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Contingent Liabilities; Reserves (Page 31)
In connection with the Company’s dissolution, the Company is required by Florida law to pay or provide for payment of all of its liabilities and obligations, including making reasonable provision for the payment of contingent obligations. Following the effective date of the filing of the Articles of Dissolution with the Florida Secretary of State, the Company will pay all expenses and other known liabilities and maintain a reserve, consisting of cash or other assets, that the Company believes will be adequate for the satisfaction of all of its current contingent or conditional claims and liabilities. The Company may also take other steps to provide for the satisfaction of the reasonably estimated amount of such liabilities, including possibly seeking to acquire insurance coverage with respect to certain contingent liabilities. The Company currently estimates that it will maintain an initial cash reserve of approximately $2.2 million for unknown, contingent and/or conditional liabilities. In addition, the Company may use all or a portion of the net proceeds of any Potential Additional Proceeds it may receive in the future to satisfy any such liabilities. From time to time, the Company may distribute to its Shareholders on a pro rata basis any portions of the reserve that the Company deems to no longer be required. In the event the Company fails to create an adequate reserve for the payment of its expenses and liabilities and amounts have been distributed to the Shareholders under the Plan of Dissolution, creditors of the Company may be able to pursue claims against the Company’s Shareholders directly to an extent they have claims co-extensive with such Shareholders’ receipt of liquidating distributions. See “Risk Factors to be Considered by Stockholders in Deciding whether to Approve the Plan of Dissolution—If the Company fails to create an adequate reserve for payment of its expenses and liabilities, each Shareholder receiving liquidating distributions could be held liable for payment to the Company’s creditors of his, her or its pro rata share of amounts owed to creditors in excess of the reserve, up to the amount actually distributed to such Shareholder in connection with the Dissolution.”
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