Florida | 30-0663473 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer | ¨ | Accelerated filer | ¨ | |||
Non-accelerated filer | ý | Smaller reporting company | ý | |||
Emerging growth company | ¨ |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Page No. | |
PART I — FINANCIAL INFORMATION | |
PART II — OTHER INFORMATION | |
• | our ability to obtain future financings on favorable terms, or at all; |
• | our ability to meet our debt service obligations; |
• | delays in the receipt of death benefits may impact distribution from our investment in the limited partnership that constitutes our primary asset; |
• | increases in premiums on, or the cost of insurance of, life insurance policies that we own or owned by the limited partnership; |
• | our lack of control over the policies that are within the limited partnership under its current ownership and control; |
• | changes in general economic conditions, including inflation, changes in interest or tax rates; |
• | our actual results of operations; |
• | our ability to continue to make premium payments on the life insurance policies that we own; |
• | adverse developments, including financial ones, associated with litigation and judicial actions; |
• | changes to actuarial life expectancy tables including inaccurate estimates regarding the likelihood and magnitude of death benefits related to life insurance policies that we own or owned by the limited partnership; |
• | lack of mortalities of insureds of the life insurance policies that we own or owned by the limited partnership; |
• | increases to the discount rates used to value the life insurance policies that we own; |
• | changes in mortality rates and inaccurate assumptions about life expectancies; |
• | changes in life expectancy calculation methodologies by third party medical underwriters; |
• | the effect on our financial condition as a result of any lapse of life insurance policies; |
• | our ability to sell the two life insurance policies we own at favorable prices, if at all; |
• | adverse developments in capital markets; |
• | deterioration of the market for life insurance policies and life settlements; |
• | increased carrier challenges to the validity of our life insurance policies; |
• | adverse court decisions regarding insurable interest and the obligation of a life insurance carrier to pay death benefits or return premiums upon a successful rescission or contest; |
• | challenges to the ownership of the policies in the portfolio held by the limited partnership; |
• | changes in laws and regulations; |
• | deterioration in the credit worthiness of the life insurance companies that issued the policies included in the portfolio held by the limited partnership; |
• | regulation of life settlement transactions as securities; |
• | liabilities associated with our legacy structured settlement business; |
• | our failure to maintain the security of personally identifiable information pertaining to insureds and counterparties; |
• | our ability to maintain a listing or quotation on a national securities exchange or other trading platform for our common stock; |
• | cyber security risks and the threat of data breaches resulting in disruption of our information technology systems; and |
• | loss of the services of any of our executive officers; |
• | our ability to mitigate the effects of global intangible low-taxed income ("GILTI") tax; |
• | We do not control our significant asset and rely on third parties to manage it. |
August 31, 2019 | November 30, 2018* | ||||||
(Unaudited) | |||||||
(In thousands except share data) | |||||||
ASSETS | |||||||
Assets | |||||||
Cash and cash equivalents | $ | 8,780 | $ | 1,209 | |||
Certificates of deposit | 508 | 500 | |||||
Prepaid expenses and other assets | 844 | 657 | |||||
Deposits - other | 1,377 | 1,377 | |||||
Life settlements, at estimated fair value | 1,254 | 1,172 | |||||
Receivable for maturity of life settlements | 17,768 | — | |||||
Fixed assets, net | 28 | 78 | |||||
Investment in limited partnership, at estimated fair value (Note 11) | 132,334 | — | |||||
Investment in deconsolidated subsidiaries, at estimated fair value (Note 4) | — | 128,795 | |||||
Investment in affiliate | 2,384 | 2,384 | |||||
Deferred tax asset | — | 576 | |||||
Total assets | $ | 165,277 | $ | 136,748 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Liabilities | |||||||
Accounts payable and accrued expenses | $ | 2,093 | $ | 2,446 | |||
Other liabilities | 100 | 194 | |||||
Interest payable - 8.5% Convertible Notes (Note 13) | — | 37 | |||||
8.5% Convertible Notes, net of discount and deferred debt costs (Note 13) | — | 1,173 | |||||
Interest payable - 5.0% Convertible Notes (Note 14) | 169 | 1,116 | |||||
5.0% Convertible Notes, net of discount and deferred debt costs (Note 14) | 70,697 | 69,742 | |||||
Interest payable - 8.5% Senior Secured Notes (Note 15) | 1,091 | 628 | |||||
8.5% Senior Secured Notes, net of deferred debt costs (Note 15) | 44,042 | 34,170 | |||||
Current tax liability | 2,642 | — | |||||
Total liabilities | 120,834 | 109,506 | |||||
Commitments and Contingencies (Note 18) | |||||||
Stockholders’ Equity | |||||||
Common stock (par value $0.01 per share, 415,000,000 authorized at August 31, 2019 and November 30, 2018; 158,659,803 issued and 158,051,803 outstanding as of August 31, 2019; 158,733,928 issued and 158,125,928 outstanding as of November 30, 2018) | 1,587 | 1,587 | |||||
Preferred stock (par value $0.01 per share, 40,000,000 authorized; 0 issued and outstanding as of August 31, 2019 and November 30, 2018) | — | — | |||||
Treasury Stock, net of issuance cost (608,000 shares as of August 31, 2019 and November 30, 2018) | (2,534 | ) | (2,534 | ) | |||
Additional paid-in-capital | 334,488 | 334,198 | |||||
Accumulated deficit | (289,098 | ) | (306,009 | ) | |||
Total stockholders’ equity | 44,443 | 27,242 | |||||
Total liabilities and stockholders’ equity | $ | 165,277 | $ | 136,748 |
For the Three Months Ended August 31, | For the Nine Months Ended August 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(in thousands, except share and per share data) | |||||||||||||||
Income | |||||||||||||||
Change in fair value of life settlements (Notes 10 & 16) | $ | (42 | ) | $ | 5,404 | $ | (37 | ) | $ | 19,299 | |||||
Change in fair value of investment in limited partnership | (5,821 | ) | — | (5,821 | ) | — | |||||||||
Change in fair value of investment in deconsolidated subsidiaries (Notes 4 & 16) | 90,710 | — | 37,941 | — | |||||||||||
Other income | 2,011 | 153 | 2,028 | 396 | |||||||||||
Total income | 86,858 | 5,557 | 34,111 | 19,695 | |||||||||||
Expenses | |||||||||||||||
Interest expense | 2,832 | 7,979 | 8,370 | 23,398 | |||||||||||
Change in fair value of White Eagle Revolving Credit Facility (Notes 12 & 16) | — | (7,037 | ) | — | (11,663 | ) | |||||||||
Personnel costs | 694 | 800 | 1,001 | 2,460 | |||||||||||
Legal fees | 1,448 | 552 | 2,117 | 3,478 | |||||||||||
Professional fees | 1,142 | 1,875 | 1,470 | 4,497 | |||||||||||
Insurance | 270 | 193 | 666 | 592 | |||||||||||
Other selling, general and administrative expenses | 276 | 394 | 399 | 1,407 | |||||||||||
Total expenses | 6,662 | 4,756 | 14,023 | 24,169 | |||||||||||
Income (loss) from continuing operations before income taxes | 80,196 | 801 | 20,088 | (4,474 | ) | ||||||||||
(Benefit) provision for income taxes | (5 | ) | 3,094 | 3,213 | (136 | ) | |||||||||
Net income (loss) from continuing operations | $ | 80,201 | $ | (2,293 | ) | $ | 16,875 | $ | (4,338 | ) | |||||
Discontinued Operations: | |||||||||||||||
Income (loss) from discontinued operations before income taxes | 70 | (17 | ) | 36 | (14 | ) | |||||||||
(Benefit) provision for income taxes | — | — | — | — | |||||||||||
Net income (loss) from discontinued operations | 70 | (17 | ) | 36 | (14 | ) | |||||||||
Net income (loss) | $ | 80,271 | $ | (2,310 | ) | $ | 16,911 | $ | (4,352 | ) | |||||
Basic income (loss) per common share: | |||||||||||||||
Continuing operations | $ | 0.51 | $ | (0.01 | ) | $ | 0.11 | $ | (0.03 | ) | |||||
Discontinued operations | $ | — | $ | — | $ | — | $ | — | |||||||
Net income (loss) - basic | $ | 0.51 | $ | (0.01 | ) | $ | 0.11 | $ | (0.03 | ) | |||||
Diluted income (loss) per share: | |||||||||||||||
Continuing operations | $ | 0.41 | $ | (0.01 | ) | $ | 0.10 | $ | (0.03 | ) | |||||
Discontinued operations | $ | — | $ | — | $ | — | $ | — | |||||||
Net income (loss) - diluted | $ | 0.41 | $ | (0.01 | ) | $ | 0.10 | $ | (0.03 | ) | |||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 156,968,470 | 158,305,635 | 156,949,425 | 157,919,215 | |||||||||||
Diluted | 195,979,957 | 158,305,635 | 194,867,908 | 157,919,215 |
Nine Months Ended August 31, 2019 | |||||||||||||||||||||||||
Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Deficit | Total | |||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||
(in thousands, except share data) | |||||||||||||||||||||||||
Balance, December 1, 2018 | 158,733,928 | $ | 1,587 | (608,000 | ) | $ | (2,534 | ) | $ | 334,198 | $ | (306,009 | ) | $ | 27,242 | ||||||||||
Net income/(loss) | — | — | — | — | — | (37,476 | ) | (37,476 | ) | ||||||||||||||||
Stock-based compensation | — | — | — | — | 98 | — | 98 | ||||||||||||||||||
Balance, February 28, 2019 | 158,733,928 | $ | 1,587 | (608,000 | ) | $ | (2,534 | ) | $ | 334,296 | $ | (343,485 | ) | $ | (10,136 | ) | |||||||||
Net income/(loss) | — | — | — | — | — | (25,884 | ) | (25,884 | ) | ||||||||||||||||
Stock-based compensation | — | — | — | — | 97 | — | 97 | ||||||||||||||||||
Retirement of common stock | (74,125 | ) | — | — | — | — | — | — | |||||||||||||||||
Balance, May 31, 2019 | 158,659,803 | $ | 1,587 | (608,000 | ) | $ | (2,534 | ) | $ | 334,393 | $ | (369,369 | ) | $ | (35,923 | ) | |||||||||
Net income/(loss) | — | — | — | — | — | 80,271 | 80,271 | ||||||||||||||||||
Stock-based compensation | — | — | — | — | 95 | — | 95 | ||||||||||||||||||
Balance, August 31, 2019 | 158,659,803 | $ | 1,587 | (608,000 | ) | $ | (2,534 | ) | $ | 334,488 | $ | (289,098 | ) | $ | 44,443 |
Nine Months Ended August 31, 2018 | |||||||||||||||||||||||||
Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Deficit | Total | |||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||
(in thousands, except share data) | |||||||||||||||||||||||||
Balance, December 1, 2017 | 156,515,399 | $ | 1,565 | (608,000 | ) | $ | (2,534 | ) | $ | 333,631 | $ | (143,718 | ) | $ | 188,944 | ||||||||||
Net income/(loss) | — | — | — | — | — | 4,851 | 4,851 | ||||||||||||||||||
Stock-based compensation | 2,000,000 | 20 | — | — | 121 | — | 141 | ||||||||||||||||||
Retirement of common stock | (40,000 | ) | — | — | (91 | ) | — | (91 | ) | ||||||||||||||||
Balance, February 28, 2018 | 158,475,399 | $ | 1,585 | (608,000 | ) | $ | (2,534 | ) | $ | 333,661 | $ | (138,867 | ) | $ | 193,845 | ||||||||||
Net income/(loss) | — | — | — | — | — | (6,893 | ) | (6,893 | ) | ||||||||||||||||
Stock-based compensation | 150,000 | 1 | — | — | 122 | — | 123 | ||||||||||||||||||
Issue of common stock, net | 25,000 | — | — | — | 9 | — | 9 | ||||||||||||||||||
Balance, May 31, 2018 | 158,650,399 | $ | 1,586 | (608,000 | ) | $ | (2,534 | ) | $ | 333,792 | $ | (145,760 | ) | $ | 187,084 | ||||||||||
Net income/(loss) | — | — | — | — | — | (2,310 | ) | (2,310 | ) | ||||||||||||||||
Stock-based compensation | 400,000 | 4 | — | — | 207 | — | 211 | ||||||||||||||||||
Retirement of common stock | (21,941 | ) | — | — | (4 | ) | — | (4 | ) | ||||||||||||||||
Balance, August 31, 2018 | 159,028,458 | $ | 1,590 | (608,000 | ) | $ | (2,534 | ) | $ | 333,995 | $ | (148,070 | ) | $ | 184,981 |
For the Nine Months Ended August 31, | |||||||
2019 | 2018 | ||||||
(In thousands) | |||||||
Cash flows from operating activities | |||||||
Net income (loss) | $ | 16,911 | $ | (4,352 | ) | ||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |||||||
Depreciation and amortization | 63 | 55 | |||||
Amortization of discount and deferred costs for 8.5% Convertible Notes | 21 | 62 | |||||
Amortization of discount and deferred costs for 5.0% Convertible Notes | 955 | 889 | |||||
Amortization of deferred costs for 8.5% Senior Secured Notes | 554 | 197 | |||||
Change in fair value of investment in deconsolidated subsidiaries | (37,941 | ) | — | ||||
Stock-based compensation expense | 290 | 380 | |||||
Finance cost and fees withheld by borrower | — | 1,910 | |||||
Interest paid in kind on 8.5% Senior Secured Notes | 2,842 | — | |||||
Change in fair value of life settlements | 37 | (19,299 | ) | ||||
Change in fair value of investment in limited partnership | 5,821 | — | |||||
Change in fair value of White Eagle Revolving Credit Facility | — | (11,663 | ) | ||||
Interest income | (311 | ) | (114 | ) | |||
Deferred tax asset | 576 | — | |||||
Deferred tax liability | — | (2,378 | ) | ||||
Change in assets and liabilities: | |||||||
Prepaid expenses and other assets | 118 | 145 | |||||
Accounts payable and accrued expenses | (394 | ) | 306 | ||||
Other liabilities | (155 | ) | 14 | ||||
Current tax liability | 2,642 | 2,242 | |||||
Interest payable - 8.5% Convertible Notes | (37 | ) | (25 | ) | |||
Interest payable - 5.0% Convertible Notes | (948 | ) | (948 | ) | |||
Interest payable - 8.5% Senior Secured Notes | 463 | 8 | |||||
Net cash used in operating activities | (8,493 | ) | (32,571 | ) | |||
Cash flows from investing activities | |||||||
Purchase of fixed assets, net of disposals | (5 | ) | — | ||||
Premiums paid on life settlements | (118 | ) | (67,916 | ) | |||
Proceeds from maturity of life settlements | — | 52,304 | |||||
Consolidation of subsidiaries (cash) | 10,905 | — | |||||
Net cash provided by (used) in investing activities | 10,782 | (15,612 | ) | ||||
Cash flows from financing activities | |||||||
Borrowings from White Eagle Revolving Credit Facility | — | 67,580 | |||||
Repayment of borrowings under White Eagle Revolving Credit Facility | — | (34,597 | ) | ||||
Proceeds from issue of 8.5% Senior Secured Notes | 6,476 | — | |||||
Repayment of 8.5% Convertible Notes | (1,194 | ) | — | ||||
Net cash provided by financing activities | 5,282 | 32,983 | |||||
Net increase (decrease) in cash and cash equivalents | 7,571 | (15,200 | ) | ||||
Cash and cash equivalents, at beginning of the period | 1,209 | 31,208 | |||||
Cash and cash equivalents, at end of the period | $ | 8,780 | $ | 16,008 | |||
Supplemental disclosures of cash flow information: | |||||||
Cash paid for interest during the period | $ | 4,430 | $ | 22,865 |
• | White Eagle shall have up to and including September 17, 2019 to satisfy any and all obligations to LNV under the Credit Facility by paying LNV 102% of its outstanding principal plus accrued interest at the relevant default rate, accrued fees and costs, which aggregate amount would include the resolution of the 45% participation interest element of the Credit Facility which was part of the subject matter of the Suit; |
• | If White Eagle satisfies such obligations after September 17, 2019 and by December 30, 2019, the amount due on the outstanding principal would increase to 104%; |
• | In the event LNV has not received the payoff described above by September 17, 2019, the court-appointed liquidation trustee, together with investment banking assistance from Maple Life Financial, LLC, shall have full authority to sell |
• | If the portfolio is sold in whole or in part, LNV shall only have the right to step in to bid for such sale if, and to the extent, the total amounts generated through the sale thereof do not fully satisfy the payoff amount. |
• | If the sale of any portion of the policies that serve as collateral under the White Eagle Revolving Credit Facility (the "Collateral") has not closed or the proceeds of such sale(s) have not been received by CLMG by December 30, 2019, and if the obligations due to LNV (the "Payoff Amount") has not then been paid in cash in full, such Collateral shall be transferred on or before Noon Eastern on December 31, 2019 to CLMG (or its designee) in full satisfaction of the remaining unpaid portion of the amounts due to LNV. |
Investment in Lamington at December 1, 2018 | $ | 128,795 | |
Less: Change in fair value | 37,941 | ||
Investment in Lamington at August 16, 2019 | $ | 166,736 |
Change in Fair Value | |||||||||||
November 30, 2018 | December 1, 2018 to August 16, 2019 | August 16, 2019 | |||||||||
Equity investment | $ | 66,251 | $ | (45,847 | ) | $ | 20,404 | ||||
Promissory notes | 56,596 | 89,736 | 146,332 | ||||||||
Other liabilities | 5,948 | (5,948 | ) | — | |||||||
Total investment | $ | 128,795 | $ | 37,941 | $ | 166,736 |
August 31, 2019 | November 30, 2018 | ||||||
(Unaudited) | |||||||
(In thousands except share data) | |||||||
ASSETS | |||||||
Assets | |||||||
Cash and cash equivalents | $ | — | $ | 33,719 | |||
Prepaid expenses and other assets | — | 68 | |||||
Investment in life settlements, at estimated fair value | — | 505,235 | |||||
Receivable for maturity of life settlements | — | 27,700 | |||||
Total assets | $ | — | $ | 566,722 | |||
LIABILITIES AND STOCKHOLDERS' DEFICIT/EQUITY | |||||||
Liabilities | |||||||
Accounts payable and accrued expenses | — | 1,410 | |||||
Other liabilities (subject to compromise)* | — | 5,997 | |||||
Revolving Credit Facility debt, at estimated fair value | — | 346,671 | |||||
Promissory notes payable (subject to compromise)* | — | 137,813 | |||||
Promissory notes interest payable (subject to compromise)* | — | 8,580 | |||||
Total liabilities | — | 500,471 | |||||
Share Capital (1 share of $1 authorized and issued) | — | — | |||||
Additional paid in capital | — | 60,602 | |||||
Accumulated deficit/retained earnings | — | 5,649 | |||||
Total stockholders' deficit/equity | — | 66,251 | |||||
Total liabilities and stockholders' equity | $ | — | $ | 566,722 |
For the Three Months Ended August 31, | For the Nine Months Ended August 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Change in Fair Value of Life Settlements (Notes 10 & 16) | $ | 12,985 | $ | 5,245 | $ | (16,841 | ) | $ | 19,144 | ||||||
Change in fair value of investment in limited partnership (Note 11&16) | 15,352 | — | 15,352 | — | |||||||||||
Realized Gain on Life Settlements, Net | 21,336 | — | 21,336 | — | |||||||||||
Other income | 345 | 134 | 709 | 304 | |||||||||||
Total income | 50,018 | 5,379 | 20,556 | 19,448 | |||||||||||
Interest expense | 23,331 | 5,844 | 28,331 | 16,716 | |||||||||||
Interest expense - affiliate | — | 2,478 | — | 7,330 | |||||||||||
Change in fair value of White Eagle Revolving Credit Facility (Notes 12 & 16) | (26,586 | ) | (7,037 | ) | 17,094 | (11,663 | ) | ||||||||
Loss on extinguishment of debt | 7,360 | — | 7,360 | — | |||||||||||
Participation Interest - Revolving Credit Facility | — | — | — | 340 | |||||||||||
Reorganization cost | 4,769 | — | 13,954 | — | |||||||||||
Legal fees | 158 | 836 | 890 | 1,987 | |||||||||||
Professional fees | 659 | 478 | 1,549 | 1,510 | |||||||||||
Administrative service fees - affiliate | — | — | 2,765 | 2,371 | |||||||||||
Other general and administrative expenses | (71 | ) | 96 | 469 | 292 | ||||||||||
Total expenses | 9,620 | 2,695 | 72,412 | 18,883 | |||||||||||
Income taxes | — | — | — | — | |||||||||||
(Loss) income | $ | 40,398 | $ | 2,684 | $ | (51,856 | ) | $ | 565 |
For the Nine Months Ended August 31, | |||||||
2019 | 2018 | ||||||
Net cash used in operating activities | $ | (58,793 | ) | $ | (18,283 | ) | |
Cash flows from investing activities | |||||||
Premiums paid on life settlements | (69,827 | ) | (67,815 | ) | |||
Proceeds from maturity of life settlements | 92,505 | 52,304 | |||||
Net cash used in investing activities | $ | 22,678 | $ | (15,511 | ) | ||
Cash flows from financing activities | |||||||
Repayment of borrowings under White Eagle Revolving Credit Facility | (1,804 | ) | (34,597 | ) | |||
Borrowings from White Eagle Revolving Credit Facility | 4,221 | 67,580 | |||||
Cash distributed to Parent Company | (21 | ) | 700 | ||||
Net cash provided by financing activities | $ | 2,396 | $ | 33,683 | |||
Net increase (decrease) in cash and cash equivalents | (33,719 | ) | (111 | ) | |||
Cash and cash equivalents, at beginning of the period | 33,719 | 12,129 | |||||
Cash and cash equivalents, at end of the period | $ | — | $ | 12,018 | |||
Supplemental disclosures of cash flow information: | |||||||
Cash paid for interest during the period | $ | 28,331 | $ | 16,716 | |||
Supplemental disclosures of non-cash financing activities: | |||||||
Repayment of White Eagle Revolving Credit Facility by third party from proceeds of sale of life settlement | $ | 366,821 | $ | — | |||
White Eagle early extinguishment fees paid by third party from proceeds of Class D Shares | $ | 7,360 | $ | — |
Not Primary Beneficiary | Not Primary Beneficiary | |||||||||||||||
Non-consolidated VIE | Non-consolidated VIE- White Eagle | |||||||||||||||
Total Assets | Maximum Exposure To Loss | Total Assets | Maximum Exposure To Loss | |||||||||||||
August 31, 2019 | $ | 2,384 | $ | 2,384 | $ | 132,334 | $ | 132,334 | ||||||||
November 30, 2018 | $ | 2,384 | $ | 2,384 | $ | — | $ | — |
For the Three Months Ended August 31, | For the Nine Months Ended August 31, | ||||||||||||||
2019(1) | 2018(2) | 2019(3) | 2018(4) | ||||||||||||
Income (loss) per share: | |||||||||||||||
Numerator: | |||||||||||||||
Net income (loss) from continuing operations | $ | 80,201 | $ | (2,293 | ) | $ | 16,875 | $ | (4,338 | ) | |||||
Net income (loss) from discontinued operations | 70 | (17 | ) | 36 | (14 | ) | |||||||||
Numerator for basic EPS - net income (loss) attributable to common stockholders | $ | 80,271 | $ | (2,310 | ) | $ | 16,911 | $ | (4,352 | ) | |||||
Add back convertible notes interest | 1,095 | — | 3,270 | — | |||||||||||
Numerator for diluted earnings per share - net income (loss) attributable to common stockholders | $ | 81,296 | $ | (2,293 | ) | $ | 20,145 | $ | (4,338 | ) | |||||
Basic income (loss) per common share: | |||||||||||||||
Basic income (loss) from continuing operations | $ | 0.51 | $ | (0.01 | ) | $ | 0.11 | $ | (0.03 | ) | |||||
Basic income (loss) from discontinued operations | — | — | — | — | |||||||||||
Basic income (loss) per share available to common shareholders | $ | 0.51 | $ | (0.01 | ) | $ | 0.11 | $ | (0.03 | ) | |||||
Diluted income (loss) per common share: | |||||||||||||||
Diluted income (loss) from continuing operations | $ | 0.41 | $ | (0.01 | ) | $ | 0.10 | $ | (0.03 | ) | |||||
Diluted income (loss) from discontinued operations | — | — | — | — | |||||||||||
Diluted income (loss) per share available to common shareholders | $ | 0.41 | $ | (0.01 | ) | $ | 0.10 | $ | (0.03 | ) | |||||
Denominator: | |||||||||||||||
Basic | 156,968,470 | 158,305,635 | 156,949,425 | 157,919,215 | |||||||||||
Diluted | 195,979,957 | 158,305,635 | 194,867,908 | 157,919,215 |
(1) | The computation of diluted EPS does not include 85,000 shares of common stock underlying options, 100,000 shares of stock appreciation rights and 2,000,000 shares of common stock underlying warrants, as the effect of their inclusion would have been anti-dilutive. |
(2) | The computation of diluted EPS does not include 2,550,000 shares of restricted stock, 85,000 shares of common stock underlying options,100,000 shares of stock appreciation rights, 44,500,000 shares of common stock underlying warrants, and up to 37,918,483 shares of common stock issuable upon conversion of the 5% Convertible Notes (as defined below) and up to 181,249 shares of common stock issuable upon the conversion of the 8.5% Convertible Notes (as defined below), as the effect of their inclusion would have been anti-dilutive. |
(3) | The computation of diluted EPS does not include 85,000 shares of common stock underlying options, 100,000 shares of stock appreciation rights, 1,083,333 shares of restricted stock and 44,500,000shares of common stock underlying warrants, as the effect of their inclusion would have been anti-dilutive. |
(4) | The computation of diluted EPS does not include 2,550,000 shares of restricted stock, 85,000 shares of common stock underlying options, 100,000 shares of stock appreciation rights, 44,500,000 shares of common stock underlying warrants, up to 37,918,483 shares of common stock issuable upon conversion of the 5% Convertible Notes (as defined below) and up to 181,249 shares of common stock issuable upon the conversion of the 8.5% Convertible Notes (as defined below), as the effect of their inclusion would have been anti-dilutive. |
Common Stock Options | Number of Shares | Weighted Average Exercise Price per Share | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | ||||||||||
Outstanding Balance, December 1, 2018 | 85,000 | $ | 6.94 | 1.50 | $ | — | ||||||||
