recovery service income | $ 0 | $ 7,300,000 | ||
[1] As of March 31, 2023 and December 31, 2022, the total affiliate receivable, affiliate payable, guaranty obligation and loan from related parties balances are with related parties. In addition, the prepaid expenses and other current assets, claims financing obligation and notes payable, and interest payable includes balances with related parties. See Note 13, Related Party Transactions, for furthe r details. For th e three months ended March 31, 2023 and 2022, claims recovery service income included $ 0 million and $ 7.3 million , respectively, of claims recovery service income from VRM MSP. See Note 13, Related Party Transactions, for further details. |
Net Loss Per Common Share - Sch
Net Loss Per Common Share - Schedule of Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | ||
Numerator - basic and diluted: | |||
Net loss | [1] | $ (174,146) | $ (13,891) |
Less: Net loss attributable to MSP Recovery, LLC pre Business Combination | 0 | ||
Less: Net loss attributable to the noncontrolling interest post Business Combination | (169,230) | ||
Net loss attributable to controlling members | $ (4,916) | $ (13,891) | |
Class A Common Stock [Member] | |||
Denominator - basic and diluted: | |||
Weighted-average shares of common stock outstanding - basic | [2] | 88,609,528 | |
Weighted-average shares of common stock outstanding - diluted | [2] | 88,609,528 | |
Loss per share of common stock - basic | [2] | $ (0.06) | |
Loss per share of common stock - diluted | [2] | $ (0.06) | |
[1] Balances include related party transactions. See Note 13, Related Party Transactions , f or further details. Earnings pe r share information has not been presented for periods prior to the Business Combination (as defined in Note 3, Business Combination ), as it resulted in values that would not be meaningful to the users of these unaudited condensed consolidated financial statements. Refer to Note 14, Net Loss Per Common Share for further information. |
Net Loss Per Common Share - Add
Net Loss Per Common Share - Additional Information (Details) | 3 Months Ended |
Mar. 31, 2023 shares | |
Public Warrants Outstanding [Member] | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Antidilutive securities excluded from computation of earnings per share amount | 3,215,505 |
CPIA Warrants [Member] | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Antidilutive securities excluded from computation of earnings per share amount | 66,666,666 |
New Warrants Outstanding [Member] | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Antidilutive securities excluded from computation of earnings per share amount | 1,028,046,326 |
Class V Stock [Member] | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Antidilutive securities excluded from computation of earnings per share amount | 3,128,121,511 |
Derivative Liability - Addition
Derivative Liability - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Jan. 06, 2023 | Dec. 31, 2022 | |
Derivative Instruments, Gain (Loss) [Line Items] | |||
Aggregate purchase price | $ 11,420 | ||
Fair value of shares | 1,807 | ||
Derivative liability | $ 9,613 | ||
FEF Shares [Member] | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Aggregate number of shares transferred to escrow account | 1,100,000 | ||
Aggregate purchase price | $ 11,400 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) - USD ($) | Jan. 31, 2024 | Jan. 01, 2024 | Aug. 04, 2023 | Jul. 28, 2023 | Jul. 27, 2023 | Jul. 07, 2023 | Apr. 12, 2023 | Mar. 29, 2023 | Jul. 24, 2023 | Mar. 31, 2023 |
Subsequent Event [Line Items] | ||||||||||
Warrants to purchase exercise price per share | $ 0.0001 | |||||||||
Hazel Transactions [Member] | Credit Agreement [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Line of credit facility, maximum borrowing capacity | $ 80,000,000 | |||||||||
Debt instrument original issue discount | 40% | |||||||||
Hazel Transactions [Member] | Credit Agreement [Member] | Term Loan A [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Line of credit facility, maximum borrowing capacity | $ 30,000,000 | |||||||||
Hazel Transactions [Member] | Credit Agreement [Member] | Term Loan B [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Line of credit facility, maximum borrowing capacity | $ 18,000,000 | |||||||||
Cano Health, LLC [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Aggregate principal amount | $ 5,000,000 | |||||||||
Common Class A [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Warrants to purchase exercise price per share | $ 11.50 | |||||||||
Forecast [Member] | Hazel Transactions [Member] | Credit Agreement [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Debt instrument, frequency of periodic payment | $ 1,750,000 | |||||||||
