Bankrupt and Distressed (BAD) Research and Due Diligence

[Madclown]

CORSQ: As of June 15, 2010, the Debtor had approximately $314 million in assets and $533 million in liabilities. The largest portion of the assets is comprised of Deferred tax assets of about $264 million of which $258 million are seriously in question because they filed a claim against the FDIC receivership to retain possession of the tax refunds and the FDIC had their claim expunged back in 2009. In response, the holding company eventually filed bankruptcy and then filed an adversary complaint against the FDIC to once again try to retain the tax assets. The only folks that the tax assets discussion is even relevant to would be the TOPrS holders and possibly the other general unsecured claimants because the company is hopelessly insolvent.

Someone might want to reorganize around the holding company to get the NOLs but the CORSQ holders will not be receiving any distribution on account of their claims regardless of what happens to the $258 million in contested tax assets. The equity will be zeroed out in either event because the equity gap is just too large. Even though the company has massive NOLs in the order of magnitude of about $600 million, someone has to have earnings in order to take advantage of them. The company estimates the value of the NOLs to be about $100 million in the hands of someone who can generate enough profits to be able to use them. The equity gap is just too large for the NOLs to even be a catalyst for CORSQ holders.

Sorry to be the harbinger of bad news but this is the way I see it. I am open to discussion and would welcome any enlightenment that others may offer but the schedule of assets and liabilities filed by the company reflects hopeless insolvency.

GLTA