Options granted | — | — | — | |||||||||||
Options exercised | — | — | — | |||||||||||
Options forfeited | — | $ | — | — | ||||||||||
Options expired | — | — | — | |||||||||||
Options outstanding, August 31, 2019 | 85,000 | $ | 6.94 | 0.75 | $ | — | ||||||||
Exercisable at August 31, 2019 | 85,000 | $ | 6.94 | 0.75 | ||||||||||
Unvested at August 31, 2019 | — | — | — | $ | — |
Common Unvested Shares | Number of Shares | |
Outstanding Balance, December 1, 2018 | 1,400,000 | |
Granted | — | |
Vested | (316,667 | ) |
Forfeited | — | |
Outstanding August 31, 2019 | 1,083,333 |
Three Months Ended August 31, | Nine Months Ended August 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Total income | $ | — | $ | — | $ | — | $ | 17 | |||||||
Total expenses | (70 | ) | 18 | (36 | ) | 32 | |||||||||
Income (loss) before income taxes | 70 | (18 | ) | 36 | (15 | ) | |||||||||
(Benefit) provision for income taxes | — | — | — | — | |||||||||||
Net income (loss) from discontinued operations, net of income taxes | $ | 70 | $ | (18 | ) | $ | 36 | $ | (15 | ) |
Remaining Life Expectancy (In Years)* | Number of Life Settlement Contracts | Fair Value | Face Value | |||||||
0-1 | 6 | $ | 24,221 | $ | 28,796 | |||||
1-2 | 12 | 30,828 | 46,390 | |||||||
2-3 | 31 | 72,343 | 126,402 | |||||||
3-4 | 37 | 57,874 | 139,447 | |||||||
4-5 | 46 | 77,719 | 217,450 | |||||||
Thereafter | 454 | 242,251 | 2,217,430 | |||||||
Total | 586 | $ | 505,236 | $ | 2,775,915 |
Three Months Ended August 31, | Nine Months Ended August 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Face value | $ | 31,768 | $ | 14,250 | $ | 100,374 | $ | 68,185 | |||||||
Cost* | 8,911 | 7,664 | 27,723 | 22,755 | |||||||||||
Accumulated Change in Fair Value* | 2,858 | (528 | ) | 2,351 | 10,316 | ||||||||||
Carrying Value | 11,769 | 7,136 | 30,074 | 33,071 | |||||||||||
Gain on Maturities | $ | 19,999 | $ | 7,114 | $ | 70,300 | $ | 35,114 | |||||||
Number of Policies | 6 | 3 | 18 | 15 |
Remaining Life Expectancy (In Years) | Number of Life Settlement Contracts | Fair Value | Face Value | |||||||
0-1 | — | $ | — | $ | — | |||||
1-2 | — | — | — | |||||||
2-3 | — | — | — | |||||||
3-4 | — | — | — | |||||||
4-5 | — | — | — | |||||||
Thereafter | 2 | 1,254 | 12,000 | |||||||
Total | 2 | $ | 1,254 | $ | 12,000 |
Remaining Life Expectancy (In Years)* | Number of Life Settlement Contracts | Fair Value | Face Value | ||||||||
0-1 | $ | — | $ | — | $ | — | |||||
1-2 | — | — | — | ||||||||
2-3 | — | — | — | ||||||||
3-4 | — | — | — | ||||||||
4-5 | — | — | — | ||||||||
Thereafter | 2 | 1,172 | 12,000 | ||||||||
Total | $ | 2 | $ | 1,172 | $ | 12,000 |
Remainder of 2019 | $ | 45 | |
2020 | 191 | ||
2021 | 222 | ||
2022 | 254 | ||
2023 | 286 | ||
Thereafter | 4,989 | ||
$ | 5,987 |
Premium/Expense Reserve Account | Three Months Ended August 31, 2019 | Nine Months Ended August 31, 2019 | ||||||||
Amount | Use of Proceeds | |||||||||
First | $ | 8,210 | $ | 8,210 | Premiums, Expenses and Manager Fees | |||||
Second | — | — | Minimum Class B Interest Monthly Distribution - after three years, Class D Returns takes priority until paid in full | |||||||
Third | — | — | Minimum Class B Interest Monthly Distribution | |||||||
Fourth | — | — | Retained For Premium/Expense to Cover Three Months of Transactions, excess to be sent to the Collection Account | |||||||
$ | 8,210 | $ | 8,210 |
Collection Account | Three Months Ended August 31, 2019 | Nine Months Ended August 31, 2019 | ||||||||
Priority | Amount | Use of Proceeds | ||||||||
First | $ | — | $ | — | Premium/Expense Reserve Account - to cover next three months of premiums and expense | |||||
Second | — | — | Class A Minimum Return Cumulative Amount* | |||||||
Third | — | — | Minimum Class B Interest Monthly Distribution | |||||||
Fourth | — | — | Re-balancing the Total Return Distributions with 72.5% to the Class A Limited Partner and 27.5% to Class B Limited Partner | |||||||
Fifth | — | — | 72.5% to the Class A Limited Partner and 27.5% to the Class B Limited Partner | |||||||
$ | — | $ | — |
LTV | Premiums, Interest & Other Fees | Principal | Distribution to White Eagle - 55% | Lender Participation - 45% | ||||
N/A | 100% | —% | —% | —% | ||||
>65% | N/A | 100% | —% | —% | ||||
50-65% | N/A | 70% | 16.5% | 13.5% | ||||
35-50% | N/A | 55% | 24.8% | 20.3% | ||||
0-35% | N/A | 45% | 30.3% | 24.8% |
Collection account balance at December 1, 2018 | $ | 28,059 | |
Face value collected in current quarter | 60,163 | ||
Face value collected in prior quarters | 32,342 | ||
Other collections * | 2,575 | ||
$ | 123,139 | ||
Expenses paid from the collection account Post-Petition | |||
Premiums paid 2019 | $ | (65,905 | ) |
Interest expenses | (28,331 | ) | |
Payment toward principal | (1,804 | ) | |
White Eagle credit facility expenses | (9,304 | ) | |
Refund of premium payments advanced by parent | (3,000 | ) | |
Lender allowed claim-Beal | (5,839 | ) | |
Transfers of remaining funds to Lamington | (8,956 | ) | |
$ | (123,139 | ) | |
Collection account balance at August 16, 2019** | $ | — |
Three Months Ended August 31, 2018 | Nine Months Ended August 31, 2018 | ||||||||
Clause | Amount | Use of Proceeds | |||||||
First: | $ | 84 | $ | 251 | Custodian and Securities Intermediary | ||||
Second: | — | — | White Eagle - Ongoing Maintenance Cost Reimbursable | ||||||
Third: | — | — | Administrative Agent - Protective Advances | ||||||
Fourth: | 26 | 43 | Administrative Agent - Administrative Agent Fee and Legal Expense Reimbursement | ||||||
Fifth: | 5,844 | 16,716 | Administrative Agent - Accrued and Unpaid Interest | ||||||
Sixth: | 6,854 | 26,397 | Administrative Agent - Required Amortization | ||||||
Seventh: | — | — | Administrative Agent - Amortization Shortfall | ||||||
Eighth: | — | 340 | Administrative Agent - Participation Interest | ||||||
Ninth: | — | — | Reserved - $0 | ||||||
Tenth: | — | — | Administrative Agent Aggregate Unpaid Participation Interest | ||||||
Eleventh: | — | — | Administrative Agent - Remaining Available Amount After Clause First to Tenth | ||||||
Twelfth: | — | — | Wilmington Trust - Custodian and Securities Intermediary - Unpaid Fees | ||||||
Thirteenth: | — | 416 | Borrower - Any Remaining Available Amount After Clause First to Twelfth | ||||||
Total Distributions | $ | 12,808 | $ | 44,163 |
Three Months Ended August 31, | Nine Months Ended August 31, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Amount drawn for premium payments | $ | — | $ | 22,668 | $ | 4,221 | $ | 67,580 | ||||||||
Amount drawn in fees to service providers | — | 629 | — | 1,910 | ||||||||||||
Total amount drawn | $ | — | $ | 23,297 | $ | 4,221 | $ | 69,490 |
Three Months Ended August 31, | Nine Months Ended August 31, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Interest paid through waterfall | $ | — | $ | 5,844 | $ | — | $ | 16,716 | ||||||||
Participation interest paid through waterfall | — | — | — | 340 | ||||||||||||
Interest paid from collection account | 23,331 | — | 28,331 | — | ||||||||||||
Total interest expense | $ | 23,331 | $ | 5,844 | $ | 28,331 | $ | 17,056 |
• | White Eagle shall have up to and including September 17, 2019 to satisfy any and all obligations to LNV under the Credit Facility by paying LNV 102% of its outstanding principal plus accrued interest at the relevant default rate, accrued fees and costs, which aggregate amount would include the resolution of the 45% participation interest element of the Credit Facility which was part of the subject matter of the Suit; |
• | If White Eagle satisfies such obligations after September 17, 2019 and by December 30, 2019, the amount due on the outstanding principal would increase to 104%; |
• | In the event LNV has not received the payoff described above by September 17, 2019, the court-appointed liquidation trustee, together with investment banking assistance from Maple Life Financial, LLC, shall have full authority to sell White Eagle’s life insurance policy portfolio (which constitutes collateral under the Credit Facility) for the maximum amount achievable through an orderly sale process, taking into account that the transaction must be closed no later than December 30, 2019; in connection with this authority, the liquidation trustee and the investment banker may work prior to September 17, 2019 to prepare the portfolio for sale, but may not take actions to actually commence a sale including, but not limited to, marketing the portfolio or contacting potential buyers about the portfolio, prior to such date. |
• | If the portfolio is sold in whole or in part, LNV shall only have the right to step in to bid for such sale if, and to the extent, the total amounts generated through the sale thereof do not fully satisfy the payoff amount. |
• | If the sale of any portion of the Collateral has not closed or the proceeds of such sale(s) have not been received by CLMG by December 30, 2019, (i) if the Payoff Amount has not then been paid in cash in full, such Collateral shall be transferred on or before Noon Eastern on December 31, 2019 to CLMG (or its designee) in full satisfaction of the remaining unpaid portion of the amounts due to LNV. |
Level 1 | Level 2 | Level 3 | Total Fair Value | ||||||||||||
Assets: | |||||||||||||||
Investment in limited partnership | $ | — | $ | — | 132,334 | $ | 132,334 | ||||||||
Investment in life settlements | — | — | 1,254 | 1,254 | |||||||||||
$ | — | $ | — | $ | 133,588 | $ | 133,588 |
Level 1 | Level 2 | Level 3 | Total Fair Value | ||||||||||||
Assets: | |||||||||||||||
Investment in life settlements - Deconsolidated | $ | — | $ | — | $ | 505,235 | $ | 505,235 | |||||||
Investment in life settlements - Consolidated | — | — | 1,172 | 1,172 | |||||||||||
$ | — | $ | — | $ | 506,407 | $ | 506,407 | ||||||||
Investment in deconsolidated subsidiaries | $ | — | $ | — | $ | 128,795 | $ | 128,795 |
Level 1 | Level 2 | Level 3 | Total Fair Value | ||||||||||||
Liabilities: | |||||||||||||||
White Eagle Revolving Credit Facility - Deconsolidated | $ | — | $ | — | $ | 346,670 | $ | 346,670 | |||||||
$ | — | $ | — | $ | 346,670 | $ | 346,670 |
($ in thousands) | Quantitative Information about Level 3 Fair Value Measurements | ||||||||||||||
Fair Value at 8/31/19 | Aggregate death benefit at 08/31/19 | Valuation Technique | Unobservable Input | Range (Weighted Average) | |||||||||||
Investment in life settlements | $ | 1,254 | $ | 12,000 | Discounted cash flow | Discount rate | 13.25% | 15.25% | |||||||
Life expectancy evaluation | (11.6 years) | ||||||||||||||
Investment in limited partnership | $ | 132,334 | $ | 735,798 | Discounted cash flow | Discount rate | 15.03% | ||||||||
Life expectancy evaluation, distributions, return on investment |
Life Expectancy Months Adjustment | Value | Change in Value | |||||
+6 | $ | 1,051 | $ | (203 | ) | ||
- | $ | 1,254 | $ | — | |||
-6 | $ | 1,466 | $ | 212 |
Carrier - Consolidated | Percentage of Total Fair Value | Percentage of Total Death Benefit | Moody’s Rating | S&P Rating | |||||
Sun Life Assurance Company of Canada | 100 | % | 100 | % | Aa3 | AA |
Weighted Average Rate Calculated Based on Death Benefit - Consolidated | Rate Adjustment | Value | Change in Value | |||||||
14.42% | (0.50 | )% | $ | 1,308 | $ | 54 | ||||
14.92% | — | $ | 1,254 | $ | — | |||||
15.42% | 0.50 | % | $ | 1,202 | $ | (52 | ) |
Weighted Average Rate | Rate Adjustment | Value | Change in Value | |||||||
14.53% | (0.50 | )% | $ | 136,057 | $ | 3,723 | ||||
15.03% | — | $ | 132,334 | $ | — | |||||
15.53% | 0.50 | % | $ | 128,766 | $ | (3,568 | ) |
Life Settlements - Consolidated: : | |||
Balance, December 1, 2018 | $ | 1,172 | |
Purchase of policies | — | ||
Change in fair value | (37 | ) | |
Matured/lapsed/sold policies | — | ||
Premiums paid | 118 | ||
Balance, August 31, 2019 | $ | 1,253 | |
Changes in fair value included in earnings for the period relating to assets held at August 31, 2019 | $ | (37 | ) |
Life Settlements - Deconsolidated: | |||
Balance, December 1, 2018 | $ | 505,235 | |
Purchase of policies | — | ||
Change in fair value | (16,841 | ) | |
Receivable for maturity of life settlement write off (Note 18) | 17,800 | ||
Policies sold | (344,845 | ) | |
Policies matured | (100,373 | ) | |
Premiums paid | 69,827 | ||
Transfer to investment in limited partnership | (130,803 | ) | |
Balance, August 31, 2019 | — | ||
Changes in fair value included in earnings for the period relating to deconsolidated assets held at August 31, 2019 | $ | — |
Investment in Limited Partnership | |||
Balance, December 1, 2018 | $ | — | |
Transfer from investment in life settlement | 130,803 | ||
Change in fair value - August 16, 2019 | 15,352 | ||
Advance for Class D Shares | (8,000 | ) | |
Balance, August 16, 2019 | $ | 138,155 | |
Change in fair value - August 17, 2019 to August 31, 2019 | (5,821 | ) | |
Balance, August 31, 2019 | $ | 132,334 | |
Changes in fair value included in earnings for the period relating to assets held at August 31, 2019 | $ | (5,821 | ) |
White Eagle Revolving Credit Facility: | |||
Balance, December 1, 2018 | $ | 346,670 | |
Draws under the White Eagle Revolving Credit Facility | 4,221 | ||
Payments on White Eagle Revolving Credit Facility | (367,985 | ) | |
Unrealized change in fair value | 17,094 | ||
Balance, August 31, 2019 | $ | — | |
Changes in fair value included in earnings for period relating to liabilities held at August 31, 2019 | $ | — |
Investment in Deconsolidated Subsidiaries | |||
Investment in Lamington at December 1, 2018 | $ | 128,795 | |
Change in fair value | 37,941 | ||
Transferred to consolidation | (166,736 | ) | |
Investment in Lamington at August 31, 2019 | $ | — |
Life Settlements: | |||
Balance, December 1, 2017 | $ | 557,786 | |
Purchase of policies | — | ||
Change in fair value | 19,299 | ||
Matured/sold policies | (68,185 | ) | |
Premiums paid | 67,916 | ||
Transfers into level 3 | — | ||
Transfers out of level 3 | — | ||
Balance, August 31, 2018 | $ | 576,816 | |
Changes in fair value included in earnings for the period relating to assets held at August 31, 2018 | $ | (15,707 | ) |
White Eagle Revolving Credit Facility: | |||
Balance, December 1, 2017 | $ | 326,104 | |
Draws under the White Eagle Revolving Credit Facility | 69,490 | ||
Payments on White Eagle Revolving Credit Facility | (34,597 | ) | |
Unrealized change in fair value | (11,663 | ) | |
Transfers into level 3 | — | ||
Transfer out of level 3 | — | ||
Balance, August 31, 2018 | $ | 349,334 | |
Changes in fair value included in earnings for the period relating to liabilities at August 31, 2018 | $ | (11,663 | ) |
• | Changes in Fair Value of Life Settlements—When we acquire certain life insurance policies, we initially record these investments at the transaction price, which is the fair value of the policy for those acquired upon relinquishment or the amount paid for policies acquired for cash. The fair value of the investment in insurance policies is evaluated at the end of each reporting period. Changes in the fair value of the investment based on evaluations are recorded as changes in fair value of life settlements in our consolidated statement of operations. The fair value is determined on a discounted cash flow basis that incorporates current life expectancy assumptions. The discount rate incorporates current information about market interest rates, the credit exposure to the insurance company that issued the life insurance policy and our estimate of the risk premium an investor in the policy would require. The Company recognizes income from life settlement maturities on the date we are in receipt of death notice or verified obituary of the insured. This income is the difference between the death benefits and fair values of the policy at the time of maturity. |
• | Change in Fair Value of Investment in Limited Partnership — ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities requires that a reporting entity should account for its equity investments that are not consolidated or accounted for under the equity method at fair value, with changes to fair value recorded in current earnings. White Eagle previously valued its life settlement policies at fair value whose valuation are based on inputs that are both significant to the fair value measurement and unobservable. The Company now holds an equity investment of 27.5% in White Eagle whose only assets are these life settlement. Additionally, the investment includes a mezzanine financing which the Company assumed at closing which repayment by, and ultimate distributions to, the Company are based on a prescribed waterfall with a guaranteed 11% return to the majority owner partner. Given the nature of this ownership, fair value is not readily redeemable and inputs are not observable. The Company recognizes income from monthly distribution from the partnership as prescribed by the Subscription Agreement. |
Three Months Ended August 31, | Nine Months Ended August 31, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
End of Period — Policies Owned | ||||||||||||||||
Number of policies owned | 2 | 591 | 2 | 591 | ||||||||||||
Average age of insured | 78.4 | 84.1 | 78.4 | 84.1 | ||||||||||||
Average death benefit per policy | $ | 6,000 | $ | 4,739 | $ | 6,000 | $ | 4,739 | ||||||||
Average Life Expectancy — Calculated LE (Years) | 11.6 | 7.9 | 11.6 | 7.9 | ||||||||||||
Aggregate Death Benefit | $ | 12,000 | $ | 2,800,613 | $ | 12,000 | $ | 2,800,613 | ||||||||
Aggregate fair value | $ | 1,254 | $ | 575,837 | $ | 1,254 | $ | 575,837 | ||||||||
Monthly premium — average per policy | $ | 7.7 | $ | 13.8 | $ | 7.7 | $ | 13.8 | ||||||||
Period Maturities | ||||||||||||||||
Number of policies matured | — | 3 | — | 15 | ||||||||||||
Average age of insured at maturity | — | 89.2 | — | 89.2 | ||||||||||||
Average life expectancy - Calculated LE (Years) | — | 2.7 | — | 2.7 | ||||||||||||
Aggregate death benefit | $ | — | $ | 14,250 | $ | — | $ | 68,185 | ||||||||
Gains on maturity | $ | — | $ | 7,115 | $ | — | $ | 35,114 | ||||||||
Proceeds collected | $ | — | $ | 20,500 | $ | — | $ | 52,304 | ||||||||
White Eagle Portfolio - Deconsolidated* | ||||||||||||||||
Period Maturities | ||||||||||||||||
Number of policies matured | 6 | — | 18 | — | ||||||||||||
Average age of insured at maturity | 87.4 | — | 86.1 | — | ||||||||||||
Average life expectancy - Calculated LE (Years) | 3.6 | — | 5.9 | — | ||||||||||||
Aggregate death benefit | $ | 31,768 | $ | — | $ | 100,374 | $ | — | ||||||||
Gains on maturity | $ | 19,999 | $ | — | $ | 70,300 | $ | — | ||||||||
Proceeds collected | $ | 60,163 | $ | — | $ | 92,505 | $ | — |
Three Months Ended August 31, | |||||||||||||||||
2019 | 2018 | Change | % Change | ||||||||||||||
Income | $ | 86,858 | $ | 5,557 | $ | 81,301 | 1,463 | % | increase | ||||||||
Expenses | 6,662 | 4,756 | 1,906 | 40 | % | increase | |||||||||||
(Benefit) provision for income taxes | (5 | ) | 3,094 | (3,099 | ) | (100 | )% | decrease | |||||||||
Net income (loss) | $ | 80,201 | $ | (2,293 | ) | $ | 82,494 | (3,598 | )% | decrease | |||||||
Three Months Ended August 31, | |||||||||||||||||
2019 | 2018 | Change | % Change | ||||||||||||||
Change in fair value of life settlements | $ | (42 | ) | $ | 5,404 | $ | (5,446 | ) | (101 | )% | decrease | ||||||
Three Months Ended August 31, | |||||||||||||||||
2019 | 2018 | Change | % Change | ||||||||||||||
Change in fair value of investment in limited partnership | $ | (5,821 | ) | $ | — | $ | (5,821 | ) | 100 | % | decrease | ||||||
Three Months Ended August 31, | |||||||||||||||||
2019 | 2018 | Change | % Change | ||||||||||||||
Interest expense | $ | 2,832 | $ | 7,979 | $ | (5,147 | ) | (65 | )% | decrease | |||||||
Change in fair value of White Eagle Revolving Credit Facility | — | (7,037 | ) | 7,037 | (100 | )% | decrease | ||||||||||
SG&A expenses | 3,830 | 3,814 | 16 | — | % | increase | |||||||||||
Total Expenses | $ | 6,662 | $ | 4,756 | $ | 1,906 | 40 | % | increase | ||||||||
Three Months Ended August 31, | |||||||||||||||||
2019 | 2018 | Change | % Change | ||||||||||||||
White Eagle Revolving Credit Facility | $ | — | $ | 5,844 | $ | (5,844 | ) | (100 | )% | decrease | |||||||
8.5% Convertible Notes | 22 | 46 | (24 | ) | (52 | )% | decrease | ||||||||||
5% Convertible Notes | 1,281 | 1,259 | 22 | 2 | % | increase | |||||||||||
8.5% Senior Secured Notes | 1,526 | 828 | 698 | 84 | % | increase | |||||||||||
Other | 3 | 2 | 1 | 50 | % | increase | |||||||||||
Total Interest Expense | $ | 2,832 | $ | 7,979 | $ | (5,147 | ) | (65 | )% | decrease | |||||||
Three Months Ended August 31, | |||||||||||||||||
2019 | 2018 | Change | % Change | ||||||||||||||
White Eagle Revolving Credit Facility | $ | — | $ | (7,037 | ) | $ | 7,037 | 100 | % | decrease | |||||||
Three Months Ended August 31, | |||||||||||||||||
2019 | 2018 | Change | % Change | ||||||||||||||
Personnel costs | $ | 694 | $ | 800 | $ | (106 | ) | (13 | )% | decrease | |||||||
Legal fees | 1,448 | 552 | 896 | 162 | % | increase | |||||||||||
Professional fees | 1,142 | 1,875 | (733 | ) | (39 | )% | decrease | ||||||||||
Insurance | 270 | 193 | 77 | 40 | % | increase | |||||||||||
Other SG&A expenses | 276 | 394 | (118 | ) | (30 | )% | decrease | ||||||||||
Total SG&A Expenses | $ | 3,830 | $ | 3,814 | $ | 16 | — | % | increase | ||||||||
Three Months Ended August 31, 2019 | ||||
Income | $ | 50,018 | ||
Expenses | 9,620 | |||
Net income (loss) | $ | 40,398 | ||
Three Months Ended August 31, | |||||||||||||||||
2019 | 2018 | Change | % Change | ||||||||||||||
Total income | $ | — | $ | — | $ | — | — | % | — | ||||||||
Total expenses | (70 | ) | 18 | (88 | ) | 489 | % | decrease | |||||||||
Income (loss) before income taxes | 70 | (18 | ) | 88 | (489 | )% | increase | ||||||||||
Net income (loss), net of income taxes | $ | 70 | $ | (17 | ) | $ | 87 | (512 | )% | increase | |||||||
Nine Months Ended August 31, | |||||||||||||||||
2019 | 2018 | Change | % Change | ||||||||||||||
Income | $ | 34,111 | $ | 19,695 | $ | 14,416 | 73 | % | increase | ||||||||
Expenses | 14,023 | 24,169 | (10,146 | ) | (42 | )% | decrease | ||||||||||
(Benefit) provision for income taxes | 3,213 | (136 | ) | 3,349 | 2,463 | % | increase | ||||||||||
Net income (loss) | $ | 16,875 | $ | (4,338 | ) | $ | 21,213 | (489 | )% | decrease | |||||||
Nine Months Ended August 31, | |||||||||||||||||
2019 | 2018 | Change | % Change | ||||||||||||||
Change in fair value of life settlements | $ | (37 | ) | $ | 19,299 | $ | (19,336 | ) | (100 | )% | decrease | ||||||
Nine Months Ended August 31, | |||||||||||||||||
2019 | 2018 | Change | % Change | ||||||||||||||
Interest expense | $ | 8,370 | $ | 23,398 | $ | (15,028 | ) | (64 | )% | decrease | |||||||
Change in fair value of Revolving Credit Facility | — | (11,663 | ) | 11,663 | (100 | )% | decrease | ||||||||||
SG&A expenses | 5,653 | 12,434 | (6,781 | ) | (55 | )% | decrease | ||||||||||
Total Expense | $ | 14,023 | $ | 24,169 | $ | (10,146 | ) | (42 | )% | decrease | |||||||
Nine Months Ended August 31, | |||||||||||||||||
2019 | 2018 | Change | % Change | ||||||||||||||
White Eagle Revolving Credit Facility | $ | — | $ | 16,716 | $ | (16,716 | ) | (100 | )% | decrease | |||||||
8.5% Convertible Notes | 93 | 138 | (45 | ) | (33 | )% | decrease | ||||||||||
5% Convertible Notes | 3,799 | 3,733 | 66 | 2 | % | increase | |||||||||||
8.5% Senior Secured Notes | 4,469 | 2,461 | 2,008 | 82 | % | increase | |||||||||||
Participation Interest - White Eagle Revolving Credit Facility | — | 340 | (340 | ) | (100 | )% | decrease | ||||||||||
Other | 9 | 10 | (1 | ) | (10 | )% | decrease | ||||||||||
Total Interest Expense | $ | 8,370 | $ | 23,398 | $ | (15,028 | ) | (64 | )% | decrease | |||||||
Nine Months Ended August 31, | |||||||||||||||||
2019 | 2018 | Change | % Change | ||||||||||||||
White Eagle Revolving Credit Facility | $ | — | $ | (11,663 | ) | $ | 11,663 | (100 | )% | decrease | |||||||
Nine Months Ended August 31, | |||||||||||||||||
2019 | 2018 | Change | % Change | ||||||||||||||
Personnel costs | $ | 1,001 | $ | 2,460 | $ | (1,459 | ) | (59 | )% | decrease | |||||||
Legal fees | 2,117 | 3,478 | (1,361 | ) | (39 | )% | decrease | ||||||||||
Professional fees | 1,470 | 4,497 | (3,027 | ) | (67 | )% | decrease | ||||||||||
Insurance | 666 | 592 | 74 | 13 | % | increase | |||||||||||
Other SG&A | 399 | 1,407 | (1,008 | ) | (72 | )% | decrease | ||||||||||
Total SG&A Expenses | $ | 5,653 | $ | 12,434 | $ | (6,781 | ) | (55 | )% | decrease | |||||||
Nine Months Ended August 31, 2019 | ||||
Income | $ | 20,556 | ||
Expenses | 72,412 | |||
Net income (loss) | $ | (51,856 | ) |
Nine Months Ended August 31, | |||||||||||||||||
2019 | 2018 | Change | % Change | ||||||||||||||