Subsequent Event [Member] | Hazel Transactions [Member] | Credit Agreement [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Debt instrument, frequency of periodic payment | per month | |||||||||
Debt instrument, frequency of periodic payment | $ 2,250,000 | |||||||||
Subsequent Event [Member] | Hazel Transactions [Member] | Credit Agreement [Member] | Term Loan A [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Line of credit facility, maximum borrowing capacity | 5,500,000 | |||||||||
Terminated funding, value | 20,500,000 | |||||||||
Proceeds from credit facility | $ 5,500,000 | |||||||||
Subsequent Event [Member] | Hazel Transactions [Member] | Credit Agreement [Member] | Term Loan B [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Line of credit facility, maximum borrowing capacity | $ 27,500,000 | |||||||||
Proceeds from credit facility | $ 2,250,000 | |||||||||
Subsequent Event [Member] | Common Class A [Member] | Option to Pay in Cash or in Stock and Elected to Pay in Stock [Member] | Cano Health, LLC [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Deferred compensation arrangement shares issued | 199,000,001 | |||||||||
Deferred compensation arrangement recorded liability | $ 61,700,000 | |||||||||
Subsequent Event [Member] | Amended and Restated Nomura Promissory Note [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Aggregate principal amount | $ 26,300,000 | |||||||||
Debt instrument maturity date | Sep. 30, 2024 | |||||||||
Interest rate | 16% | |||||||||
Subsequent Event [Member] | Virage Amendment [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Operating reserve maintained | $ 70,000,000 | $ 47,500,000 | ||||||||
Description of cash payments made to counter party | cash, in an amount equal to 1.0% of each calendar month-end balance (which month-end balance shall be increased daily up to 20% per annum based on a formula set forth in the Virage MTA Amendment) of the amount owing to Virage as of each preceding calendar month end | cash, in an amount equal to 1.0% of each calendar month-end balance (which month-end balance shall be increased daily up to 20% per annum based on a formula set forth in the Virage MTA Amendment) of the amount owing to Virage as of each preceding calendar month end | ||||||||
Description of swap agreement amendment | (a) rights to recovery proceeds arising from Claims held by VRM MSP, with dates of service before January 1, 2014, were transferred to MSP Recovery; (b) MSP Recovery contributed capital to VRM MSP in the form of in-kind ownership interests to certain series entities holding Claims; however, recovery proceeds associated with said entities with service dates prior to January 1, 2014 and after March 31, 2023 were retained by MSP Recovery; and (c) as a result of such capital contributions, MSP Recovery was admitted as a member of VRM MSP. | |||||||||
Subsequent Event [Member] | Virage Amendment [Member] | Common Class A [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Description of warrants issued to counter party | warrants to purchase Class A Common Stock at $0.0001 per share, in an amount equal to the quotient of 1.0% of each calendar month-end balance (which month-end balance shall be increased daily up to 20% per annum based on a formula set forth in the Virage MTA Amendment) of the amount owing to Virage as of each preceding calendar month end and the volume weighted average price of a share of our Class A Common Stock. | warrants to purchase Class A Common Stock at $0.0001 per share, in an amount equal to the quotient of 1.0% of each calendar month-end balance (which month-end balance shall be increased daily up to 20% per annum based on a formula set forth in the Virage MTA Amendment) of the amount owing to Virage as of each preceding calendar month end and the volume weighted average price of a share of our Class A Common Stock for the five day period prior to the issuance. | ||||||||
Warrants to purchase exercise price per share | $ 0.0001 | $ 0.0001 | ||||||||
Warrants expire date | Jan. 01, 2026 | |||||||||
Subsequent Event [Member] | Purchase Agreement, Effective as of September 30, 2022, as Amended to Date [Member] | Common Class A [Member] | Option to Pay in Cash or in Stock and Elected to Pay in Stock [Member] | Cano Health, LLC [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Deferred compensation arrangement shares issued | 80,645,162 | |||||||||
Subsequent Event [Member] | Amended and Restated Claims Recovery and Assignment Agreement Effective as of December 31, 2021, as Amended to Date [Member] | Common Class A [Member] | Option to Pay in Cash or in Stock and Elected to Pay in Stock [Member] | Cano Health, LLC [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Deferred compensation arrangement shares issued | 118,354,839 |