Financial Statement Disclosure
These financial statements reflect the financial position of each of the estates in the custody of the Commissioner, as Liquidator, and encompass the activity of the estates subsequent to the Order of Liquidation. The Statements of Net Assets Available and Estimated Liabilities have been prepared on the liquidation basis of accounting. Under the liquidation basis of accounting, assets reported on the financial statements are assets that are determined to be collectible. In the first few years of a liquidation, the liabilities are mere estimates that will change during the course of the liquidation depending on the types of business written by the company and the complexity of the companys activities and organization. In addition, no estimates for future administrative expenses are included in the liabilities.
The actual percentage of asset distributions to the various classes of claimants will depend upon a variety of factors including, among other things, the dollar amount of future administrative expenses, the proceeds from the sale of assets, the amount of reinsurance and other assets collected, the outcome of any third party litigation and the amount at which the claims are evaluated and accepted. However, actual distribution percentages are not determined until all assets have been converted into cash, all claims have been evaluated and accepted, and the distribution percentages are approved by Commonwealth Court. The length of time it takes to liquidate a company and petition Commonwealth Court for a final distribution is directly related to the type and complexity of each estates assets and liabilities and whether the Liquidator pursues asset recoveries through litigation.