Total income (loss) | $ | — | $ | 17 | $ | (17 | ) | (100 | )% | decrease | |||||||
Total expenses | (36 | ) | 32 | (68 | ) | (213 | )% | decrease | |||||||||
Income (loss) before income taxes | 36 | (15 | ) | 51 | (340 | )% | increase | ||||||||||
Income tax benefit | — | — | — | — | % | ||||||||||||
Net income (loss), net of income taxes | $ | 36 | $ | (15 | ) | $ | 51 | (340 | )% | increase | |||||||
Quarter End Date | Portfolio Face Amount ($) | 12-Month Trailing Maturities Realized ($) | 12-Month Trailing Premiums Paid ($) | 12-Month Trailing Maturities/Premiums Coverage Ratio (%) | ||||||||
March 31, 2015 | 3,001,987 | 27,188 | 57,723 | 47 | % | |||||||
June 30, 2015 | 2,982,416 | 63,768 | 59,990 | 106 | % | |||||||
September 30, 2015 | 2,997,903 | 67,468 | 63,124 | 107 | % | |||||||
December 31, 2015 | 2,979,352 | 67,403 | 64,923 | 104 | % | |||||||
March 31, 2016 | 2,969,670 | 67,195 | 66,049 | 102 | % | |||||||
June 30, 2016 | 2,966,388 | 34,815 | 67,843 | 51 | % | |||||||
September 30, 2016 | 2,953,796 | 43,915 | 69,430 | 63 | % | |||||||
December 31, 2016 | 2,946,511 | 37,460 | 71,681 | 52 | % | |||||||
March 31, 2017 | 2,908,876 | 62,330 | 75,609 | 82 | % | |||||||
June 30, 2017 | 2,903,899 | 63,353 | 79,378 | 80 | % | |||||||
September 30, 2017 | 2,887,827 | 67,053 | 82,032 | 82 | % | |||||||
December 30, 2017 | 2,880,487 | 67,176 | 84,751 | 79 | % | |||||||
March 31, 2018 | 2,852,803 | 57,026 | 86,561 | 66 | % | |||||||
June 30, 2018 | 2,826,863 | 78,039 | 87,650 | 89 | % | |||||||
September 30, 2018 | 2,794,652 | 94,039 | 89,263 | 105 | % | |||||||
November 30, 2018 | 2,787,916 | 93,435 | 91,601 | 102 | % | |||||||
February 28, 2019 | 2,765,250 | 93,735 | 88,235 | 106 | % | |||||||
May 31, 2019 | 2,719,976 | 108,105 | 97,602 | 111 | % | |||||||
August 31, 2019 | 2,688,556 | 125,623 | 100,697 | 125 | % |
Nine Months Ended August 31, | ||||||||
2019 | 2018 | |||||||
Statement of Cash Flows Data: | ||||||||
Total cash (used in) provided by: | ||||||||
Operating activities | $ | (8,493 | ) | $ | (32,571 | ) | ||
Investing activities | 10,782 | (15,612 | ) | |||||
Financing activities | 5,282 | 32,983 | ||||||
Increase (decrease) in cash and cash equivalents | $ | 7,571 | $ | (15,200 | ) |
Carrier - Consolidated | Percentage of Total Fair Value | Percentage of Total Death Benefit | Moody’s Rating | S&P Rating | |||||
Sun Life Assurance Company of Canada | 100 | % | 100 | % | Aa3 | AA |
Exhibit Number | Exhibit Description | Form | Exhibit | Filing Date | Filed/ Furnished Herewith | SEC File # | |||||||
10.1 | 8-K | 10.1 | 6/14/2019 | 001-35064 | |||||||||
10.2 | 8-K | 10.2 | 6/14/2019 | 001-35064 | |||||||||
10.3 | 8-K | 10.1 | 6/24/2019 | 001-35064 | |||||||||
10.4 | 8-K | 10.1 | 7/24/2019 | 001-35064 | |||||||||
10.5 | 8-K | 10.1 | 8/21/2019 | 001-35064 | |||||||||
10.6 | 8-K | 10.2 | 8/21/2019 | 001-35064 | |||||||||
10.7 | 8-K | 10.3 | 8/21/2019 | 001-35064 | |||||||||
10.8 | 8-K | 10.4 | 8/21/2019 | 001-35064 | |||||||||
10.9 | 8-K | 10.5 | 8/21/2019 | 001-35064 | |||||||||
10.10 | 8-K | 10.6 | 8/21/2019 | 001-35064 |
31.1 | * | ||||||||||||
31.2 | * | ||||||||||||
32.1 | ** | ||||||||||||
32.2 | ** | ||||||||||||
101 | Interactive Data Files | * | |||||||||||
101.INS | XBRL Instance Document | * | |||||||||||
101.SCH | XBRL Taxonomy Extension Schema Document | * | |||||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | * | |||||||||||
101.DEF | XBRL Taxonomy Definition Linkbase Document | * | |||||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document 10.1 & 10.2 | * | |||||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | * |
* | Filed herewith. |
** | Furnished herewith. |
** | Portions of this exhibit have been omitted pursuant to the Rule 601(b)(10) of Regulation S-K. The omitted information is not material and would likely cause competitive harm to the registrant if publicly disclosed. |
Emergent Capital, Inc. | ||
/s/ Miriam Martinez | Chief Financial Officer | |
Miriam Martinez | (Principal Financial Officer) | |
Date October 9, 2019 |
1. | I have reviewed this Quarterly Report on Form 10-Q of Emergent Capital, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary companies, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Patrick J. Curry |
Patrick J. Curry |
Chief Executive Officer and Director |
(Principal Executive Officer) |
October 9, 2019 |
1. | I have reviewed this Quarterly Report on Form 10-Q of Emergent Capital, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary companies, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Miriam Martinez |
Miriam Martinez |
Chief Financial Officer |
(Principal Financial Officer) |
October 9, 2019 |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
/s/ Patrick J. Curry |
Patrick J. Curry |
Chief Executive Officer and Director |
October 9, 2019 |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
/s/ Miriam Martinez |
Miriam Martinez |
Chief Financial Officer |
October 9, 2019 |
Deconsolidation of Subsidiaries - Fair Value of Investment in Lamington (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Aug. 16, 2019 |
Nov. 30, 2018 |
Aug. 31, 2019 |
Aug. 31, 2018 |
Aug. 31, 2019 |
Aug. 16, 2019 |
Aug. 31, 2018 |
||||
Investment in Deconsolidated Subsidiary [Roll Forward] | ||||||||||
Investment in Lamington at December 1, 2018 | [1] | $ 0 | $ 0 | |||||||
Change in fair value of investment in deconsolidated subsidiaries | $ (90,710) | $ 0 | (37,941) | $ 0 | ||||||
Investment in Lamington at August 16, 2019 | $ 0 | [1] | $ 132,334 | 132,334 | ||||||
Lamington | ||||||||||
Investment in Deconsolidated Subsidiary [Roll Forward] | ||||||||||
Investment in Lamington at December 1, 2018 | $ 128,795 | 128,795 | ||||||||
Change in fair value of investment in deconsolidated subsidiaries | $ (37,900) | 149,600 | (37,941) | |||||||
Investment in Lamington at August 16, 2019 | $ 166,736 | $ 128,795 | $ 166,736 | |||||||
|
White Eagle Revolving Credit Facility - Interest Expense on Facility (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Aug. 31, 2019 |
Aug. 31, 2018 |
Aug. 31, 2019 |
Aug. 31, 2018 |
|
Debt Instrument [Line Items] | ||||
Total interest expense | $ 2,832 | $ 7,979 | $ 8,370 | $ 23,398 |
Revolving Credit Facility | White Eagle | ||||
Debt Instrument [Line Items] | ||||
Interest paid through waterfall | 0 | 5,844 | 0 | 16,716 |
Participation interest paid through waterfall | 0 | 0 | 0 | 340 |
Interest paid from collection account | 23,331 | 0 | 28,331 | 0 |
Total interest expense | $ 23,331 | $ 5,844 | $ 28,331 | $ 17,056 |
White Eagle Revolving Credit Facility - Payouts based on LTV (Details) |
9 Months Ended |
---|---|
Aug. 31, 2019 | |
Lender | |
Debt Instrument [Line Items] | |
Distribution to White Eagle - 55%, Lender Participation - 45% | 45.00% |
White Eagle | |
Debt Instrument [Line Items] | |
Distribution to White Eagle - 55%, Lender Participation - 45% | 55.00% |
Revolving Credit Facility | White Eagle | Minimum | |
Debt Instrument [Line Items] | |
LTV | 45.00% |
White Eagle Amendment | Revolving Credit Facility | LTV N/A | |
Debt Instrument [Line Items] | |
Premiums, Interest & Other Fees | 100.00% |
Principal | 0.00% |
White Eagle Amendment | Revolving Credit Facility | LTV greater than 65% | |
Debt Instrument [Line Items] | |
Principal | 100.00% |
White Eagle Amendment | Revolving Credit Facility | LTV 50-65% | |
Debt Instrument [Line Items] | |
Principal | 70.00% |
White Eagle Amendment | Revolving Credit Facility | LTV 35-50% | |
Debt Instrument [Line Items] | |
Principal | 55.00% |
White Eagle Amendment | Revolving Credit Facility | LTV 0-35% | |
Debt Instrument [Line Items] | |
Principal | 45.00% |
White Eagle Amendment | Revolving Credit Facility | Lender | LTV N/A | |
Debt Instrument [Line Items] | |
Collections from policy proceeds percentage | 0.00% |
White Eagle Amendment | Revolving Credit Facility | Lender | LTV greater than 65% | |
Debt Instrument [Line Items] | |
Collections from policy proceeds percentage | 0.00% |
White Eagle Amendment | Revolving Credit Facility | Lender | LTV 50-65% | |
Debt Instrument [Line Items] | |
Collections from policy proceeds percentage | 13.50% |
White Eagle Amendment | Revolving Credit Facility | Lender | LTV 35-50% | |
Debt Instrument [Line Items] | |
Collections from policy proceeds percentage | 20.30% |
White Eagle Amendment | Revolving Credit Facility | Lender | LTV 0-35% | |
Debt Instrument [Line Items] | |
Collections from policy proceeds percentage | 24.80% |
White Eagle Amendment | Revolving Credit Facility | White Eagle | LTV N/A | |
Debt Instrument [Line Items] | |
Collections from policy proceeds percentage | 0.00% |
White Eagle Amendment | Revolving Credit Facility | White Eagle | LTV greater than 65% | |
Debt Instrument [Line Items] | |
Collections from policy proceeds percentage | 0.00% |
White Eagle Amendment | Revolving Credit Facility | White Eagle | LTV greater than 65% | Minimum | |
Debt Instrument [Line Items] | |
LTV | 65.00% |
White Eagle Amendment | Revolving Credit Facility | White Eagle | LTV 50-65% | |
Debt Instrument [Line Items] | |
Collections from policy proceeds percentage | 16.50% |
White Eagle Amendment | Revolving Credit Facility | White Eagle | LTV 50-65% | Minimum | |
Debt Instrument [Line Items] | |
LTV | 50.00% |
White Eagle Amendment | Revolving Credit Facility | White Eagle | LTV 50-65% | Maximum | |
Debt Instrument [Line Items] | |
LTV | 65.00% |
White Eagle Amendment | Revolving Credit Facility | White Eagle | LTV 35-50% | |
Debt Instrument [Line Items] | |
Collections from policy proceeds percentage | 24.80% |
White Eagle Amendment | Revolving Credit Facility | White Eagle | LTV 35-50% | Minimum | |
Debt Instrument [Line Items] | |
LTV | 35.00% |
White Eagle Amendment | Revolving Credit Facility | White Eagle | LTV 35-50% | Maximum | |
Debt Instrument [Line Items] | |
LTV | 50.00% |
White Eagle Amendment | Revolving Credit Facility | White Eagle | LTV 0-35% | |
Debt Instrument [Line Items] | |
Collections from policy proceeds percentage | 30.30% |
White Eagle Amendment | Revolving Credit Facility | White Eagle | LTV 0-35% | Minimum | |
Debt Instrument [Line Items] | |
LTV | 0.00% |
White Eagle Amendment | Revolving Credit Facility | White Eagle | LTV 0-35% | Maximum | |
Debt Instrument [Line Items] | |
LTV | 35.00% |
Segment Information |
9 Months Ended |
---|---|
Aug. 31, 2019 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information On October 25, 2013, the Company sold its structured settlement business, which was previously reported as an operating segment. The operating results related to the Company’s structured settlement business have been included in discontinued operations in the Company’s Consolidated Statements of Operations for all periods presented and the Company has discontinued segment reporting. See Note 9 "Discontinued Operations" to the accompanying consolidated financial statements for further information. Management views its current operations as one segment. |
Subsequent Events |
9 Months Ended |
---|---|
Aug. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On September 16, 2019, the Bankruptcy Court entered an order and final decree closing the White Eagle Chapter 11 Case. |
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands |
Aug. 31, 2019 |
Nov. 30, 2018 |
[1] | ||
---|---|---|---|---|---|
ASSETS | |||||
Cash and cash equivalents | $ 8,780 | $ 1,209 | |||
Certificates of deposit | 508 | 500 | |||
Prepaid expenses and other assets | 844 | 657 | |||
Deposits - other | 1,377 | 1,377 | |||
Life settlements, at estimated fair value | 1,254 | 1,172 | |||
Receivable for maturity of life settlements | 17,768 | 0 | |||
Fixed assets, net | 28 | 78 | |||
Investment in limited partnership, at estimated fair value (Note 11) | 132,334 | 0 | |||
Investment in deconsolidated subsidiaries, at estimated fair value (Note 4) | 0 | 128,795 | |||
Investment in affiliate | 2,384 | 2,384 | |||
Deferred tax asset | 0 | 576 | |||
Total assets | 165,277 | 136,748 | |||
Liabilities | |||||
Accounts payable and accrued expenses | 2,093 | 2,446 | |||
Other liabilities | 100 | 194 | |||
Current tax liability | 2,642 | 0 | |||
Total liabilities | 120,834 | 109,506 | |||
Commitments and Contingencies (Note 18) | |||||
Stockholders’ Equity | |||||
Common stock (par value $0.01 per share, 415,000,000 authorized at August 31, 2019 and November 30, 2018; 158,659,803 issued and 158,051,803 outstanding as of August 31, 2019; 158,733,928 issued and 158,125,928 outstanding as of November 30, 2018) | 1,587 | 1,587 | |||
Preferred stock (par value $0.01 per share, 40,000,000 authorized; 0 issued and outstanding as of August 31, 2019 and November 30, 2018) | 0 | 0 | |||
Treasury Stock, net of issuance cost (608,000 shares as of August 31, 2019 and November 30, 2018) | (2,534) | (2,534) | |||
Additional paid-in-capital | 334,488 | 334,198 | |||
Accumulated deficit | (289,098) | (306,009) | |||
Total stockholders’ equity | 44,443 | 27,242 | |||
Total liabilities and stockholders’ equity | 165,277 | 136,748 | |||
8.5% Convertible Notes | |||||
Liabilities | |||||
Interest payable | 0 | 37 | |||
Convertible Notes, net of discount and deferred debt costs | 0 | 1,173 | |||
5.0% Convertible Notes | |||||
Liabilities | |||||
Interest payable | 169 | 1,116 | |||
Convertible Notes, net of discount and deferred debt costs | 70,697 | 69,742 | |||
8.5% Senior Secured Notes | |||||
Liabilities | |||||
Interest payable | 1,091 | 628 | |||
Senior Secured Notes, net of deferred debt costs | $ 44,042 | $ 34,170 | |||
|
CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED) - USD ($) |
9 Months Ended | |
---|---|---|
Aug. 31, 2019 |
Aug. 31, 2018 |
|
Cash flows from operating activities | ||
Net income/(loss) | $ 16,911,000 | $ (4,352,000) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Depreciation and amortization | 63,000 | 55,000 |
Change in fair value of investment in deconsolidated subsidiaries | (37,941,000) | 0 |
Stock-based compensation expense | 290,000 | 380,000 |
Finance cost and fees withheld by borrower | 0 | 1,910,000 |
Interest paid in kind on 8.5% Senior Secured Notes | 2,842,000 | 0 |
Change in fair value of life settlements | 37,000 | (19,299,000) |
Change in fair value of investment in limited partnership | 5,821,000 | 0 |
Change in fair value of White Eagle Revolving Credit Facility | 0 | (11,663,000) |
Interest income | (311,000) | (114,000) |
Deferred tax asset | 576,000 | 0 |
Deferred tax liability | 0 | (2,378,000) |
Change in assets and liabilities: | ||
Prepaid expenses and other assets | 118,000 | 145,000 |
Accounts payable and accrued expenses | (394,000) | 306,000 |
Other liabilities | (155,000) | 14,000 |
Current tax liability | 2,642,000 | 2,242,000 |
Net cash used in operating activities | (8,493,000) | (32,571,000) |
Cash flows from investing activities | ||
Purchase of fixed assets, net of disposals | (5,000) | 0 |
Premiums paid on life settlements | (118,000) | (67,916,000) |
Proceeds from maturity of life settlements | 0 | 52,304,000 |
Consolidation of subsidiaries (cash) | 10,905,000 | 0 |
Net cash provided by (used) in investing activities | 10,782,000 | (15,612,000) |
Cash flows from financing activities | ||
Borrowings from White Eagle Revolving Credit Facility | 0 | 67,580,000 |
Repayment of borrowings under White Eagle Revolving Credit Facility | 0 | (34,597,000) |
Proceeds from issue of 8.5% Senior Secured Notes | 6,476,000 | 0 |
Repayment of 8.5% Convertible Notes | (1,194,000) | 0 |
Net cash provided by financing activities | 5,282,000 | 32,983,000 |
Net increase (decrease) in cash and cash equivalents | 7,571,000 | (15,200,000) |
Cash and cash equivalents, at beginning of the period | 1,209,000 | 31,208,000 |
Cash and cash equivalents, at end of the period | 8,780,000 | 16,008,000 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest during the period | 4,430,000 | 22,865,000 |
8.5% Convertible Notes | ||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Amortization of discount and deferred costs | 21,000 | 62,000 |
Change in assets and liabilities: | ||
Interest payable | (37,000) | (25,000) |
5.0% Convertible Notes | ||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Amortization of discount and deferred costs | 955,000 | 889,000 |
Change in assets and liabilities: | ||
Interest payable | (948,000) | (948,000) |
8.5% Senior Secured Notes | ||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Amortization of discount and deferred costs | 554,000 | 197,000 |
Change in assets and liabilities: | ||
Interest payable | $ 463,000 | $ 8,000 |
8.50% Senior Unsecured Convertible Notes |
9 Months Ended |
---|---|
Aug. 31, 2019 | |
8.5% Convertible Notes | |
Debt Instrument [Line Items] | |
Senior Notes | 8.50% Senior Unsecured Convertible Notes In February 2014, the Company issued $70.7 million in an aggregate principal amount of 8.50% senior unsecured convertible notes due 2019 (the "Convertible Notes" or "8.5% Convertible Notes"). The Convertible Notes were issued pursuant to an indenture dated February 21, 2014, between the Company and U.S. Bank National Association, as trustee (the "Convertible Note Indenture"). The Convertible Notes are general senior unsecured obligations and rank equally in right of payment with all of the Company's other existing and future senior unsecured indebtedness. The Convertible Notes are effectively subordinate to all of the Company's secured indebtedness to the extent of the value of the assets collateralizing such indebtedness. The Convertible Notes are not guaranteed by the Company's subsidiaries. The maturity date of the Convertible Notes is February 15, 2019. The Convertible Notes accrue interest at the rate of 8.50% per annum on the principal amount of the Convertible Notes, payable semi-annually in arrears on August 15 and February 15 of each year. The Convertible Notes are convertible into shares of common stock at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date. Initially, the Convertible Notes were convertible into shares of common stock at a conversion rate of 147.9290 shares of common stock per $1,000 principal amount of Convertible Notes (equivalent to a conversion price of $6.76 per share of common stock). In the second quarter of 2015, the conversion rate was adjusted to 151.7912 shares of common stock per $1,000 principal amount of Convertible Notes (equivalent to a conversion price of $6.59 per share of common stock) in connection with an anti-dilution adjustment triggered by a rights offering that resulted in the issuance of 6,688,433 shares of the Company’s common stock. On and after February 15, 2017 and prior to the maturity date, the Company may redeem for cash all, but not less than all, of the Convertible Notes if the last reported sale price of the Company’s common stock equals or exceeds 130% of the applicable conversion price for at least 20 trading days during the 30 consecutive trading day period ending on the trading day immediately prior to the date the Company delivers notice of the redemption. The redemption price will be equal to 100% of the principal amount of the Convertible Notes, plus any accrued and unpaid interest to, but excluding, the redemption date. In addition, if a make-whole fundamental change occurs prior to maturity date, and a holder elects to convert its Convertible Notes in connection therewith, the Company will, in certain circumstances, increase the conversion rate by a number of additional shares of common stock for holders who convert their notes prior to the redemption date. The Company determined that an embedded conversion option existed in the Convertible Notes that was required to be separately accounted for as a derivative under ASC 815 which required the Company to bifurcate the embedded conversion option, record it as a liability at fair value and record a debt discount by an equal amount. Upon receipt of shareholder approval to issue shares of common stock upon conversion of the Convertible Notes in an amount that exceeded applicable New York Stock Exchange limits for issuances without shareholder approval, the Company reclassified the embedded conversion derivative liability to equity. The Convertible Notes are recorded at accreted value and will continue to be accreted up to the par value of the Convertible Notes at maturity. On February 14, 2017, the Company solicited consents (the "Consent Solicitation") to issue additional 8.50% Convertible Notes (the "Additional Convertible Notes") in lieu of a cash payment of interest on February 15, 2017 (the "2017 Interest Payment Date") to holders of the Convertible Notes. On March 14, 2017, the Company issued Additional Convertible Notes for an aggregate principal amount of $3.5 million following the Company’s receipt of the requisite consents of the holders of approximately 98% of the aggregate principal amount of Convertible Notes (the "Consenting Holders"), pursuant to the Consent Solicitation, whereby each Consenting Holder agreed to accept Additional Convertible Notes in lieu of a cash payment of interest on the Convertible Notes due on the 2017 Interest Payment Date. All Additional Convertible Notes issued by the Company to Consenting Holders were issued under the Convertible Note Indenture and such Additional Convertible Notes have identical terms to the existing Convertible Notes. Interest on the Additional Convertible Notes accrued from February 15, 2017. On March 15, 2017 and May 12, 2017, the Company entered into a series of separate Master Transaction Agreements (the "Master Transaction Agreements") by and among the Company, PJC Investments, LLC, a Texas limited liability company ("PJC") and each such Consenting Holder that is a party to such Master Transaction Agreement regarding a series of integrated transactions with the intent to effect a recapitalization of the Company (the "Transaction") which included, among other transactions, a Convertible Note Exchange Offer and a New Convertible Note Indenture providing for the issuance of New Convertible Notes to be delivered in connection with the Transaction (each as defined in the Master Transaction Agreements). As part of the Transaction, on April 18, 2017, the Company launched an exchange offer (the "Convertible Note Exchange Offer") to the existing holders of its outstanding Convertible Notes for 5.0% Senior Unsecured Convertible Notes due 2023 (the "New Convertible Notes" or "5% Convertible Notes"). At least 98% of the holders of the Convertible Notes were required to be tendered in the Convertible Note Exchange Offer as a condition to closing the Transaction. On July 26, 2017, the Company’s offer to exchange its outstanding $74.2 million aggregate principal amount of Convertible Notes for its New Convertible Notes expired. Holders of at least 98% of the holders of the Convertible Notes tendered in the Convertible Note Exchange Offer. On July 28, 2017, the Company consummated a series of integrated transactions to effect a recapitalization of the Company (the "Transaction Closing") pursuant to the Master Transaction Agreements, which transactions included the consummation of the Convertible Note Exchange Offer. The amount exchanged included approximately $73.0 million of principal outstanding prior to the exchange and approximately $2.8 million of interest paid in kind at the exchange date. The outstanding principal amount of the Convertible Notes after the exchange was approximately $1.2 million. In connection with the Transaction Closing, the Company entered into a supplemental indenture (the "Supplemental Convertible Note Indenture") to the Convertible Note Indenture governing the Convertible Notes. The purpose of the Supplemental Convertible Note Indenture was to eliminate substantially all of the restrictive covenants, eliminate certain events of default, eliminate the covenant restricting mergers and consolidations and modify certain provisions relating to defeasance contained in the Convertible Note Indenture and the Convertible Notes (collectively, the "Proposed Amendments") promptly after the receipt of the requisite consents for the Proposed Amendments. The Company performed an assessment of the modification of the Convertible Notes under ASC 470, Debt, and determined the transaction is a troubled debt restructuring. The Company did not recognize any gain as a result of the restructuring, therefore, approximately $7.7 million was reclassified to the New Convertible Notes, including $6.7 million and $1.0 million related to debt discount and origination cost, respectively. See Note 14 "5.0% Senior Unsecured Convertible Notes" for a description of the changes in terms of the Convertible Notes. On February 20, 2019, the Company received written notice from U.S. Bank, National Association, the trustee under New Convertible Note Indenture, that the Company was in default (the "Event of Default") under the New Convertible Note Indenture for failure to pay the principal amount and accrued interest due upon maturity on February 15, 2019 of Convertible Notes due 2019 (the "Convertible Notes"). The Event of Default, which caused an automatic acceleration of the outstanding principal and accrued interest, had no practical effect on the Company, as such amounts were already due and payable. The Event of Default did not result in a cross-default under other debt agreements or arrangements of the Company. On August 28, 2019, the Company paid off the outstanding principal and accrued interest on its Convertible Notes, consisting of $1.2 million in principal, $110,000 in accrued and unpaid interest and $38,000 in administrative fees and expenses. The Convertible Notes matured on February 15, 2019. Upon the payoff, the Convertible Notes were extinguished. During the three months ended August 31, 2019, the Company recorded $22,000 of interest expense on the Convertible Notes, compared to interest expense of $46,000 during the three months ended August 31, 2018, which included $25,000, $18,000 and $3,000 from interest, amortizing debt discounts and origination costs, respectively. During the nine months ended August 31, 2019, the Company recorded $93,000 of interest expense on the Convertible Notes, including $73,000, $18,000 and $3,000 from interest, amortizing debt discounts and origination costs, respectively compared to interest expense of $138,000, during the nine months ended August 31, 2018, which included $76,000, $54,000 and $8,000 from interest, amortizing debt discounts and origination costs, respectively. |
