Liability for Estimated Wind-Up Expenses in Excess of Estimated Income During Liquidation

12 Months Ended

Dec. 31, 2022

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Liability for Estimated Wind-Up Expenses in Excess of Estimated Income During Liquidation

3. Liability for Estimated Wind-Up Expenses in Excess of Estimated Income During Liquidation

The liquidation basis of accounting requires the Company to estimate net cash flows primarily from the collection of receivables and to accrue all costs associated with winding up the remaining operations of the Company and complying with regulatory requirements (when such costs can be reasonably estimated). As the basis for such estimates, in accordance with Ohio law, the Company expects to continue to exist for a period of five years following the filing of the certificate of dissolution with the Secretary of State of the State of Ohio, which occurred on June 30, 2022 (“Liquidation Period”). The Company currently estimates that it will have enough assets to cover the expenses during the Liquidation Period. These amounts can vary significantly due to, among other things, the timing and amounts of accounts receivable collected and contingent liabilities paid and the costs associated with the winding up of the Company. Certain of these amounts, including costs associated with the Company’s current requirement to comply with the applicable reporting requirements of the Exchange Act, are estimated and are anticipated to be paid out over the Liquidation Period.

Upon transition to the liquidation basis of accounting on May 1, 2022, the Company accrued $4.9 million of estimated general and administrative expenses expected to be incurred and paid out during the Liquidation Period (Note 4).

In addition, the Company did not record any liability for potential breach of representation claims related to the sale agreement governing the Company's final real estate disposition. This potential liability was capped at approximately $0.8 million. The survival period for this contingent liability expired in January 2023 and no payments were made.

The decrease in net assets in liquidation for the period May 1, 2022 through December 31, 2022, was primarily due to the payment of common share dividends to shareholders of $31.0 million and the payment of additional expenses associated with the wind-up of the Company's operations partially offset by payments received that were in excess of estimated receivables or were not anticipated.

The change in the liability for estimated costs during the Liquidation Period as of December 31, 2022 is as follows (in thousands):


	Period from May 1, 2022
	through
	December 31, 2022
General and administrative expenses, beginning of period	$	5,671
Payments		(2,893	)
Remeasurement of wind-up expenses		173
General and administrative expenses, end of period	$	2,951

Retail Value Inc. 10-K