Mr Cooper Group Inc (COOP)

[hotmeat]

The WMILT uses Liquidation Basis of Accounting (LBA). This means that only when the liquidation of an asset is imminent will the value be accounted for. If there are SH assets owned by the former WMI estate that have not yet been accessed by the LT, those assets cannot be liquidated and reported until those assets are in the LT's possession. I believe the bankruptcy "temporarily" removed those assets from the Debtor's estate but they will be restored once the bankruptcy is closed. The article below basically explains how LBA works.





Liquidation basis accounting is concerned with preparing the financial statements of a business in a different way if its liquidation is considered to be imminent. Imminent refers to one of the following two conditions:

-Liquidation plan. A plan for liquidation has been approved, and is likely to be achieved....ie the WMILT

-Forced liquidation. A third party is forcing the business into liquidation, and is likely to achieve this goal.


The accounting under the liquidation basis of accounting differs in several respects from normal accrual basis accounting. The key differences are:

-Recognize any assets that had not previously been recognized, but which you expect to either sell in liquidation or use to pay off liabilities. This means it is possible to recognize internally generated intangible assets – which would not normally be the case. The main point is to only recognize items if they are actually worth something in liquidation.

-It is allowable to recognize in aggregate those assets that had not been previously recognized, rather than individually.

-Accrue for the expected disposal costs of assets that will be liquidated.

-Accrue for those income and expense items that will be earned or incurred through the end of the expected liquidation period. An example of such an income item is the expected profits from orders that have not yet been fulfilled. An example of such an expense item is wage and salary costs expected to be incurred.