Condensed and Consolidated Financial Statements for Entities in Bankruptcy |
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Condensed Financial Information of Debtor-in-Possession Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed and Consolidated Financial Statements for Entities in Bankruptcy | Condensed and Consolidated Financial Statements for Entities in Bankruptcy Condensed consolidated financial information for Lamington Road DAC is set forth below, presented at historical cost basis from the Petition Date to August 16, 2019. Lamington Road DAC (Debtor-in-Possession) Condensed and Consolidated Balance Sheet
*Liabilities subject to compromise include pre-petition unsecured claims, which may be settled at amounts different from those recorded in the condensed consolidated balance sheet. Lamington Road DAC (Debtor-in-Possession) Condensed and Consolidated Statements of Operations
Lamington Road DAC (Debtor-in-Possession) Condensed and Consolidated Statements of Cash Flows
Related Party Transactions Certain related party transactions had been eliminated in consolidation. Due to the deconsolidation of Lamington, transactions after November 13, 2018 are no longer eliminated. With deemed discharge of the Chapter 11 Cases, effective August 17, 2019 related party transactions are now eliminated in consolidation. The below is a description of related party transactions for the period. Administrative Services Fees In 2014, White Eagle entered into an Administrative Service Agreement with Imperial Finance and Trading ("IFT"). Under the agreement, IFT will perform certain non-discretionary, administrative or ministerial services to assist with certain reporting, compliance and document retention duties and obligations arising under or in connection with the Amended and Restated Loan and Securities Agreement. IFT shall recover all cost incurred in performing these services, with billings quarterly or annually. Bills will be based on actual cost or an appropriate allocation methodology. White Eagle incurred administrative service expenses of approximately $0 during the three months ended August 31, 2019 and 2018, respectively, with $2.8 million and $2.4 million during the nine months ended August 31, 2019 and 2018, respectively, amounts for 2018 were eliminated in consolidation. Amounts due from White Eagle resulting from the administrative services during the nine months ended August 31, 2019 were contributed on August 16, 2019 consisted with the Master Termination Agreement. Promissory Notes Receivable Effective May 16, 2014, Lamington entered into a 10 year, $59.3 million unsecured Promissory Note ("the 8.5% Promissory Note") with its parent company, Markley Asset Portfolio, LLC ("Markley"). The amount was used by Lamington as the partial purchase price of Markley’s interest in White Eagle. The annual interest rate on the Promissory Note is 8.5% and is due to be paid at the end of each calendar year; provided that any interest accrued at the end of a calendar year which is not paid within seven business days thereafter shall be capitalized and increased to the outstanding principal balance. As of August 31, 2019 the outstanding principal balance was $86.5 million, which includes $27.2 million in capitalized interest. Total interest expense related to the 8.5% Promissory Note was $0 and $1.7 million for the three months ended August 31, 2019 and 2018, respectively, with $0 and $5.1 million during the nine months ended August 31, 2019 and 2018, respectively. The entire remaining principal balance of the 8.5% Promissory Note shall be due and payable, together with all accrued but unpaid interest, on May 16, 2024. No principal payments are due prior to the maturity date. Effective July 28, 2017, Lamington issued an unsecured Promissory Note to Markley, in a principal amount of $57.0 million. The amount represents distributions of earnings from Lamington's share of profits of White Eagle, to satisfy Profit Participating Notes issued by Markley to Lamington (the "Special Dividend Note").The Special Dividend Note matures on July 28, 2027 and bears interest at an annual rate of 5.0% provided that any interest accrued at the end of a calendar year which is not paid within seven business days thereafter shall be capitalized and increased to the outstanding principal balance. As of August 31, 2019 the outstanding principal balance was $59.9 million, which includes $2.9 million in capitalized interest. Total interest expense related to the Special Dividend Note was $0 and $737,000 for the three months ended August 31, 2019 and 2018, respectively, with $0 and $1.5 million during the nine months ended August 31, 2019 and 2018, respectively. The entire remaining principal balance of the Special Dividend Note shall be due and payable, together with all accrued but unpaid interest, on July 28, 2027. No principal payments are due prior to the maturity date. Approximately $570,000 was paid as interest for the nine months ended August 31, 2018. There was no payment for the nine months ended August 31, 2019 up to the deconsolidated period. Approximately $10.9 million was paid after the deemed discharge of the Chapter 11 Case and have been eliminated in consolidation at August 31, 2019. At August 16, 2019, the notes were fair valued in accordance with ASC 820, with a fair value of approximately $146.3 million, resulting in a change in fair value of approximately $89.7 million for the period up to August 16, 2019, which is included in change in fair value of investment in deconsolidated subsidiaries. The notes are now being eliminated in consolidation effective August 17, 2019. At August 31, 2019 and 2018, the combined face value of the notes was $146.4 million and $137.8 million, respectively. |
Discontinued Operations |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations | Discontinued Operations On October 25, 2013, the Company sold substantially all of the operating assets comprising its structured settlement business to Majestic Opco LLC pursuant to an Asset Purchase Agreement. No structured settlement receivables were sold and no on-balance sheet liabilities were transferred in connection with the sale. On August 18, 2015, the Company sold its remaining structured settlement receivables asset to the buyer of its operating assets. As a result of the sale of its structured settlements business, the Company reclassified its structured settlement business operating results as discontinued operations in the accompanying Consolidated Statements of Operations for all periods presented. Operating results related to the Company’s discontinued structured settlement business are as follows:
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Investment in Limited Partnership (Tables) |
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Investments in and Advances to Affiliates [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Funds in the Premium/Expense Reserve Account | Funds in the premium/expense reserve account shall be used or otherwise distributed in the following order of priority:
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Schedule of Funds on Deposit in the Collections Account and Distributions by the Paying Agent | On each Distribution Date, funds on deposit in the Collections Account shall be distributed by the Paying Agent ("Wilmington Trust, N.A") pursuant to the Waterfall Notice in the following order of priority:
*To pay the Class A Limited Partner the amount necessary such that the Class A Limited Partner shall have received the Class A Minimum Return Cumulative Amount (applied first which is 11%), second to the amounts necessary to reduce the principal balance from $406.0 million on the Effective Date to April 2039 when it is expected to be paid in full (the A&R LPA stipulate the expected monthly reduction in target principal commencing in April 2021), third to later contributions by the Class A Limited Partner, excluding Advance Facility but includes funded into premium/expense account on its own behalf and fourth the Class D Return, in each case of the definition of Class A Minimum Return Cumulative Amount as of the last day of the month immediately prior to such Distribution Date. |
Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Reconciliation of Actual Basic and Diluted Earnings Per Share | The following table reconciles actual basic and diluted earnings per share for the three months and nine months ended August 31, 2019 and 2018 (in thousands except per share data).
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Stock-based Compensation - Narrative (Details) - USD ($) |
3 Months Ended | 9 Months Ended | 11 Months Ended | 12 Months Ended | 24 Months Ended | |||||
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Jun. 27, 2017 |
Jun. 06, 2013 |
Aug. 31, 2019 |
Aug. 31, 2018 |
Aug. 31, 2019 |
Aug. 31, 2018 |
Nov. 30, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2017 |
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Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Options exercisable (in shares) | 85,000 | 85,000 | ||||||||
Options outstanding (in shares) | 85,000 | 85,000 | 85,000 | |||||||
Weighted average exercise price of options outstanding (in dollars per share) | $ 6.94 | $ 6.94 | $ 6.94 | |||||||
Weighted average remaining contractual term of unvested awards | 9 months | 1 year 6 months | ||||||||
Options granted (in shares) | 0 | |||||||||
Exercise price of options (in dollars per share) | $ 0.00 | |||||||||
Options | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Stock based compensation not yet recognized | $ 0 | $ 0 | ||||||||
Restricted Stock | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Awards granted (in shares) | 0 | |||||||||
Awards vested (in shares) | 316,667 | |||||||||
Awards forfeited (in shares) | 0 | |||||||||
Awards unvested (in shares) | 1,083,333 | 1,083,333 | 1,400,000 | |||||||
Restricted Stock | Board and Certain Employees | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Stock-based compensation expense (income) | $ 95,000 | $ 207,000 | $ 290,000 | $ 380,000 | ||||||
SARs | Sole Non-employee Member of the Committee | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Expiration period of awards | 10 years | |||||||||
Fair value of unvested awards | $ 9,000 | |||||||||
Options granted (in shares) | 100,000 | |||||||||
Exercise price of options (in dollars per share) | $ 1.00 | |||||||||
Options vested (in shares) | 100,000 | |||||||||
Options unexercised (in shares) | 100,000 | 100,000 | ||||||||
Omnibus Plan | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Additional shares of common stock authorized for issuance (in shares) | 9,900,000 | |||||||||
Options outstanding (in shares) | 85,000 | 85,000 | ||||||||
Weighted average exercise price of options outstanding (in dollars per share) | $ 6.94 | $ 6.94 | ||||||||
Omnibus Plan | Options | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Shares of common stock reserved for issuance (in shares) | 12,600,000 | 12,600,000 | ||||||||
Options exercisable (in shares) | 85,000 | 85,000 | ||||||||
Stock-based compensation expense (income) | $ 0 | 0 | $ 0 | 0 | ||||||
Omnibus Plan | Options | Certain Employees | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Options outstanding (in shares) | 85,000 | 85,000 | ||||||||
Expiration period of awards | 7 years | |||||||||
Options granted (in shares) | 85,000 | |||||||||
Omnibus Plan | Restricted Stock | Certain Employees | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Stock based compensation not yet recognized | $ 110,000 | $ 110,000 | ||||||||
Awards granted (in shares) | 2,270,000 | |||||||||
Awards unvested (in shares) | 1,083,333.33 | 1,083,333.33 | ||||||||
Omnibus Plan | Restricted Stock | Certain Employees | 2016 Grant | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Stock-based compensation expense (income) | $ 0 | 10,000 | $ 0 | (25,000) | ||||||
Awards granted (in shares) | 200,000 | |||||||||
Awards vesting period | 2 years | |||||||||
Fair value of unvested awards | $ 674,000 | |||||||||
Awards vested (in shares) | 74,000 | 46,000 | ||||||||
Awards forfeited (in shares) | 20,000 | 60,000 | ||||||||
Awards unvested (in shares) | 0 | 0 | ||||||||
Omnibus Plan | Restricted Stock | Certain Employees | 2017 Grant | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Stock-based compensation expense (income) | $ 89,000 | 101,000 | $ 271,000 | 305,000 | ||||||
Awards granted (in shares) | 2,000,000 | |||||||||
Awards vesting period | 2 years | |||||||||
Fair value of unvested awards | $ 745,000 | |||||||||
Awards vested (in shares) | 250,000 | 750,000 | ||||||||
Awards unvested (in shares) | 1,000,000 | 1,000,000 | ||||||||
Aggregate intrinsic value of unvested awards | $ 240,000 | $ 240,000 | ||||||||
Weighted average remaining contractual term of unvested awards | 2 months 16 days | |||||||||
Omnibus Plan | Restricted Stock | Certain Employees | 2018 Grant | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Stock-based compensation expense (income) | $ 6,000 | 6,000 | $ 19,000 | 11,000 | ||||||
Awards granted (in shares) | 150,000 | |||||||||
Fair value of unvested awards | $ 58,000 | |||||||||
Awards vested (in shares) | 66,667 | 66,667 | ||||||||
Awards unvested (in shares) | 83,333 | 83,333 | ||||||||
Aggregate intrinsic value of unvested awards | $ 20,000 | $ 20,000 | ||||||||
Weighted average remaining contractual term of unvested awards | 10 months 14 days | |||||||||
Omnibus Plan | Restricted Stock | Certain Employees | 2018 Grant | Vesting in two years | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Awards vesting period | 2 years | |||||||||
Awards unvested (in shares) | 100,000 | |||||||||
Omnibus Plan | Restricted Stock | Certain Employees | 2018 Grant | Vesting in three years | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Awards vesting period | 3 years | |||||||||
Awards unvested (in shares) | 50,000 | |||||||||
Omnibus Plan | Restricted Stock | Directors | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Awards granted (in shares) | 633,215 | |||||||||
Awards vested (in shares) | 1,186,667 | |||||||||
Omnibus Plan | Restricted Stock | Directors | 2017 Grant | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Stock-based compensation expense (income) | $ 0 | 0 | $ 0 | 0 | ||||||
Awards granted (in shares) | 51,132 | |||||||||
Awards vesting period | 1 year | |||||||||
Fair value of unvested awards | $ 17,000 | |||||||||
Awards vested (in shares) | 8,522 | 42,610 | ||||||||
Omnibus Plan | Restricted Stock | Sole Non-employee Member of the Committee | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Stock-based compensation expense (income) | $ 81,000 | $ 81,000 | ||||||||
Awards granted (in shares) | 400,000 | 400,000 | ||||||||
Fair value of unvested awards | $ 128,000 | |||||||||
Awards vested (in shares) | 400,000 | |||||||||
Omnibus Plan | SARs | Directors | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Options outstanding (in shares) | 100,000 | 100,000 | ||||||||
Options granted (in shares) | 100,000 |
Life Settlements (Life Insurance Policies) - Narrative (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | 11 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Aug. 16, 2019
USD ($)
|
Aug. 31, 2019
USD ($)
contract
|
Aug. 31, 2018
USD ($)
contract
|
Aug. 31, 2019
USD ($)
contract
|
Aug. 31, 2018
USD ($)
contract
|
Nov. 30, 2018
USD ($)
contract
|
Dec. 29, 2016
contract
|
||||
Financial Instruments Owned and Pledged as Collateral [Line Items] | ||||||||||
Number of consolidated and deconsolidated life insurance policies owned | contract | 588 | |||||||||
Investment in life settlements fair value | $ 1,254 | $ 1,254 | $ 506,407 | |||||||
Life insurance policies with aggregate death benefit | 12,000 | 12,000 | ||||||||
Investment in limited partnership, at estimated fair value (Note 11) | $ 132,334 | $ 132,334 | 0 | [1] | ||||||
Policies pledged | Revolving Credit Facility | White Eagle | ||||||||||
Financial Instruments Owned and Pledged as Collateral [Line Items] | ||||||||||
Investment in life settlements fair value | 505,236 | |||||||||
Life insurance policies with aggregate death benefit | $ 2,775,915 | |||||||||
Number of policies owned | contract | 0 | 0 | 586 | 190 | ||||||
Average life expectancy on death benefits insured | 8 years 10 months 30 days | |||||||||
Number of life insurance policies that experienced maturity | contract | 6 | 3 | 18 | 15 | ||||||
Face value of life insurance policies that experienced maturity | $ 31,768 | $ 14,250 | $ 100,374 | $ 68,185 | ||||||
Net gain on life insurance contracts that experienced maturity | 19,999 | $ 7,114 | 70,300 | $ 35,114 | ||||||
Policies not pledged | ||||||||||
Financial Instruments Owned and Pledged as Collateral [Line Items] | ||||||||||
Investment in life settlements fair value | 1,254 | 1,254 | $ 1,172 | |||||||
Life insurance policies with aggregate death benefit | $ 12,000 | $ 12,000 | $ 12,000 | |||||||
Number of policies owned | contract | 2 | 2 | 2,000 | |||||||
Average life expectancy on death benefits insured | 11 years 7 months 18 days | 12 years 2 months 12 days | ||||||||
Estimated future premium payments | $ 5,987 | $ 5,987 | ||||||||
Subsidiaries | ||||||||||
Financial Instruments Owned and Pledged as Collateral [Line Items] | ||||||||||
Investment in life settlements fair value | $ 1,172 | |||||||||
White Eagle | Affiliates | ||||||||||
Financial Instruments Owned and Pledged as Collateral [Line Items] | ||||||||||
Percentage of equity interest sold | 72.50% | |||||||||
Proceeds from sale of limited partnership interest | $ 366,200 | |||||||||
Gain on sale of partnership interest | $ 21,300 | |||||||||
WE Investment | Subsidiaries | ||||||||||
Financial Instruments Owned and Pledged as Collateral [Line Items] | ||||||||||
Equity investment ownership percentage | 27.50% | 27.50% | ||||||||
WE Investment | White Eagle | Subsidiaries | ||||||||||
Financial Instruments Owned and Pledged as Collateral [Line Items] | ||||||||||
Number of consolidated life insurance policies owned | contract | 2 | 2 | ||||||||
Equity investment ownership percentage | 27.50% | 27.50% | ||||||||
Investment in limited partnership, at estimated fair value (Note 11) | $ 132,300 | $ 132,300 | ||||||||
WE Investment | White Eagle | Subsidiaries | Policies pledged | ||||||||||
Financial Instruments Owned and Pledged as Collateral [Line Items] | ||||||||||
Equity investment ownership percentage | 27.50% | |||||||||
|
Fair Value Measurements - Quantitative Information about Level 3 Fair Value Measurements (Details) $ in Thousands |
Aug. 31, 2019
USD ($)
|
Nov. 30, 2018
USD ($)
|
|||
---|---|---|---|---|---|
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||
Investment in life settlements fair value | $ 1,254 | $ 506,407 | |||
Investments in life settlement aggregate death benefit | 12,000 | ||||
Investment in limited partnership | 132,334 | 0 | [1] | ||
Level 3 | |||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||
Investment in life settlements fair value | 1,254 | $ 506,407 | |||
Investments in life settlement aggregate death benefit | 12,000 | ||||
Investment in limited partnership | 132,334 | ||||
Investment in limited partnership aggregate death benefit | $ 735,798 | ||||
Level 3 | Valuation Technique, Discounted Cash Flow | Discount rate | |||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||
Investment in limited partnership measurement input | 0.1503 | ||||
Level 3 | Valuation Technique, Discounted Cash Flow | Discount rate | Minimum | |||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||
Investment in live settlements measurement input | 0.1325 | ||||
Level 3 | Valuation Technique, Discounted Cash Flow | Discount rate | Maximum | |||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||
Investment in live settlements measurement input | 0.1525 | ||||
Level 3 | Valuation Technique, Discounted Cash Flow | Life expectancy evaluation | |||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||
Investment in live settlements measurement input | 11.6 | ||||
|
Stockholders' Deficit/Equity (Details) |
1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Aug. 11, 2017
USD ($)
$ / shares
shares
|
Jul. 28, 2017
USD ($)
director
$ / shares
shares
|
Sep. 01, 2015
USD ($)
|
Oct. 31, 2014
$ / shares
|
Apr. 30, 2014
USD ($)
shares
|
May 31, 2018
USD ($)
|
Aug. 31, 2019
USD ($)
shares
|
Dec. 31, 2015
USD ($)
$ / shares
shares
|
Nov. 30, 2018
USD ($)
shares
|
Jul. 17, 2017
shares
|
Jul. 16, 2017
shares
|
||||
Stockholders Equity [Line Items] | ||||||||||||||
Stock options granted (in shares) | 0 | |||||||||||||
Stock options outstanding (shares) | 85,000 | 85,000 | ||||||||||||
Share and note repurchase program, authorized amount | $ | $ 10,000,000 | |||||||||||||
Stock repurchase program, term of plan | 2 years | |||||||||||||
Shares purchased (in shares) | 608,000 | |||||||||||||
Cost of shares purchased | $ | $ 2,534,000 | $ 2,500,000 | $ 2,534,000 | [1] | ||||||||||
Average cost per share purchased (in dollars per share) | $ / shares | $ 4.17 | |||||||||||||
Common stock issued value | $ | $ 9,000 | |||||||||||||
Common stock, shares authorized (in shares) | 415,000,000 | 415,000,000 | [1] | 415,000,000 | 80,000,000 | |||||||||
Number of board of directors | director | 7 | |||||||||||||
Common Stock Purchase Agreement | ||||||||||||||
Stockholders Equity [Line Items] | ||||||||||||||
Sale of stock, number of shares issued (in shares) | 115,000,000 | |||||||||||||
Sale of stock, price per share (in dollars per share) | $ / shares | $ 0.20 | |||||||||||||
Common stock issued value | $ | $ 23,000,000 | |||||||||||||
Immediately Upon Issuance | Convertible Notes | ||||||||||||||
Stockholders Equity [Line Items] | ||||||||||||||
Warrants issued (in shares) | 17,500,000 | |||||||||||||
At Later Times After Conversion of Notes | Convertible Notes | ||||||||||||||
Stockholders Equity [Line Items] | ||||||||||||||
Warrants issued (in shares) | 25,000,000 | |||||||||||||
Term of warrants | 8 years | |||||||||||||
Warrant Investors | ||||||||||||||
Stockholders Equity [Line Items] | ||||||||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 0.2 | |||||||||||||
Warrants issued (in shares) | 42,500,000 | |||||||||||||
PJC, Triax and Other Affiliates | ||||||||||||||
Stockholders Equity [Line Items] | ||||||||||||||
Warrants issued (in shares) | 27,150,000 | |||||||||||||
Sale of stock, number of shares issued (in shares) | 39,320,038 | |||||||||||||
PJC, Triax and Other Affiliates | Emergent Capital, Inc. | ||||||||||||||
Stockholders Equity [Line Items] | ||||||||||||||
Percentage of ownership after sale of stocks (as percent) | 38.90% | |||||||||||||
PJC, Triax and Other Affiliates | Common Stock Purchase Agreement | ||||||||||||||
Stockholders Equity [Line Items] | ||||||||||||||
Sale of stock, number of shares issued (in shares) | 75,000,000 | |||||||||||||
Common stock issued value | $ | $ 15,000,000 | |||||||||||||
Convertible Notes Holders Investors | Common Stock Purchase Agreement | ||||||||||||||
Stockholders Equity [Line Items] | ||||||||||||||
Sale of stock, number of shares issued (in shares) | 40,000,000 | |||||||||||||
Common stock issued value | $ | $ 8,000,000 | |||||||||||||
PJC Investments, LLC | Common Stock Purchase Agreement | ||||||||||||||
Stockholders Equity [Line Items] | ||||||||||||||
Sale of stock, number of shares issued (in shares) | 19,320,038 | |||||||||||||
Brennan | Common Stock Purchase Agreement | ||||||||||||||
Stockholders Equity [Line Items] | ||||||||||||||
Securities remaining for future issuance (in shares) | 12,500,000 | |||||||||||||
Sale of stock, price per share (in dollars per share) | $ / shares | $ 0.40 | |||||||||||||
Sale of stock, aggregate purchase price | $ | $ 5,000,000 | |||||||||||||
Other Investors Designated by PJC and Triax | ||||||||||||||
Stockholders Equity [Line Items] | ||||||||||||||
Warrants issued (in shares) | 13,350,000 | |||||||||||||
Sale of stock, number of shares issued (in shares) | 55,000,000 | |||||||||||||
Other Investors Designated by PJC and Triax | Emergent Capital, Inc. | ||||||||||||||
Stockholders Equity [Line Items] | ||||||||||||||
Percentage of ownership after sale of stocks (as percent) | 43.60% | |||||||||||||
USAO Investigation | ||||||||||||||
Stockholders Equity [Line Items] | ||||||||||||||
Litigation settlement, shares to escrow (in shares) | 2,000,000 | |||||||||||||
Estimated fair value of warrants | $ | $ 5,400,000 | |||||||||||||
Common stock warrants term | 5 years | |||||||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 10.75 | |||||||||||||
Average daily trading closing price (in dollars per share) | $ / shares | $ 8.50 | |||||||||||||
Average daily trading closing price, period | 45 days | |||||||||||||
Restricted Stock | ||||||||||||||
Stockholders Equity [Line Items] | ||||||||||||||
Awards granted (in shares) | 0 | |||||||||||||
Awards subject to vesting (in shares) | 1,083,333 | 1,400,000 | ||||||||||||
Awards vested (in shares) | 316,667 | |||||||||||||
Omnibus Plan | ||||||||||||||
Stockholders Equity [Line Items] | ||||||||||||||
Stock options outstanding (shares) | 85,000 | |||||||||||||
Securities remaining for future issuance (in shares) | 9,511,785 | |||||||||||||
Omnibus Plan | Stock Options | ||||||||||||||
Stockholders Equity [Line Items] | ||||||||||||||
Shares of common stock reserved for future grant (in shares) | 12,600,000 | |||||||||||||
Omnibus Plan | Stock Options | Employees | ||||||||||||||
Stockholders Equity [Line Items] | ||||||||||||||
Stock options granted (in shares) | 85,000 | |||||||||||||
Stock options outstanding (shares) | 85,000 | |||||||||||||
Omnibus Plan | Stock Appreciation Rights | Directors | ||||||||||||||
Stockholders Equity [Line Items] | ||||||||||||||
Stock options granted (in shares) | 100,000 | |||||||||||||
Stock options outstanding (shares) | 100,000 | |||||||||||||
Omnibus Plan | Restricted Stock | Employees | ||||||||||||||
Stockholders Equity [Line Items] | ||||||||||||||
Awards granted (in shares) | 2,270,000 | |||||||||||||
Awards subject to vesting (in shares) | 1,083,333.33 | |||||||||||||
Omnibus Plan | Restricted Stock | Directors | ||||||||||||||
Stockholders Equity [Line Items] | ||||||||||||||
Awards granted (in shares) | 633,215 | |||||||||||||
Awards vested (in shares) | 1,186,667 | |||||||||||||
|
Fair Value Measurements - Changes in Fair Value for All Assets Using Material Level of Unobservable (Level 3) Inputs (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Aug. 31, 2019 |
Aug. 31, 2019 |
Aug. 31, 2018 |
Aug. 31, 2019 |
Aug. 16, 2019 |
Aug. 31, 2018 |
|
Fair Value, Assets, Unobservable Input Reconciliation [Roll Forward] | ||||||
Change in fair value of investment in limited partnership | $ (5,821,000) | $ 0 | $ (5,821,000) | $ 0 | ||
Subsidiaries | Lamington | ||||||
Fair Value, Assets, Unobservable Input Reconciliation [Roll Forward] | ||||||
Change in fair value of investment in limited partnership | 15,352,000 | 0 | 15,352,000 | 0 | ||
Level 3 | Lamington | ||||||
Fair Value, Assets, Unobservable Input Reconciliation [Roll Forward] | ||||||
Beginning balance | 128,795,000 | $ 128,795,000 | ||||
Change in fair value | 37,941,000 | |||||
Transferred to consolidation | (166,736,000) | |||||
Ending balance | $ 0 | 0 | 0 | |||
Level 3 | Life Finance | ||||||
Fair Value, Assets, Unobservable Input Reconciliation [Roll Forward] | ||||||
Beginning balance | 557,786,000 | |||||
Purchase of policies | 0 | |||||
Change in fair value | 19,299,000 | |||||
Policies matured | (68,185,000) | |||||
Premiums paid | 67,916,000 | |||||
Transfers into level 3 | 0 | |||||
Transfers out of level 3 | 0 | |||||
Ending balance | $ 576,816,000 | 576,816,000 | ||||
Changes in fair value included in earnings for the period relating to assets held at the end of the period | $ (15,707,000) | |||||
Level 3 | Life Finance | Subsidiaries | ||||||
Fair Value, Assets, Unobservable Input Reconciliation [Roll Forward] | ||||||
Beginning balance | 1,172,000 | 1,172,000 | ||||
Purchase of policies | 0 | |||||
Change in fair value | (37,000) | |||||
Policies matured | 0 | |||||
Premiums paid | 118,000 | |||||
Ending balance | 1,253,000 | 1,253,000 | 1,253,000 | |||
Changes in fair value included in earnings for the period relating to assets held at the end of the period | (37,000) | |||||
Level 3 | Life Finance | Deconsolidated | ||||||
Fair Value, Assets, Unobservable Input Reconciliation [Roll Forward] | ||||||
Beginning balance | 505,235,000 | 505,235,000 | ||||
Purchase of policies | 0 | |||||
Change in fair value | (16,841,000) | |||||
Receivable for maturity of life settlement write off (Note 18) | 17,800,000 | |||||
Policies sold | (344,845,000) | |||||
Policies matured | (100,373,000) | |||||
Premiums paid | 69,827,000 | |||||
Transfer (to) from investments | (130,803,000) | |||||
Ending balance | 0 | 0 | 0 | |||
Changes in fair value included in earnings for the period relating to assets held at the end of the period | 0 | |||||
Level 3 | Equity investment | ||||||
Fair Value, Assets, Unobservable Input Reconciliation [Roll Forward] | ||||||
Beginning balance | 138,155,000 | 0 | 0 | |||
Change in fair value | 15,352,000 | |||||
Transfer (to) from investments | 130,803,000 | |||||
Advance for Class D Shares | (8,000,000) | |||||
Change in fair value of investment in limited partnership | (5,821,000) | |||||
Ending balance | $ 132,334,000 | $ 132,334,000 | 132,334,000 | $ 138,155,000 | ||
Changes in fair value included in earnings for the period relating to assets held at the end of the period | $ (5,821,000) |
8.50% Senior Unsecured Convertible Notes (Details) $ / shares in Units, $ in Thousands |
1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Aug. 28, 2019
USD ($)
|
Jul. 28, 2017
USD ($)
|
Jul. 26, 2017
USD ($)
|
Apr. 18, 2017 |
Mar. 14, 2017
USD ($)
|
Feb. 15, 2017
d
|
Feb. 21, 2014 |
Feb. 28, 2014
USD ($)
$ / shares
|
Aug. 31, 2019
USD ($)
|
Aug. 31, 2018
USD ($)
|
Jun. 30, 2015
$ / shares
shares
|
Aug. 31, 2019
USD ($)
|
Aug. 31, 2018
USD ($)
|
Feb. 14, 2017 |
|
Debt Instrument [Line Items] | ||||||||||||||
Interest paid in kind on 8.5% Senior Secured Notes | $ 2,842 | $ 0 | ||||||||||||
Existing Note Holders | Exchange Offers | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Percentage of holders tendering exchange offer, minimum (as percent) | 98.00% | |||||||||||||
8.5% Convertible Notes | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Stated interest rate percentage | 8.50% | 8.50% | 8.50% | 8.50% | ||||||||||
5.0% Convertible Notes | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Stated interest rate percentage | 5.00% | 5.00% | ||||||||||||
Convertible Notes | 8.5% Convertible Notes | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Debt instrument issued | $ 1,200 | $ 74,200 | $ 70,700 | |||||||||||
Stated interest rate percentage | 8.50% | |||||||||||||
Debt instrument, issuance date | Feb. 21, 2014 | |||||||||||||
Debt instrument, maturity date | Feb. 15, 2019 | |||||||||||||
Debt instrument, frequency of periodic payment | semi-annually in arrears on August 15 and February 15 of each year | |||||||||||||
Debt instrument, conversion shares per $1,000 of principal amount (in shares) | 147.9290 | 151.7912 | ||||||||||||
Debt instrument, conversion rate | 0.147929 | |||||||||||||
Debt instrument, conversion price (in dollars per share) | $ / shares | $ 6.76 | $ 6.59 | ||||||||||||
Common stock issued for rights offering, net of costs (in shares) | shares | 6,688,433 | |||||||||||||
Debt instrument, redemption start date | Feb. 15, 2017 | |||||||||||||
Debt instrument, convertible, minimum percentage of common stock price (as percent) | 130.00% | |||||||||||||
Debt instrument, convertible, threshold trading days | d | 20 | |||||||||||||
Debt instrument, convertible, threshold consecutive trading days | d | 30 | |||||||||||||
Debt instrument, redemption price, percentage (as percent) | 100.00% | |||||||||||||
Outstanding principal balance | 73,000 | |||||||||||||
Interest paid in kind on 8.5% Senior Secured Notes | 2,800 | |||||||||||||
Debt restructuring, amount reclassified to succeeding debt instrument | 7,700 | |||||||||||||
Debt restructuring, debt discount reclassified to succeeding instrument | 6,700 | |||||||||||||
Debt instrument, debt issuance costs reclassified to succeeding debt instrument | $ 1,000 | |||||||||||||
Debt outstanding principal pay off | $ 1,200 | |||||||||||||
Debt accrued and unpaid interest payment | 110 | |||||||||||||
Debt administrative fees and expenses paid | $ 38 | |||||||||||||
Interest expense debt | $ 22 | $ 46 | $ 93 | $ 138 | ||||||||||
Interest included in interest expense | 25 | 73 | 76 | |||||||||||
Amortization of debt discounts | 18 | 18 | 54 | |||||||||||
Amortization of debt origination costs | $ 3 | $ 3 | $ 8 | |||||||||||
Convertible Notes | Additional 8.50% Convertible Notes | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Debt instrument issued | $ 3,500 | |||||||||||||
Stated interest rate percentage | 8.50% | |||||||||||||
Percentage of aggregate principal amount of convertible notes (as percent) | 98.00% | |||||||||||||
Convertible Notes | 5.0% Convertible Notes | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Stated interest rate percentage | 5.00% | 5.00% | 5.00% | |||||||||||
Percentage of holders tendering exchange offer, minimum (as percent) | 98.00% |
Fair Value Measurements - Weighted Average Rate Discount Rates Used to Calculate Death Benefits (Details) $ in Thousands |
9 Months Ended | |
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Aug. 31, 2019
USD ($)
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Nov. 30, 2018
USD ($)
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investment in life settlements fair value | $ 1,254 | $ 506,407 |
Weighted Average Discount Rate | 0.50% Decrease | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Weighted Average Rate Calculated Based on Death Benefit - Consolidated | 0.1442 | |
Investment in life settlements fair value | $ 1,308 | |
Change in Value | $ 54 | |
Weighted Average Discount Rate | No Change | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Weighted Average Rate Calculated Based on Death Benefit - Consolidated | 0.1492 | |
Investment in life settlements fair value | $ 1,254 | |
Change in Value | $ 0 | |
Weighted Average Discount Rate | 0.50% Increase | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Weighted Average Rate Calculated Based on Death Benefit - Consolidated | 0.1542 | |
Investment in life settlements fair value | $ 1,202 | |
Change in Value | $ (52) |
Deconsolidation of Subsidiaries |
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Reorganizations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deconsolidation of Subsidiaries | Deconsolidation of Subsidiaries On the Petition Date, Lamington and WEGP filed the November Chapter 11 Cases in the Bankruptcy Court. As of such date, Lamington was the limited partner and owned 99.99%, and WEGP was the general partner and owned 0.01%, of White Eagle. In its capacity as general partner, WEGP managed the affairs of White Eagle. Lamington and WEGP will continue to operate their businesses as "debtors-in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. Emergent Capital (exclusive of its subsidiaries) is a separate entity, and has not filed for bankruptcy relief and is continuing to operate in the ordinary course. The Deconsolidated Entities' financial results are included in the Company’s consolidated results through November 13, 2018, the day prior the Petition Date. However, under ASC 810, Consolidation, specifically ASC 810-10-15, consolidation of a majority-owned subsidiary is precluded where control does not rest with the majority owners, for instance, where the subsidiary is in legal reorganization or bankruptcy. Accordingly, when a subsidiary files for bankruptcy, it is appropriate for the parent to deconsolidate the subsidiary. Under ASC 810, this loss of control would likely trigger a gain or loss for the parent as the parent would remeasure its retained noncontrolling investment at fair value. We assessed the inherent uncertainties associated with the outcome of the Chapter 11 reorganization process and the anticipated duration thereof, and concluded that it was appropriate to deconsolidate Lamington and its subsidiaries effective on the Petition Date. At November 13, 2018, the pre-petition date, the Company valued its investment in Lamington to be $278.4 million, of which $127.3 million represents equity, $145.9 million represents promissory notes and interest receivable and $5.2 million represents other liabilities, which is equivalent to the Company's carrying value. This valuation was determined by performing a fair value calculation of the assets and liabilities of Lamington under ASC 820, Fair Value Measurement. The Company currently uses a probabilistic method of valuing life insurance policies, which the Company believes to be the preferred valuation method in the industry. The most significant assumptions are the estimates of life expectancy of the insured and the discount rate. The Company calculated the fair value of the White Eagle Revolving Credit Facility using a discounted cash flow model taking into account the stated interest rate of the credit facility and probabilistic cash flows from the pledged policies. Considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, the Company’s estimates are not necessarily indicative of the amounts that the Company, or holders of the instruments, could realize in a current market exchange. The most significant assumptions are the estimates of life expectancy of the insureds, the estimate of the amount that will be necessary to settle the debt under the White Eagle Revolving Credit Facility, and the discount rate. The use of different assumptions and/or estimation methodologies could have a material effect on the estimated fair values. All other assets and liabilities were deemed equivalent to their carrying value as at the pre-petition date. See Note 16, "Fair Value Measurements," of the accompanying consolidated financial statements. ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities was effective for calendar year-end public business entities in 2018. Under the new guidance, a reporting entity should account for its equity investments that are not consolidated or accounted for under the equity method at fair value, with changes to fair value recorded in current earnings. Lamington's main subsidiary, White Eagle, carries its life settlements policies and debt under the White Eagle Revolving Credit Facility at fair value, these valuations are based on inputs that are both significant to the fair value measurement and unobservable. As a result, the Company adopted ASU 2016-01 to value its investment in Lamington. The calculation was performed consistent with ASC 820 with changes in fair value recorded in current earnings. As a result of the Chapter 11 Cases, consistent with ASC 321, Investments - Equity Securities, the Company subsequently, measured its investment in Lamington at fair value as of November 30, 2018. Further, the Company engaged a third party to perform a quantitative assessment to determine the value of its investment in Lamington. The valuation report showed the fair value of the Company's investment in Lamington to be $128.8 million, which was $149.6 million lower than its pre-petition value. As a result, the Company recognized a reduction in its investment in Lamington at November 30, 2018. On August 16, 2019, the White Eagle Revolving Credit Facility was paid in full and terminated. In addition, payment was made to all White Eagle vendors and intercompany liabilities were contributed by Emergent. Lamington and WEGP had pledged their respective interests in White Eagle to secure its obligations under the White Eagle Revolving Credit Facility. With the termination of the facility, this pledge was released. There were no outstanding third party liabilities for either Lamington or WEGP at August 16, 2019 besides intercompany obligations. On September 16, 2019, subsequent to the quarter end, the Bankruptcy Court entered an order and a final decree closing the White Eagle Chapter 11 Case. The Lamington and WEGP case were not yet dismissed as of the filing date of this Form 10-Q. However pursuant to ASC 810, Consolidation, management took the position that given that all third party claims had been satisfied in the case, consolidation of Lamington and WEGP as of August 17, 2019 was appropriate. The Company further evaluated its investment at August 16, 2019 and recognized a gain of approximately $37.9 million, which amount is reflected in current earnings as change in fair value of investment in deconsolidated subsidiaries. The amount is associated with gains incurred by Lamington for the period up to August 16, 2019 in considering the proceeds received through the transactions for the Subscription Agreement, the actual payoff of the White Eagle Revolving Credit Facility and all other third party claims. Effective August 17, 2019, the entities are no longer deconsolidated. The fair value of the investment in Lamington is calculated as follows:
The table below summarizes the composition of the Company's investment in the deconsolidated entities at August 16, 2019:
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Stock-based Compensation |
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Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based Compensation | Stock-based Compensation On June 27, 2017, the shareholders of the Company voted to amend, and the Company amended, the Amended and Restated 2010 Omnibus Incentive Plan (as amended, the "Omnibus Plan") to increase the number of shares authorized for issuance thereunder by 9,900,000 shares. Awards under the Omnibus Plan may consist of incentive awards, stock options, stock appreciation rights, performance shares, performance units, and shares of common stock, restricted stock, restricted stock units or other stock-based awards as determined by the compensation committee of the Company's board of directors. The Omnibus Plan has an aggregate of 12,600,000 shares of common stock authorized for issuance thereunder, subject to adjustment as provided therein. Options As of November 30, 2018, all options to purchase shares of common stock issued by the Company were fully vested with 85,000 exercisable. There was no stock-based compensation expense relating to stock options granted under the Omnibus Plan during the three months and nine months ended August 31, 2019 and 2018, respectively. As of August 31, 2019, options to purchase 85,000 shares of common stock were outstanding under the Omnibus Plan at a weighted average exercise price of $6.94 per share. The options were issued on June 6, 2013 and expire seven years after the date of grant which will be June 6, 2020. The following table presents the activity of the Company’s outstanding stock options to purchase common stock for the nine months ended August 31, 2019:
As of August 31, 2019, all outstanding stock options had an exercise price above the fair market value of the common stock on that date. There are no remaining unamortized amounts to be recognized on these options. Restricted Stock The Company incurred stock-based compensation expense of approximately $95,000 and $207,000 relating to restricted stock granted to the board and certain employees during the three months ended August 31, 2019 and 2018, respectively, and $290,000 and $380,000 during the nine months ended August 31, 2019 and 2018, respectively. During the year ended December 31, 2016, the Company granted 200,000 shares of restricted stock units to certain employees under the Omnibus Plan, which were subject to a two year vesting period that commenced on the date of grant. The fair value of the unvested restricted stock was valued at approximately $674,000 based on the closing price of the Company’s shares on the day prior to the grant date. Approximately 46,000 and 60,000 shares of restricted stock were vested and forfeited, respectively, since issuance and 74,000 and 20,000 were vested and forfeited, respectively, during the eleven months ended November 30, 2018 with 0 unvested at August 31, 2019. The Company incurred stock-based compensation expense of approximately $0 and $10,000 related to these 200,000 shares of restricted stock during the three months ended August 31, 2019 and 2018 respectively, and income of $0 and $25,000 during the nine months ended August 31, 2019 and 2018, respectively. During the year ended December 31, 2017, the Company granted 51,132 shares of restricted stock to its directors under the Omnibus Plan, which were subject to a one year vesting period that commenced on the date of grant. The fair value of the unvested restricted stock was valued at approximately $17,000 based on the closing price of the Company’s shares on the date prior to the grant date. The Company incurred stock-based compensation expense related to these 51,132 shares of restricted stock of approximately $0 during the three months and nine months ended August 31, 2019 and 2018. Approximately 42,610 shares of restricted stock vested during the year ended December 31, 2017, with 8,522 vested during the eleven months November 30, 2018. During the year ended December 31, 2017, the Company granted 2,000,000 shares of restricted stock units to certain employees under the Omnibus Plan, which are subject to a two year vesting period that commenced on the date of grant. The fair value of the unvested restricted stock was valued at approximately $745,000 based on the closing price of the Company's shares on the day prior to the grant date. Approximately 750,000 shares of restricted stock vested during the eleven months ended November 30, 2018 and 250,000 during the nine months ended August 31, 2019 with 1,000,000 unvested at August 31, 2019. The Company incurred stock-based compensation expense of approximately $89,000 and $101,000 during the three months ended August 31, 2019 and 2018, respectively, with $271,000 and $305,000 during the nine months ended August 31, 2019 and 2018, respectively, related to these 2,000,000 shares of restricted stock. During the eleven months ended November 30, 2018, the Company granted 150,000 shares of restricted stock units to certain employees under the Omnibus Plan, with 100,000 shares and 50,000 subject to a two and three year vesting period, respectively, that commenced on the date of grant. The fair value of the unvested restricted stock was valued at approximately $58,000 based on the closing price of the Company's shares on the day prior to the grant date. Approximately 66,667 shares of restricted stock vested during the three months and nine months ended August 31, 2019 with 83,333 unvested at August 31, 2019. The Company incurred stock-based compensation expense of approximately $6,000 and $6,000 during the three months ended August 31, 2019 and 2018, respectively, with $19,000 and $11,000 during the nine months ended August 31, 2019 and 2018, respectively, related to these 150,000 shares of restricted stock. During the three months and nine months ended August 31, 2018, the Company established an ad hoc Capital Structure Committee (the "Committee") consisting of members of the board of directors, to undertake a review of the Company's capital structure. As compensation to the sole non-employee member of the Committee, the Company granted 400,000 restricted stock units under the Omnibus Plan, which will vest on the later of (i) September 30, 2018 and (ii) termination of the director's service on the Committee. The fair value of the restricted stock was valued at approximately $128,000 based on the closing price of the Company’s shares on the date prior to the grant date. The Company incurred stock-based compensation expense related to these 400,000 restricted stock units of approximately $81,000 and $81,000 during the three months and nine months ended August 31, 2018 and 2018. The 400,000 restricted stock units vested during the eleven months November 30, 2018. The following table presents the activity of the Company’s unvested shares of restricted stock for the nine months ended August 31, 2019:
The aggregate intrinsic value of the awards of 83,333 and 1,000,000 shares is $20,000 and $240,000, respectively, and the remaining weighted average life of these awards is 0.87 years and 0.21 years respectively as of August 31, 2019. As of August 31, 2019, a total of $110,000 in stock based compensation remained unrecognized. Stock Appreciation Rights (SARs) During the eleven months November 30, 2018, the Company issued 100,000 SARs to the sole non-employee member of the ad hoc Capital Structure Committee of the Board, which will expire 10 years after the date the SARs were granted. The SARs will vest on the later of (i) September 30, 2018 and (ii) termination of the director's service on the Committee and had a fair value of $9,000 on the grant date. Each SAR entitles the holder to receive, upon exercise, an amount equal to the excess of (a) the fair market value per share of stock on the exercise date, over (b) the exercise price, which is $1.00, being not less than the fair market value per share of stock on the grant date. Upon exercise of the SARs, the stock appreciation amount shall be paid, as determined solely at the discretion of the Company, in (a) whole shares, (b) cash, or (c) a combination of both cash and shares. The 100,000 SARs vested during the eleven months November 30, 2018 and remain unexercised at August 31, 2019. |
White Eagle Revolving Credit Facility |
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Credit Facility | White Eagle Revolving Credit Facility Effective April 29, 2013, White Eagle entered into a 15-year revolving credit agreement with LNV Corporation, as initial lender, Imperial Finance & Trading, LLC, as servicer and portfolio manager and CLMG Corp., as administrative agent. Proceeds from the initial advance under the facility were used, in part, to retire a bridge facility and to fund a payment to the lender protection insurance provider to release subrogation rights in certain of the policies pledged as collateral for the White Eagle Revolving Credit Facility. On May 16, 2014, White Eagle Asset Portfolio, LLC converted from a Delaware limited liability company to White Eagle Asset Portfolio, LP, a Delaware limited partnership (the "Conversion") and all of its ownership interests were transferred to an indirect, wholly-owned Irish subsidiary of the Company. In connection with the Conversion, the White Eagle Revolving Credit Facility was amended and restated among White Eagle, as borrower, Imperial Finance and Trading, LLC, as the initial servicer, the initial portfolio manager and guarantor, Lamington Road Bermuda Ltd., as portfolio manager, LNV Corporation, as initial lender, the other financial institutions party thereto as lenders, and CLMG Corp., as administrative agent for the lenders. The White Eagle Revolving Credit Facility was amended on November 9, 2015. As amended, the White Eagle Revolving Credit Facility may provide earlier participation in the portfolio cash flows if certain loan to value ("LTV") ratios are achieved. Additionally, the maximum facility limit was reduced from $300.0 million to $250.0 million, and the interest rate under the facility was increased by 50 basis points. On December 29, 2016, White Eagle entered into a Second Amendment to the Amended and Restated Loan and Security Agreement ("White Eagle Second Amendment") and on January 31, 2017, as required by the terms of the White Eagle Second Amendment, White Eagle executed the Second Amended and Restated Loan and Security Agreement, dated January 31, 2017, which consolidated into a single document the amendments evidenced by the White Eagle Amendment (as defined below) and all previous amendments. As amended, the White Eagle Revolving Credit Facility adjusted the loan-to-value LTV ratios which directed cash flow participation and became subjected to achieving certain financial metrics, as more fully described below under "Amortization & Distributions." Pursuant to the White Eagle Second Amendment, 190 life settlement policies purchased from wholly owned subsidiaries of the Company were pledged as additional collateral under the facility for an additional policy advance of approximately $71.1 million. The maximum facility limit was increased to $370.0 million and the term of the facility was extended to December 31, 2031. Additional loan terms and amendment changes are more fully described in the sections that follow. On October 4, 2017, White Eagle entered into an amendment to the Second Amended and Restated Loan and Security Agreement. The amendment changed the provisions relating to how participation of the proceeds from the maturity of the policies pledged as collateral under the White Eagle Revolving Credit Facility are distributed pursuant to a waterfall. The amendment included an exclusion from the cash interest coverage ratio of at least 2.0:1 for the period of July 1, 2017 through July 28, 2017. As a result of the amendment, the Company was able to participate in the waterfall distribution scheduled during October 2017. General and Security. The White Eagle Revolving Credit Facility provides for an asset-based revolving credit facility backed by White Eagle’s portfolio of life insurance policies with an aggregate lender commitment of up to $370.0 million, subject to borrowing base availability. Borrowing Base. Borrowing availability under the White Eagle Revolving Credit Facility is subject to a borrowing base, which at any time is equal to the lesser of (A) the sum of all of the following amounts that have been funded or are to be funded through the next distribution date: (i) the initial advance and all additional advances to acquire additional pledged policies that are not for ongoing maintenance advances, plus (ii) 100% of the sum of the ongoing maintenance costs, plus (iii) 100% of fees and expense deposits and other fees and expenses funded and to be funded as approved by the required lenders, less (iv) any required payments of principal and interest previously distributed and to be distributed through the next distribution date; (B) 75% of the valuation of the policies pledged as collateral as determined by the lenders; (C) 50% of the aggregate face amount of the policies pledged as collateral (excluding certain specified life insurance policies); and (D) the then applicable facility limit. Amortization and Distributions. Proceeds from the maturity of the policies pledged as collateral under the White Eagle Revolving Credit Facility are distributed pursuant to a waterfall. After distributions for premium payments, fees to service providers and payments of interest, a percentage of the collections from policy proceeds are to be paid to the Company, which will vary depending on the then LTV ratio as illustrated below where the valuation is determined by the lenders:
Provided that (i) if (a) the Company failed to maintain a cash interest coverage ratio of at least 2.0:1 at any time during the immediately preceding calendar quarter or (b) the Company fails to take steps to improve its solvency in a manner acceptable to the required lenders (as determined in their sole and absolute discretion), then the cash flow sweep percentage to the lenders shall equal one-hundred percent (100%) and (ii) if such distribution date occurs on or after December 29, 2025, then the cash flow sweep percentage shall equal one-hundred percent (100%). The cash interest coverage ratio is the ratio of (i) consolidated cash and cash equivalents maintained by the Company to (ii) the aggregate interest amounts that will be due and payable in cash on (x) the $46.5 million 8.5% Senior Secured Notes due July 15, 2021 (and any notes issued by the Company or any of its Affiliates in connection with refinancing, replacing, substituting or any similar action with respect to any such notes), the $75.8 million 5% Convertible Notes due February 15, 2023 (and any notes issued by the Company or any of its Affiliates in connection with refinancing, replacing, substituting or any similar action with respect to any such notes), and the $1.2 million 8.5% Convertible Notes due February 15, 2019 (and any notes issued by the Company or any of its Affiliates in connection with refinancing, replacing, substituting or any similar action with respect to any such notes) and (y) any additional indebtedness issued by the Company after December 29, 2016, in each case, during the twelve month period following such date of determination. See Note 12, "8.50% Senior Unsecured Convertible Notes", Note 13, "5.0% Senior Unsecured Convertible Notes" and Note 14, "8.5% Senior Secured Notes", to the accompanying consolidated financial statements for further information. With respect to approximately 25% of the face amount of policies pledged as collateral under the White Eagle Revolving Credit Facility, White Eagle has agreed that if policy proceeds that are otherwise due are not paid by an insurance carrier, the foregoing distributions will be altered such that the lenders will receive any "catch-up" payments with respect to amounts that they would have received in the waterfall prior to distributions being made to White Eagle. During the continuance of events of default or unmatured events of default, the amounts from collections of policy proceeds that might otherwise be paid to White Eagle will instead be held in a designated account controlled by the lenders and may be applied to fund operating and third party expenses, interest and principal, "catch-up" payments or percentage payments that would go to the lenders as described above. The below is a reconciliation of proceeds collected by the White Eagle Revolving Credit Facility and distributed from the collection account in accordance with the budget approved by the Bankruptcy court and the Revolving Credit Facility termination agreement (in thousands):
*Includes refund of premiums and interest earned on maturity proceeds ** Collection account was closed on August 16, 2019 in connection with the termination of the White Eagle Revolving Credit Facility. For the three months and nine months ended August 31, 2018, approximately $12.8 million and $44.2 million , respectively, of proceeds received from the maturity of policies pledged under the White Eagle Revolving Credit Facility, were distributed through the waterfall in the following stages of priority (in thousands):
Use of Proceeds. Generally, ongoing advances may be made for paying premiums on the life insurance policies pledged as collateral and to pay the fees of service providers. Effective with the amendment to the White Eagle Revolving Credit Facility on November 9, 2015 (the "White Eagle Amendment"), ongoing advances may no longer be used to pay interest, which will now be paid by White Eagle if there is not otherwise sufficient amounts available from policy proceeds to be distributed to pay interest expense pursuant to the waterfall described above in "Amortization and Distributions." Subsequent advances and the use of proceeds from those advances are at the discretion of the lenders. During the three months and nine months ended August 31, 2019 and 2018, advances for premium payments and fees to service providers amounted to (in thousands):
Interest. Borrowings under the White Eagle Revolving Credit Facility bear interest at a rate equal to LIBOR or, if LIBOR is unavailable, the base rate, in each case plus an applicable margin of 4.50%, which was increased from 4.00% pursuant to the November 9, 2015 amendment, and subject to a rate floor component equal to the greater of LIBOR (or the applicable rate) and 1.5%. The base rate under the White Eagle Revolving Credit Facility equals the sum of (i) the weighted average of the interest rates on overnight federal funds transactions or, if unavailable, the average of three federal funds quotations received by the Agent plus 0.75% and (ii) 0.5%. Based on the loan agreement, the LIBOR portion of the interest rate will re-adjust annually, once the floor has exceeded 1.5%. The applicable rate will be dependent on the rate at the last business day of the preceding calendar year. On December 31, 2018, the LIBOR floor increased from 2.11% to 3.01%. The effective rate at August 15, 2019 and August 31, 2018 was 9.51% and 6.61%, respectively. In the event that an Event of Default has occurred and is continuing, the interest rate will be equal to the sum of (i) the greater of (a) (1) LIBOR or, if LIBOR is unavailable, (2) the Base Rate and (b) one and a half percent (1.5%) plus (ii) six and a half percent (6.5%). Interest paid during the period is recorded in the Company’s consolidated and deconsolidated financial statements. Accrued interest is reflected as a component of the estimated fair value of the White Eagle Revolving Credit Facility debt. Total interest expense on the facility during the three months and nine months ended August 31, 2019 and 2018 paid from maturity proceeds or paid directly by White Eagle was as follows (in thousands):
Maturity. Effective with the White Eagle Second Amendment, the term of the White Eagle Revolving Credit Facility expires December 31, 2031, which is also the scheduled commitment termination date (though the lenders’ commitments to fund borrowings may terminate earlier in an event of default). The lenders’ interests in and rights to a portion of the proceeds of the policies does not terminate with the repayment of the principal borrowed and interest accrued thereon, the termination of the White Eagle Revolving Credit Facility or expiration of the lenders’ commitments. Covenants/Events of Defaults. The White Eagle Revolving Credit Facility contains covenants and events of default that are customary for asset-based credit agreements of this type, but also includes cross defaults under the servicing, account control, contribution and pledge agreements entered into in connection with the White Eagle Revolving Credit Facility (including in relation to breaches by third parties thereunder), certain changes in law, changes in control of or insolvency or bankruptcy of the Company and relevant subsidiary companies and performance of certain obligations by certain relevant subsidiary companies, White Eagle and third parties. Effective with the White Eagle Second Amendment, and as described above in "Amortization and Distributions", the White Eagle Revolving Credit Facility contains a financial covenant requiring White Eagle to maintain a cash interest coverage ratio of at least 1.75:1 commencing after June 30, 2019. Failure to maintain this ratio for 60 consecutive days after June 30, 2019 constitutes an event of default. There is no cash interest coverage ratio requirement that would result in an event of default prior to this date; however, any failure to maintain a cash interest coverage ratio of at least 2.0:1 does impact the cash flow sweep percentage for proceeds distributed through the waterfall. Remedies. The White Eagle Revolving Credit Facility and ancillary transaction documents afford the lenders a high degree of discretion in their selection and implementation of remedies, including strict foreclosure, in relation to any event of default, including a high degree of discretion in determining whether to foreclose upon and liquidate all or any pledged policies, the interests in White Eagle, and the manner of any such liquidation. White Eagle has limited ability to cure events of default through the sale of policies or the procurement of replacement financing. The Company elected to account for the debt under the White Eagle Revolving Credit Facility in accordance with ASC 820, Fair Value Measurements and Disclosures, ("ASC 820") which includes the 45% interest in policy proceeds to the lender, using the fair value method. The fair value of the debt is the amount the Company would have to pay to transfer the debt to a market participant in an orderly transaction. The Company calculated the fair value of the debt using a discounted cash flow model taking into account the stated interest rate of the credit facility and probabilistic cash flows from the pledged policies. Considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, the Company’s estimates are not necessarily indicative of the amounts that the Company, or holders of the instruments, could realize in a current market exchange. The most significant assumptions are the estimates of life expectancy of the insured and the discount rate. The use of different assumptions and/or estimation methodologies could have a material effect on the estimated fair values. Voluntary Petitions for Relief Under Chapter 11 On the Petition Date, Lamington and WEGP filed the November Chapter 11 Cases in the Bankruptcy Court. Lamington was the limited partner and owned 99.99%, and WEGP was the general partner and owned 0.01%, of White Eagle. In its capacity as general partner, WEGP managed the affairs of White Eagle. The Lamington and WEGP filings are referred to as the "November Chapter 11 Cases." The commencement of the November Chapter 11 Cases constitutes an event of default under the White Eagle Revolving Credit Facility, resulting in the principal and accrued interest due from White Eagle thereunder becoming immediately due and payable. Lamington and WEGP have pledged their respective interests in White Eagle to secure its obligations under the White Eagle Revolving Credit Facility. Any efforts of CLMG to enforce such pledges by Lamington and WEGP of their respective interests in White Eagle in connection with the White Eagle Revolving Credit Facility are automatically stayed as a result of the commencement of the November Chapter 11 Cases and LNV’s and CLMG’s rights of enforcement in respect of the White Eagle Revolving Credit Facility are subject to the applicable provisions of the Bankruptcy Code. In addition, on November 15, 2018, White Eagle, LNV and CLMG entered into an Agreement Regarding Rights and Remedies (the "Standstill Agreement"), pursuant to which LNV and CLMG agreed to refrain from exercising their rights and remedies in connection with the White Eagle Revolving Credit Facility, subject to the terms and provisions of the Standstill Agreement, until 12:00 p.m. noon Pacific time on November 26, 2018, to facilitate negotiations. The effective period under the Standstill Agreement was extended several times, finally to December 13, 2018. On December 13, 2018, White Eagle filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the Bankruptcy Court. The Chapter 11 case is being administered under case number 18-12808 (the "White Eagle Chapter 11 Case" and, together with the November Chapter 11 Cases, the "Chapter 11 Cases"). The commencement of the White Eagle Chapter 11 Case would constitute a default and event of default under the terms of the Amended and Restated Senior Note Indenture relating to the Company’s Amended and Restated Senior Secured Indenture and the New Convertible Note Indenture. However, such defaults and events of default and their consequences were waived in advance of the White Eagle Chapter 11 Case by holders of all of the outstanding principal amount of the 8.5% Senior Secured Notes and by holders of a majority of the outstanding principal amount of the outstanding New Convertible Notes, and consequently, the Company believes that no defaults, events of default or acceleration of the payment obligations thereunder, including principal or accrued interest, occurred under either the Company’s Amended and Restated Senior Secured Indenture or the New Convertible Note Indenture. The commencement of the White Eagle Chapter 11 Case, together with the related Chapter 11 Cases, constitutes an event of default under the White Eagle Revolving Credit Facility, resulting in the principal and accrued interest due from White Eagle thereunder becoming immediately due and payable. Lamington and WEGP have pledged their respective interests in White Eagle to secure its obligations under the White Eagle Revolving Credit Facility. Any efforts by LNV to enforce repayment by White Eagle and/or such pledges by Lamington and WEGP of their respective interests in White Eagle in connection with the White Eagle Revolving Credit Facility are automatically stayed as a result of the commencement of the Chapter 11 Cases and LNV’s and CLMG’s rights of enforcement in respect of the White Eagle Revolving Credit Facility are subject to the applicable provisions of the Bankruptcy Code. Subsequent Event On September 16, 2019, the Bankruptcy Court entered an order and final decree closing the White Eagle Chapter 11 Case. Deconsolidation and Subsequent Measurement of the Deconsolidated Entities Lamington and its subsidiaries' (White Eagle, WEGP and Lamington Bermuda), financial results were excluded from the Company’s consolidated results for the period from November 14, 2018, the Petition Date, to August 16, 2019, the day the date the White Eagle Revolving Credit Facility was terminated. ASC 810, Consolidation require that an entity whose financial statements were previously consolidated with those of its parent that files for protection under the U.S. Bankruptcy Code, whether solvent or insolvent, generally must be prospectively deconsolidated from the parent and presented as an equity investment (deconsolidation applies to Lamington and all subsidiaries owned, directly or indirectly, by Lamington, including WEGP, White Eagle and Lamington Bermuda which collectively are referred to herein as the ("Deconsolidated Entities" or the "Debtors"). Therefore, our 2019 results are not comparable with our 2018 results. Under ASC 810, this loss of control would likely trigger a gain or loss for the parent as the parent would remeasure its retained noncontrolling investment at fair value each reporting period. We assessed the inherent uncertainties associated with the outcome of the Chapter 11 reorganization process and the anticipated duration thereof, and concluded that it was appropriate to deconsolidate Lamington and its subsidiaries effective on the Petition Date. Effective August 17, 2019, the entities were deemed to have emerged from bankruptcy and were no longer deconsolidated. See Note 2, "Principles of Consolidation - Reorganization and Consolidation" to the accompanying consolidated financial statements. Beal Litigation On January 25, 2019, the Company, White Eagle, Lamington, and WEGP (collectively the "Plaintiffs" filed the Suit against LNV, Silver Point and GWG the "Defendants") in the Bankruptcy Court where the Suit will be administered together with the previously filed Chapter 11 Cases. LNV, a subsidiary of Beal, is the lender under the White Eagle Revolving Credit Facility. In the Suit, the Plaintiffs allege that the Defendants engaged in a scheme to coerce the Plaintiffs into selling their valuable portfolio of life insurance policies to defendants for well below its true value. Pursuant to the White Eagle Revolving Credit Facility, LNV agreed to lend $370 million to White Eagle, and in connection therewith received a 45% equity stake in White Eagle. That equity stake, and LNV’s significant control over White Eagle under the White Eagle Revolving Credit Facility, creates a joint venture, and gives rise to fiduciary duties to White Eagle and Emergent, on the part of LNV. The Plaintiffs further allege that LNV has been engaged in a concerted campaign to "squeeze" White Eagle and Emergent by improperly restricting their cash flow, in the hopes that White Eagle and Emergent will have no choice but to sell the valuable policy portfolio to LNV or one of its proxies, including Silver Point and/or GWG, at below its true value. In connection with the White Eagle Chapter 11 Case, on January 15, 2019, the Court authorized the Debtors to use the proceeds of pre-petition cash collateral for a period of twenty (20) weeks (the "Cash Collateral'), which allowance was extended in May 2019 for another nine (9) weeks. The Cash Collateral may be used solely for the purposes permitted under the budget approved by the Court, including (i) to provide working capital needs of the Debtors and general corporate purposes of the Debtors, (ii) to make the payments or fund amounts otherwise permitted in the final order that authorized such uses and such budget, (iii) to fund amounts necessary to pay certain fees; and (iv) to fund amounts necessary to pay certain professional fees in accordance with such Budget. Global Settlement Agreement in Principle in Bankruptcies On May 7, 2019, the Proposed Settlement, a global settlement in principle of the Chapter 11 Cases and the Suit, was announced on the record to, and filed with, the Bankruptcy Court jointly by the Debtors and Defendants. The Proposed Settlement would be effected together with the plan of reorganization, in accordance with the following schedule: (x) the Proposed Settlement and plan of reorganization, and other relevant documents, would be filed with the Bankruptcy Court by May 24, 2019, (y) the parties would use their best efforts to have the Proposed Settlement approved by the Bankruptcy Court by June 7, 2019, and (z) the parties would use their best efforts to have a confirmation hearing for approval of the plan of reorganization by the Bankruptcy Court held on or before June 21, 2019. Pursuant to the Proposed Settlement, among other things:
In addition, in order to provide sufficient cash flow to the Company during this period, and subject to negotiation of mutually-agreed upon terms and conditions, the Debtors shall have the right to use proceeds from the maturity of any portfolio policy and resolution of certain claims, and LNV will provide the Debtors a revolving $15.0 million of debtor-in-possession financing (which amount may be increased if found to be insufficient) through December 30, 2019 (the "DIP Financing"). Plan of Reorganization On June 5, 2019, the Bankruptcy Court approved the Settlement Agreement memorializing the Proposed Settlement and the DIP Financing. The Plan of Reorganization for the Chapter 11 Cases, which implements the Settlement Agreement and the DIP Financing, was confirmed by the Bankruptcy Court on June 19, 2019. On July 18, 2019, the Company entered into the Commitment Letter with Lamington, White Eagle and Jade Mountain in connection with the Plan of Reorganization. The Commitment Letter provided for a transaction in which Jade Mountain and/or certain of its affiliates and/or certain investors would acquire 72.5% of the equity interests of White Eagle in exchange for $384.3 million as may be adjusted in accordance with the final documentation. The Commitment Letter and its terms and the transactions contemplated thereby were approved by the Bankruptcy Court on July 22, 2019. Repayment and Termination of the White Eagle Revolving Credit Facility On August 16, 2019, the Company entered into the Subscription Agreement, in connection with the Commitment Letter, pursuant to which White Eagle sold to Palomino 72.5% of its limited partnership interests, consisting of all of the newly issued and outstanding Class A and Class D interests, and WEGP sold to an affiliate of Jade Mountain all of its general partnership interests for a purchase price of approximately $366.2 million and $8.0 million for the Class A and Class D interests, respectively. Pursuant to the Subscription Agreement, Lamington received 27.5% of the limited partnership interests of White Eagle, consisting of all of the newly issued and outstanding Class B interests in exchange for all of its previously owned White Eagle limited partnership interests with a value of approximately $138.9 million on the closing date. The proceeds of the WE Investment were used to satisfy in full (i) the White Eagle Revolving Credit Facility, and (ii) the DIP Financing extended by CLMG, as agent, and LNV, as lender, to White Eagle, each in connection with the termination of the White Eagle Revolving Credit Facility and the release of the related liens on the collateral thereunder pursuant to a the Master Termination Agreement. The repayment and termination of the White Eagle Revolving Credit Facility and the termination of the DIP Financing, which had not been drawn against, were in accordance with the Plan of Reorganization. The WE Investment was consummated, and the White Eagle Revolving Credit Facility was paid off in full and terminated, on August 16, 2019. The payoff totaled $402.5 million, which included payment directly to CLMG by Palomino of $374.2 million and payment to CLMG by White Eagle of $28.3 million, collectively sufficient to repay, under the White Eagle Revolving Credit Facility, the outstanding principal of $368.0 million, accrued and unpaid interest of $21.3 million plus, under the Plan of Reorganization, an early payment amount due to LNV of $7.4 million which is included in the income statement as loss on extinguishment of debt and lender-allowed claims of $5.8 million. |
White Eagle Revolving Credit Facility (Tables) |
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Aug. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Interest Expense on Facility | Total interest expense on the facility during the three months and nine months ended August 31, 2019 and 2018 paid from maturity proceeds or paid directly by White Eagle was as follows (in thousands):
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Revolving Credit Facility | White Eagle | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Payouts Based on LTV | After distributions for premium payments, fees to service providers and payments of interest, a percentage of the collections from policy proceeds are to be paid to the Company, which will vary depending on the then LTV ratio as illustrated below where the valuation is determined by the lenders:
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Schedule of Reconciliation of Proceeds Distributed | The below is a reconciliation of proceeds collected by the White Eagle Revolving Credit Facility and distributed from the collection account in accordance with the budget approved by the Bankruptcy court and the Revolving Credit Facility termination agreement (in thousands):
*Includes refund of premiums and interest earned on maturity proceeds ** Collection account was closed on August 16, 2019 in connection with the termination of the White Eagle Revolving Credit Facility. |
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Schedule of Distribution of Proceeds | For the three months and nine months ended August 31, 2018, approximately $12.8 million and $44.2 million , respectively, of proceeds received from the maturity of policies pledged under the White Eagle Revolving Credit Facility, were distributed through the waterfall in the following stages of priority (in thousands):
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Schedule of Advances For Premium Payments and Fees | During the three months and nine months ended August 31, 2019 and 2018, advances for premium payments and fees to service providers amounted to (in thousands):
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Stock-based Compensation (Tables) |
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Aug. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Common Stock Option Activity | The following table presents the activity of the Company’s outstanding stock options to purchase common stock for the nine months ended August 31, 2019:
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Schedule of Activity of Unvested Shares of Restricted Stock | The following table presents the activity of the Company’s unvested shares of restricted stock for the nine months ended August 31, 2019:
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Earnings Per Share - Reconciliation Narrative (Details) - shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Aug. 31, 2019 |
Aug. 31, 2018 |
Aug. 31, 2019 |
Aug. 31, 2018 |
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5.0% Convertible Notes | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Stated interest rate percentage | 5.00% | 5.00% | ||
8.5% Convertible Notes | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Stated interest rate percentage | 8.50% | 8.50% | 8.50% | 8.50% |
Stock Option | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of diluted earnings per share (shares) | 85,000 | 85,000 | 85,000 | 85,000 |
Stock Appreciation Rights | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of diluted earnings per share (shares) | 100,000 | 100,000 | 100,000 | 100,000 |
Warrants | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of diluted earnings per share (shares) | 2,000,000 | 44,500,000 | 44,500,000 | 44,500,000 |
Restricted Stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of diluted earnings per share (shares) | 2,550,000 | 1,083,333 | 2,550,000 | |
Convertible Debt Securities | 5.0% Convertible Notes | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of diluted earnings per share (shares) | 37,918,483 | 37,918,483 | ||
Convertible Debt Securities | 8.5% Convertible Notes | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of diluted earnings per share (shares) | 181,249.2 | 181,249.2 |
Discontinued Operations (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Aug. 31, 2019 |
Aug. 31, 2018 |
Aug. 31, 2019 |
Aug. 31, 2018 |
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Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Income (loss) before income taxes | $ 70 | $ (17) | $ 36 | $ (14) |
(Benefit) provision for income taxes | 0 | 0 | 0 | 0 |
Net income (loss) from discontinued operations | 70 | (17) | 36 | (14) |
Discontinued operations, disposed of by sale | Structured Settlement Business | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Total income | 0 | 0 | 0 | 17 |
Total expenses | (70) | 18 | (36) | 32 |
Income (loss) before income taxes | 70 | (18) | 36 | (15) |
(Benefit) provision for income taxes | 0 | 0 | 0 | 0 |
Net income (loss) from discontinued operations | $ 70 | $ (18) | $ 36 | $ (15) |
Fair Value Measurements - Discount Rate Used to Estimate Fair Value of Investment in Partnership (Details) |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Aug. 31, 2019
USD ($)
|
Aug. 31, 2018
USD ($)
|
Aug. 31, 2019
USD ($)
|
Aug. 31, 2018
USD ($)
|
Nov. 30, 2018
USD ($)
|
[1] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
Investment in limited partnership | $ 132,334,000 | $ 132,334,000 | $ 0 | |||||
Change in Value | $ (5,821,000) | $ 0 | $ (5,821,000) | $ 0 | ||||
Discount rate | 0.50% Decrease | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
Weighted Average Rate | 0.1453 | 0.1453 | ||||||
Investment in limited partnership | $ 136,057,000 | $ 136,057,000 | ||||||
Change in Value | $ 3,723,000 | |||||||
Discount rate | No Change | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
Weighted Average Rate | 0.1503 | 0.1503 | ||||||
Investment in limited partnership | $ 132,334,000 | $ 132,334,000 | ||||||
Change in Value | $ 0 | |||||||
Discount rate | 0.50% Increase | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
Weighted Average Rate | 0.1553 | 0.1553 | ||||||
Investment in limited partnership | $ 128,766,000 | $ 128,766,000 | ||||||
Change in Value | $ (3,568,000) | |||||||
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Fair Value Measurements - Narrative (Details) claim in Thousands, $ in Thousands, policy in Millions |
1 Months Ended | 3 Months Ended | 9 Months Ended | 11 Months Ended | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Aug. 16, 2019
USD ($)
|
Oct. 18, 2018
USD ($)
|
Nov. 30, 2018
USD ($)
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Aug. 31, 2019
USD ($)
policy
claim
carrier
|
Aug. 31, 2018
USD ($)
|
Aug. 31, 2019
USD ($)
policy
claim
carrier
|
Aug. 16, 2019
USD ($)
|
Aug. 31, 2018
USD ($)
|
Nov. 30, 2018
USD ($)
|
Dec. 13, 2018 |
Nov. 13, 2018
USD ($)
|
Oct. 29, 2018 |
Jul. 28, 2017 |
Apr. 18, 2017 |
|||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||
Mortality rate (as percent) | 100.00% | 100.00% | ||||||||||||||||
Investment in limited partnership, at estimated fair value (Note 11) | $ 0 | [1] | $ 132,334 | $ 132,334 | $ 0 | [1] | ||||||||||||
Change in fair value of investment in deconsolidated subsidiaries | $ 90,710 | $ 0 | $ 37,941 | $ 0 | ||||||||||||||
8.5% Senior Secured Notes | ||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||
Stated interest rate percentage | 8.50% | 8.50% | 8.50% | 8.50% | ||||||||||||||
5.0% Convertible Notes | ||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||
Stated interest rate percentage | 5.00% | 5.00% | ||||||||||||||||
5.0% Convertible Notes | Convertible Notes | ||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||
Stated interest rate percentage | 5.00% | 5.00% | 5.00% | |||||||||||||||
Discount rate | Life Finance | ||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||
Investment in live settlements measurement input | 0.1342 | 0.1492 | 0.1492 | 0.1342 | ||||||||||||||
WE Investment | Subsidiaries | ||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||
Equity investment ownership percentage | 27.50% | 27.50% | ||||||||||||||||
Class A Interests | Affiliates | ||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||
Internal rate of return guaranteed to majority owner of partnership investment | 11.00% | 11.00% | ||||||||||||||||
Class A Interests | For the first 3 years | Affiliates | ||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||
Proceeds from sale of limited partnership interest | $ 8,000 | |||||||||||||||||
Period for distribution of proceeds from limited partnership interest | 3 years | |||||||||||||||||
Class A Interests | For the subsequent 7 years | Affiliates | ||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||
Proceeds from sale of limited partnership interest | $ 4,000 | |||||||||||||||||
Period for distribution of proceeds from limited partnership interest | 7 years | |||||||||||||||||
Class D Interests | Affiliates | ||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||
Internal rate of return guaranteed to majority owner of partnership investment | 11.00% | 11.00% | ||||||||||||||||
Class B Interests | Affiliates | ||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||
Period for distribution of proceeds from limited partnership interest | 8 years | |||||||||||||||||
Internal rate of return guaranteed to majority owner of partnership investment | 11.00% | 11.00% | ||||||||||||||||
AVS | Life expectancy evaluation | Life Finance | ||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||
Increase in percentage of length of life insurance | 9.00% | 13.00% | ||||||||||||||||
21st Century | Life expectancy evaluation | Life Finance | ||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||
Increase in percentage of length of life insurance | 9.00% | |||||||||||||||||
Increase (decrease) in fair value of life settlements | $ 124,000 | $ 23,100 | ||||||||||||||||
Subsidiary in Bankruptcy Proceedings | ||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||
Investment in limited partnership, at estimated fair value (Note 11) | $ 166,736 | $ 128,795 | $ 166,736 | $ 128,795 | $ 278,400 | |||||||||||||
Change in fair value of investment in deconsolidated subsidiaries | $ 37,900 | $ (149,600) | $ 37,941 | |||||||||||||||
Subsidiary in Bankruptcy Proceedings | Subsidiaries | ||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||
Basis investment in Lamington | $ 278,400 | |||||||||||||||||
Palomino | Affiliates | White Eagle | ||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||
Percentage of equity interest sold | 72.50% | 72.50% | ||||||||||||||||
Palomino | Class A Interests | Affiliates | White Eagle | ||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||
Percentage of equity interest sold | 72.50% | 72.50% | ||||||||||||||||
Palomino | Class D Interests | Affiliates | White Eagle | ||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||
Proceeds from sale of limited partnership interest | $ 8,000 | |||||||||||||||||
Lamington | WE Investment | ||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||
Investment in limited partnership, at estimated fair value (Note 11) | $ 138,900 | $ 132,300 | $ 132,300 | $ 138,900 | ||||||||||||||
Equity investment ownership percentage | 27.50% | 27.50% | ||||||||||||||||
Lamington | WE Investment | Subsidiaries | ||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||
Equity investment ownership percentage | 27.50% | 27.50% | ||||||||||||||||
Lamington | Class B Interests | WE Investment | Subsidiaries | ||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||
Equity investment ownership percentage | 27.50% | 27.50% | ||||||||||||||||
White Eagle | Affiliates | ||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||
Percentage of equity interest sold | 72.50% | 72.50% | ||||||||||||||||
Proceeds from sale of limited partnership interest | $ 366,200 | |||||||||||||||||
White Eagle | WE Investment | Subsidiaries | ||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||
Investment in limited partnership, at estimated fair value (Note 11) | $ 132,300 | $ 132,300 | ||||||||||||||||
Equity investment ownership percentage | 27.50% | 27.50% | ||||||||||||||||
White Eagle | WE Investment | Subsidiaries | Discount rate | ||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||
Investment in limited partnership measurement input | 0.1503 | 0.1503 | ||||||||||||||||
Valuation Basic Table 2015 | ||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||
Number of policies | policy | 266 | 266 | ||||||||||||||||
Number of claims on policies | claim | 2,550 | 2,550 | ||||||||||||||||
Number of insurance carriers | carrier | 51 | 51 | ||||||||||||||||
Impaired life bearing | ||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||
Mortality rate (as percent) | 200.00% | 200.00% | ||||||||||||||||
Revolving Credit Facility | CLMG | Palomino | Class D Interests | ||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||
Purchase price of acquired equity interest allocated to Class D | 8,000 | |||||||||||||||||
Annual amount guaranteed to majority owners of limited partnership | $ 2,000 | $ 2,000 | ||||||||||||||||
Internal rate of return guaranteed to majority owner of partnership investment | 11.00% | 11.00% | ||||||||||||||||
|
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Aug. 31, 2019 |
Aug. 31, 2018 |
Aug. 31, 2019 |
Aug. 31, 2018 |
Aug. 16, 2019 |
|
Income Tax Disclosure [Abstract] | |||||
Effective annual effective tax rate (as percent) | 15.99% | ||||
(Benefit) provision for income taxes | $ (5) | $ 3,094 | $ 3,213 | $ (136) | |
White Eagle | Affiliates | Palomino | |||||
Income Tax Contingency [Line Items] | |||||
Percentage of equity interest sold | 72.50% | ||||
White Eagle | Affiliates | Class A and Class D Interests | Palomino | |||||
Income Tax Contingency [Line Items] | |||||
Percentage of equity interest sold | 72.50% | ||||
WE Investment | Lamington | |||||
Income Tax Contingency [Line Items] | |||||
Equity investment ownership percentage | 27.50% | 27.50% | |||
WE Investment | Subsidiaries | |||||
Income Tax Contingency [Line Items] | |||||
Equity investment ownership percentage | 27.50% | 27.50% | |||
WE Investment | Subsidiaries | Lamington | |||||
Income Tax Contingency [Line Items] | |||||
Equity investment ownership percentage | 27.50% | ||||
WE Investment | Subsidiaries | Class B Interests | Lamington | |||||
Income Tax Contingency [Line Items] | |||||
Equity investment ownership percentage | 27.50% |
Fair Value Measurements - Changes in Fair Value for All Liabilities Using Material Level of Unobservable (Level 3) Inputs (Details) - Level 3 - Revolving Credit Facility - White Eagle - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Aug. 31, 2019 |
Aug. 31, 2018 |
|
Fair Value, Liabilities, Unobservable Input Reconciliation [Roll Forward] | ||
Beginning balance | $ 346,670 | $ 326,104 |
Draws under the White Eagle Revolving Credit Facility | 4,221 | 69,490 |
Payments on White Eagle Revolving Credit Facility | (367,985) | (34,597) |
Unrealized change in fair value | 17,094 | (11,663) |
Transfers into level 3 | 0 | |
Transfer out of level 3 | 0 | |
Ending balance | 0 | 349,334 |
Changes in fair value included in earnings for period relating to liabilities held at the end of the period | $ 0 | $ (11,663) |
5.0% Senior Unsecured Convertible Notes (Details) |
3 Months Ended | 9 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 28, 2017
USD ($)
d
$ / shares
|
Jul. 26, 2017 |
Aug. 31, 2019
USD ($)
|
Aug. 31, 2018
USD ($)
|
Aug. 31, 2019
USD ($)
|
Aug. 31, 2018
USD ($)
|
Dec. 10, 2018
USD ($)
|
Nov. 30, 2018
USD ($)
|
[1] | Apr. 18, 2017 |
|||
5.0% Senior Unsecured Convertible Notes Due 2023 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stated interest rate percentage | 5.00% | 5.00% | ||||||||||
Convertible notes, net of discount | $ 70,697,000 | $ 70,697,000 | $ 69,742,000 | |||||||||
New Convertible Notes Indenture | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Debt instrument issued | $ 40,000,000 | $ 70,000,000 | ||||||||||
Convertible Notes | 5.0% Senior Unsecured Convertible Notes Due 2023 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Percentage of holders tendering exchange offer, minimum (as percent) | 98.00% | |||||||||||
Stated interest rate percentage | 5.00% | 5.00% | 5.00% | |||||||||
Convertible Notes | New Convertible Notes Indenture | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Debt instrument issued | $ 75,800,000 | |||||||||||
Debt instrument, required percentage of trustees or holders to declare Notes immediately due and payable (as percent) | 25.00% | |||||||||||
Debt instrument, required percentage of principal for each day of default | 0.25% | |||||||||||
Debt instrument, additional required percentage of principal for each day of restricted transfer default | 0.25% | |||||||||||
Debt instrument, maximum required percentage of principal restricted transfer default | 0.50% | |||||||||||
Debt instrument, debt default, special interest percentage of principal | 0.50% | |||||||||||
Convertible Notes | 5% Convertible Notes | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Debt instrument, conversion price (in dollars per share) | $ / shares | $ 2.00 | |||||||||||
Debt instrument, conversion rate | 0.5 | |||||||||||
Debt instrument, redemption price, percentage (as percent) | 100.00% | |||||||||||
Debt instrument, convertible, minimum percentage of common stock price (as percent) | 120.00% | |||||||||||
Debt instrument, convertible, threshold trading days | d | 15 | |||||||||||
Debt instrument, convertible, threshold consecutive trading days | d | 30 | |||||||||||
Convertible notes, net of discount | $ 70,700,000 | $ 70,700,000 | ||||||||||
Debt unamortized discount | 4,500,000 | 4,500,000 | ||||||||||
Debt unamortized issuance cost | 663,000 | 663,000 | ||||||||||
Interest expense debt | 1,300,000 | $ 1,300,000 | 3,800,000 | $ 3,700,000 | ||||||||
Interest included in interest expense | 948,000 | 948,000 | 2,800,000 | 2,800,000 | ||||||||
Amortization of debt discounts | 290,000 | 271,000 | 832,000 | 774,000 | ||||||||
Amortization of debt origination costs | $ 43,000 | $ 40,000 | $ 123,000 | $ 115,000 | ||||||||
|
Condensed and Consolidated Financial Statements for Entities in Bankruptcy - Narrative (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Aug. 31, 2019 |
Jul. 28, 2017 |
May 16, 2014 |
Aug. 31, 2019 |
Aug. 31, 2018 |
Aug. 31, 2019 |
Aug. 16, 2019 |
Aug. 31, 2018 |
|
Condensed Financial Statements, Captions [Line Items] | ||||||||
Change in fair value of investment in deconsolidated subsidiaries | $ 37,941,000 | $ 0 | ||||||
Lamington | Senior Notes | 8.5% Promissory Note | ||||||||
Condensed Financial Statements, Captions [Line Items] | ||||||||
Debt instrument term | 10 years | |||||||
Debt instrument issued | $ 59,300,000 | |||||||
Debt instrument, interest rate | 8.50% | |||||||
Period to capitalize outstanding principal balance | 7 days | |||||||
Outstanding principal balance | $ 86,500,000 | $ 86,500,000 | 86,500,000 | |||||
Capitalized interest included in outstanding principal balance | 27,200,000 | 27,200,000 | 27,200,000 | |||||
Interest expense debt | 0 | $ 1,700,000 | 0 | 5,100,000 | ||||
Principal payments due prior to maturity date | 0 | 0 | 0 | |||||
Lamington | Senior Notes | Special Dividend Note | ||||||||
Condensed Financial Statements, Captions [Line Items] | ||||||||
Debt instrument issued | $ 57,000,000 | |||||||
Debt instrument, interest rate | 5.00% | |||||||
Outstanding principal balance | 59,900,000 | 59,900,000 | 59,900,000 | |||||
Capitalized interest included in outstanding principal balance | 2,900,000 | 2,900,000 | 2,900,000 | |||||
Interest expense debt | 0 | 737,000 | 0 | 1,500,000 | ||||
Principal payments due prior to maturity date | 0 | 0 | 0 | |||||
Period after which interest shall be capitalized if accrued interest is not paid | 7 days | |||||||
Interest payments | 10,900,000 | 0 | 570,000 | |||||
Fair value of notes | $ 146,300,000 | |||||||
Change in fair value of investment in deconsolidated subsidiaries | $ 89,700,000 | |||||||
Combined face value of notes | $ 146,400,000 | 146,400,000 | 137,800,000 | 146,400,000 | 137,800,000 | |||
Subsidiaries | Lamington | ||||||||
Condensed Financial Statements, Captions [Line Items] | ||||||||
Administrative service fees - affiliate | $ 0 | $ 0 | $ 2,765,000 | $ 2,371,000 |
Deconsolidation of Subsidiaries - Company's Investment in Deconsolidated Entities (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Aug. 16, 2019 |
Nov. 30, 2018 |
Aug. 31, 2019 |
Aug. 31, 2018 |
Aug. 31, 2019 |
Aug. 16, 2019 |
Aug. 31, 2018 |
||||
Investment in Deconsolidated Subsidiary [Roll Forward] | ||||||||||
Investment in Lamington at December 1, 2018 | [1] | $ 0 | $ 0 | |||||||
Change in fair value | $ 90,710 | $ 0 | 37,941 | $ 0 | ||||||
Investment in Lamington at August 16, 2019 | $ 0 | [1] | $ 132,334 | 132,334 | ||||||
Lamington | ||||||||||
Investment in Deconsolidated Subsidiary [Roll Forward] | ||||||||||
Investment in Lamington at December 1, 2018 | 128,795 | 128,795 | ||||||||
Change in fair value | $ 37,900 | (149,600) | 37,941 | |||||||
Investment in Lamington at August 16, 2019 | 166,736 | 128,795 | 166,736 | |||||||
Lamington | Promissory notes | ||||||||||
Investment in Deconsolidated Subsidiary [Roll Forward] | ||||||||||
Investment in Lamington at December 1, 2018 | 56,596 | 56,596 | ||||||||
Change in fair value | 89,736 | |||||||||
Investment in Lamington at August 16, 2019 | 146,332 | 56,596 | 146,332 | |||||||
Lamington | Other liabilities | ||||||||||
Investment in Deconsolidated Subsidiary [Roll Forward] | ||||||||||
Investment in Lamington at December 1, 2018 | 5,948 | 5,948 | ||||||||
Change in fair value | (5,948) | |||||||||
Investment in Lamington at August 16, 2019 | 0 | 5,948 | 0 | |||||||
Lamington | Equity investment | ||||||||||
Investment in Deconsolidated Subsidiary [Roll Forward] | ||||||||||
Investment in Lamington at December 1, 2018 | $ 66,251 | 66,251 | ||||||||
Change in fair value | (45,847) | |||||||||
Investment in Lamington at August 16, 2019 | $ 20,404 | $ 66,251 | $ 20,404 | |||||||
|
Life Settlements (Life Insurance Policies) - Estimated Premiums to be Paid (Details) - Policies not pledged $ in Thousands |
Aug. 31, 2019
USD ($)
|
---|---|
Financial Instruments Owned and Pledged as Collateral [Line Items] | |
Remainder of 2019 | $ 45 |
2020 | 191 |
2021 | 222 |
2022 | 254 |
2023 | 286 |
Thereafter | 4,989 |
Total | $ 5,987 |
White Eagle Revolving Credit Facility - Narrative (Details) |
1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Aug. 16, 2019
USD ($)
|
Jul. 18, 2019
USD ($)
|
May 07, 2019 |
Jan. 25, 2019
USD ($)
|
Jan. 15, 2019 |
Nov. 14, 2018 |
Nov. 13, 2018 |
Dec. 29, 2016
USD ($)
contract
|
Nov. 09, 2015
USD ($)
|
Apr. 29, 2013
USD ($)
|
May 31, 2019 |
Aug. 31, 2019
USD ($)
contract
|
Aug. 31, 2018
USD ($)
|
Aug. 31, 2019
USD ($)
contract
|
Aug. 31, 2018
USD ($)
|
Dec. 30, 2019
USD ($)
|
Sep. 17, 2019 |
Aug. 15, 2019 |
Dec. 13, 2018 |
Nov. 30, 2018
USD ($)
contract
|
Oct. 04, 2017 |
Aug. 14, 2017
USD ($)
|
Jul. 28, 2017
USD ($)
|
Jul. 26, 2017
USD ($)
|
Apr. 18, 2017 |
Feb. 28, 2014
USD ($)
|
||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Borrowings from White Eagle Revolving Credit Facility | $ 0 | $ 67,580,000 | |||||||||||||||||||||||||||
Investment in limited partnership | $ 132,334,000 | $ 132,334,000 | $ 0 | [1] | |||||||||||||||||||||||||
8.5% Senior Secured Notes | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Debt instrument issued | $ 46,500,000 | $ 30,000,000 | |||||||||||||||||||||||||||
Debt instrument, interest rate | 8.50% | 8.50% | 8.50% | 8.50% | |||||||||||||||||||||||||
5.0% Convertible Notes | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Debt instrument, interest rate | 5.00% | 5.00% | |||||||||||||||||||||||||||
8.5% Convertible Notes | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Debt instrument, interest rate | 8.50% | 8.50% | 8.50% | 8.50% | |||||||||||||||||||||||||
Senior Secured Notes | 8.5% Senior Secured Notes | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Debt instrument issued | $ 46,500,000 | $ 46,500,000 | |||||||||||||||||||||||||||
Senior Secured Notes | 5.0% Convertible Notes | Maximum | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Debt instrument issued | $ 75,800,000 | $ 75,800,000 | |||||||||||||||||||||||||||
Convertible Notes | 5.0% Convertible Notes | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Debt instrument, interest rate | 5.00% | 5.00% | 5.00% | ||||||||||||||||||||||||||
Convertible Notes | 8.5% Convertible Notes | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Debt instrument issued | $ 1,200,000 | $ 74,200,000 | $ 70,700,000 | ||||||||||||||||||||||||||
Debt instrument, interest rate | 8.50% | ||||||||||||||||||||||||||||
Revolving Credit Facility | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Repayment of outstanding principal on line of credit | $ 368,000,000 | ||||||||||||||||||||||||||||
Repayment of accrued and unpaid interest on line of credit | $ 21,300,000 | ||||||||||||||||||||||||||||
Revolving Credit Facility | White Eagle Asset Portfolio, LLC | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Cash interest coverage ratio required, minimum | 2.0 | 2.0 | 2.0 | ||||||||||||||||||||||||||
Percent of face amount pledged as collateral (as percent) | 50.00% | ||||||||||||||||||||||||||||
Revolving Credit Facility | White Eagle Asset Portfolio, LLC | After June 30, 2019 | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Cash interest coverage ratio required, minimum | 1.75 | 1.75 | |||||||||||||||||||||||||||
Cash interest coverage ratio required number of consecutive days | 60 days | ||||||||||||||||||||||||||||
White Eagle | Revolving Credit Facility | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Revolving credit facility effective date | Apr. 29, 2013 | ||||||||||||||||||||||||||||
Revolving credit facility period | 15 years | ||||||||||||||||||||||||||||
Revolving credit facility, current borrowing capacity | $ 250,000,000.0 | $ 300,000,000.0 | |||||||||||||||||||||||||||
Basis points interest rate increase (as percent) | 0.50% | ||||||||||||||||||||||||||||
Borrowings from White Eagle Revolving Credit Facility | $ 0 | $ 23,297,000 | $ 4,221,000 | $ 69,490,000 | |||||||||||||||||||||||||
Cash interest coverage ratio required, minimum | 2.0 | 2.0 | |||||||||||||||||||||||||||
Cash sweep percentage required (as percent) | 100.00% | 100.00% | |||||||||||||||||||||||||||
Collateral pledge percentage for distributions to be altered (as percent) | 25.00% | 25.00% | |||||||||||||||||||||||||||
Distribution of proceeds | $ 12,808,000 | $ 44,163,000 | |||||||||||||||||||||||||||
Base rate (as percent) | 0.50% | 0.50% | |||||||||||||||||||||||||||
Debt instrument effective rate (as percent) | 6.61% | 6.61% | 9.51% | ||||||||||||||||||||||||||
Credit agreement expiration date | Dec. 31, 2031 | ||||||||||||||||||||||||||||
Period during which debtors are authorized to use proceeds from pre-petition cash collateral (equivalent to 20 weeks) | 2 months 7 days | 5 months | 2 months 7 days | ||||||||||||||||||||||||||
White Eagle | Revolving Credit Facility | LIBOR | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Basis spread on variable rate (as percent) | 4.00% | 4.50% | |||||||||||||||||||||||||||
White Eagle | Revolving Credit Facility | Federal Funds Rate | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Basis spread on variable rate (as percent) | 0.75% | ||||||||||||||||||||||||||||
White Eagle | Revolving Credit Facility | Floor Rate | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Basis spread on variable rate (as percent) | 2.11% | 3.01% | |||||||||||||||||||||||||||
White Eagle | Revolving Credit Facility | Base Rate | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Debt instrument, basis spread over variable rate in event of default | 1.50% | ||||||||||||||||||||||||||||
Debt instrument, additional percentage over spread on variable rate in event of default | 6.50% | ||||||||||||||||||||||||||||
White Eagle | Revolving Credit Facility | Maintenance costs | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Line of credit borrowing base percentage | 100.00% | 100.00% | |||||||||||||||||||||||||||
White Eagle | Revolving Credit Facility | Accrued and Unpaid Interest | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Line of credit borrowing base percentage | 100.00% | 100.00% | |||||||||||||||||||||||||||
White Eagle | Revolving Credit Facility | Policies pledged as collateral as determined by the lenders | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Line of credit borrowing base percentage | 75.00% | 75.00% | |||||||||||||||||||||||||||
White Eagle | Revolving Credit Facility | Minimum | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Line of credit, loan to value ratio (as percent) | 45.00% | ||||||||||||||||||||||||||||
White Eagle | Revolving Credit Facility | Minimum | LIBOR | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Basis spread on variable rate (as percent) | 1.50% | ||||||||||||||||||||||||||||
White Eagle | Revolving Credit Facility | Policies pledged | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Revolving credit facility, current borrowing capacity | $ 370,000,000.0 | $ 370,000,000 | $ 370,000,000 | ||||||||||||||||||||||||||
Number of policies owned | contract | 190 | 0 | 0 | 586 | |||||||||||||||||||||||||
Borrowings from White Eagle Revolving Credit Facility | $ 71,100,000 | ||||||||||||||||||||||||||||
Palomino | Affiliates | White Eagle | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Percentage of equity interest sold | 72.50% | ||||||||||||||||||||||||||||
Palomino | Affiliates | Class A Interests | White Eagle | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Percentage of equity interest sold | 72.50% | ||||||||||||||||||||||||||||
Palomino | Affiliates | Class D Interests | White Eagle | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Proceeds from sale of limited partnership interest | $ 8,000,000 | ||||||||||||||||||||||||||||
Jade Mountain | Affiliates | White Eagle | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Exchange price on sale of equity interest in subsidiary | $ 384,300,000 | ||||||||||||||||||||||||||||
Lamington | Limited Partner | IRELAND | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Ownership interest percentage | 99.99% | ||||||||||||||||||||||||||||
Lamington | Subsidiaries | Limited Partner | IRELAND | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Ownership interest percentage | 99.99% | 99.99% | |||||||||||||||||||||||||||
WEGP | General Partner | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Ownership interest percentage | 0.01% | ||||||||||||||||||||||||||||
WEGP | Subsidiaries | General Partner | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Ownership interest percentage | 0.01% | 0.01% | |||||||||||||||||||||||||||
LNV | Subsidiaries | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Equity stake percentage | 45.00% | ||||||||||||||||||||||||||||
White Eagle | Affiliates | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Percentage of equity interest sold | 72.50% | ||||||||||||||||||||||||||||
Proceeds from sale of limited partnership interest | $ 366,200,000 | ||||||||||||||||||||||||||||
DIP Financing | LNV | Subsidiaries | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Amount of debt committed to in connection with receiving an equity stake percentage | $ 370,000,000 | ||||||||||||||||||||||||||||
Equity stake percentage | 45.00% | ||||||||||||||||||||||||||||
WE Investment | Subsidiaries | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Equity investment ownership percentage | 27.50% | 27.50% | |||||||||||||||||||||||||||
WE Investment | Lamington | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Equity investment ownership percentage | 27.50% | 27.50% | |||||||||||||||||||||||||||
Investment in limited partnership | $ 138,900,000 | $ 132,300,000 | $ 132,300,000 | ||||||||||||||||||||||||||
WE Investment | Lamington | Policies pledged | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Equity investment ownership percentage | 27.50% | ||||||||||||||||||||||||||||
WE Investment | Lamington | Subsidiaries | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Equity investment ownership percentage | 27.50% | ||||||||||||||||||||||||||||
WE Investment | Lamington | Subsidiaries | Policies pledged | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Equity investment ownership percentage | 27.50% | ||||||||||||||||||||||||||||
WE Investment | White Eagle | Subsidiaries | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Equity investment ownership percentage | 27.50% | 27.50% | |||||||||||||||||||||||||||
Investment in limited partnership | $ 132,300,000 | $ 132,300,000 | |||||||||||||||||||||||||||
WE Investment | White Eagle | Subsidiaries | Policies pledged | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Equity investment ownership percentage | 27.50% | ||||||||||||||||||||||||||||
CLMG | Revolving Credit Facility | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Line of credit payoff | $ 402,500,000 | ||||||||||||||||||||||||||||
CLMG | Palomino | Class A Interests | Revolving Credit Facility | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Purchase price of acquired equity interest | 374,200,000 | ||||||||||||||||||||||||||||
CLMG | White Eagle | Revolving Credit Facility | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Line of credit payoff | 28,300,000 | ||||||||||||||||||||||||||||
LNV | Revolving Credit Facility | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Early repayments of line of credit | 7,400,000 | ||||||||||||||||||||||||||||
Lender-allowed claims | $ 5,800,000 | ||||||||||||||||||||||||||||
Forecast | DIP Financing | LNV | Subsidiaries | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Equity stake percentage | 45.00% | ||||||||||||||||||||||||||||
Forecast | DIP Financing | LNV | Subsidiaries | White Eagle | If paid by September 17, 2019 | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Default rate of outstanding principal and accrued interest | 102.00% | ||||||||||||||||||||||||||||
Forecast | DIP Financing | LNV | Subsidiaries | White Eagle | If paid by December 30, 2019 | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Default rate of outstanding principal and accrued interest | 104.00% | ||||||||||||||||||||||||||||
Forecast | DIP Financing | LNV | Subsidiaries | WEGP | |||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Debtor-in-possession financing | $ 15,000,000 | ||||||||||||||||||||||||||||
|
White Eagle Revolving Credit Facility - Advances For Premium Payments and Fees (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Aug. 31, 2019 |
Aug. 31, 2018 |
Aug. 31, 2019 |
Aug. 31, 2018 |
|
Debt Instrument [Line Items] | ||||
Total amount drawn | $ 0 | $ 67,580 | ||
Revolving Credit Facility | White Eagle | ||||
Debt Instrument [Line Items] | ||||
Amount drawn for premium payments | $ 0 | $ 22,668 | 4,221 | 67,580 |
Amount drawn in fees to service providers | 0 | 629 | 0 | 1,910 |
Total amount drawn | $ 0 | $ 23,297 | $ 4,221 | $ 69,490 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Aug. 31, 2019 |
Nov. 30, 2018 |
[1] | ||
---|---|---|---|---|---|
Statement of Financial Position [Abstract] | |||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |||
Common stock, shares authorized (in shares) | 415,000,000 | 415,000,000 | |||
Common stock, shares issued (in shares) | 158,659,803 | 158,733,928 | |||
Common stock, shares outstanding (in shares) | 158,051,803 | 158,125,928 | |||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |||
Preferred stock, shares authorized (in shares) | 40,000,000 | 40,000,000 | |||
Preferred stock, shares issued (in shares) | 0 | 0 | |||
Preferred stock, shares outstanding (in shares) | 0 | 0 | |||
Treasury stock (in shares) | 608,000 | 608,000 | |||
|
Description of Business |
9 Months Ended | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Aug. 31, 2019 | |||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||
Description of Business | Description of Business Emergent Capital, Inc. was founded in December 2006 as a Florida limited liability company, Imperial Holdings, LLC, and converted into Imperial Holdings, Inc. on February 3, 2011, in connection with our initial public offering. Effective September 1, 2015, the name was changed to Emergent Capital, Inc. (with its subsidiary companies, the "Company" or "Emergent Capital"). Emergent Capital, through its subsidiaries, owns 2 life insurance policies, also referred to as life settlements, with a fair value of $1.3 million and an aggregate death benefit of approximately $12.0 million at August 31, 2019. Additionally, through a subsidiary, the Company owns a 27.5% equity investment, having an estimated fair value of approximately $132.3 million at August 31, 2019, in White Eagle Asset Portfolio, LP ("White Eagle"), which was previously a wholly-owned subsidiary of the Company that holds a portfolio of life settlements. The Company primarily earns income through change in fair value and death benefits from these two polices and change in fair value and distributions from its equity investment in White Eagle. Change in Financial Year End On September 7, 2018, the Board of Directors of the Company (the "Board") adopted resolutions to change the Company’s fiscal year end, and therefore the Company and its direct and indirect subsidiaries changed their fiscal year ends, from December 31 to November 30, effective immediately. The Company filed a Transition Report on Form 10-KT in accordance with SEC rules and regulations for the fiscal period ended November 30, 2018, which covered transactions from January 1, 2018 to November 30, 2018. This Form 10-Q covers the period beginning June 1, 2019 and ending August 31, 2019 compared to June 1, 2018 to August 31, 2018. As a result, the Form 10-Q will not be comparable to the results filed for the third quarter of 2018 covering July 1, 2018 to September 30, 2018. Voluntary Petitions for Relief Under Chapter 11 and De-consolidation of Subsidiaries On November 14, 2018 (the "Petition Date"), Lamington Road Designated Activity Company (formerly known as Lamington Road Limited), the Company’s wholly-owned indirect Irish subsidiary ("Lamington" or "Lamington Road DAC"), and White Eagle General Partner, LLC, the Company’s wholly-owned indirect Delaware subsidiary ("WEGP"), filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). Lamington is the limited partner and owns 99.99%, and WEGP is the general partner and owns 0.01%, of White Eagle. In its capacity as general partner, WEGP manages the affairs of White Eagle. The Lamington and WEGP filings are referred to as the "November Chapter 11 Cases." The commencement of the November Chapter 11 Cases would constitute defaults and events of default under the terms of the Company’s Amended and Restated Senior Secured Indenture and the New Convertible Note Indenture (each as defined below). However, such defaults and events of default and their consequences were waived in advance of the November Chapter 11 Cases by holders of a majority of the outstanding principal amounts of each of the 8.5% Senior Secured Notes and the New Convertible Notes, and consequently, the Company believes that no defaults, events of default or acceleration of the payment obligations thereunder, including principal or accrued interest, occurred under either the Amended and Restated Senior Secured Indenture or the New Convertible Note Indenture. The commencement of the November Chapter 11 Cases constituted an event of default under the Second Amended and Restated Loan and Security Agreement, dated as of January 31, 2017, by and among White Eagle, as borrower, Imperial Finance and Trading, LLC, Lamington Road Bermuda, LTD, as Portfolio Manager ("Lamington Bermuda"), CLMG Corp., as Administrative Agent ("CLMG"), and LNV Corporation, as Lender ("LNV"), as amended (the "White Eagle Revolving Credit Facility"), resulting in the principal and accrued interest due from White Eagle thereunder becoming immediately due and payable. Lamington and WEGP have pledged their respective interests in White Eagle to secure its obligations under the White Eagle Revolving Credit Facility. Any efforts by LNV, or CLMG to enforce such pledges by Lamington and WEGP of their respective interests in White Eagle in connection with the White Eagle Revolving Credit Facility are automatically stayed as a result of the commencement of the November Chapter 11 Cases and LNV’s and CLMG’s rights of enforcement in respect of the White Eagle Revolving Credit Facility are subject to the applicable provisions of the Bankruptcy Code. In addition, on November 15, 2018, White Eagle, LNV and CLMG entered into an Agreement Regarding Rights and Remedies (the "Standstill Agreement"), pursuant to which LNV and CLMG agreed to refrain from exercising their rights and remedies in connection with the White Eagle Revolving Credit Facility, subject to the terms and provisions of the Standstill Agreement, until 12:00 p.m. noon Pacific time on November 26, 2018, to facilitate negotiations. The effective period under the Standstill Agreement was extended several times, finally to December 13, 2018. On December 13, 2018, White Eagle filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the "White Eagle Chapter 11 Case" and, together with the November Chapter 11 Cases, the "Chapter 11 Cases"). The Company obtained waivers from the requisite holders of each of the 8.5% Senior Secured Notes and the New Convertible Notes with respect to the White Eagle Chapter 11 Case, similar to the waivers for the November Chapter 11 Cases, and believes that no defaults, events of default or acceleration of the payment obligations thereunder, including principal or accrued interest, occurred with respect to both the 8.5% Senior Secured Notes and the New Convertible Notes. Subsequent Event On September 16, 2019, the Bankruptcy Court entered an order and final decree closing the White Eagle Chapter 11 Case. Beal Litigation On January 25, 2019, the Company, White Eagle, Lamington, and WEGP, collectively the "Plaintiffs", filed suit (the "Suit") against LNV , Silver Point Capital L.P. ("Silver Point") and GWG Holdings, Inc. ("GWG" and, with LNV and Silver Point, the "Defendants") in the Bankruptcy Court, where the Suit will be administered together with the Chapter 11 Cases. LNV, a subsidiary of Beal Bank ("Beal"), is the lender under the White Eagle Revolving Credit Facility. In the Suit, the Plaintiffs allege that the Defendants engaged in a scheme to coerce the Plaintiffs into selling their valuable portfolio of life insurance policies to defendants for well below its true value. Pursuant to the White Eagle Revolving Credit Facility, LNV agreed to lend $370 million to White Eagle, and in connection therewith received a 45% equity stake in White Eagle. That equity stake, and LNV’s significant control over White Eagle under the Credit Facility, creates a joint venture, and gives rise to fiduciary duties to White Eagle and Emergent, on the part of LNV. The Plaintiffs further allege that LNV has been engaged in a concerted campaign to "squeeze" White Eagle and Emergent by improperly restricting their cash flow, in the hopes that White Eagle and Emergent will have no choice but to sell the valuable policy portfolio to LNV or one of its proxies, including Silver Point and/or GWG, at below its true value. In connection with the White Eagle Chapter 11 Case, on January 15, 2019, the Court authorized the Debtors to use the proceeds of pre-petition cash collateral for a period of twenty (20) weeks (the "Cash Collateral"), which allowance was extended in May 2019 for another nine (9) weeks. The Cash Collateral may be used solely for the purposes permitted under the budget approved by the Court, including (i) to provide working capital needs of the Debtors and general corporate purposes of the Debtors, (ii) to make the payments or fund amounts otherwise permitted in the final order that authorized such uses and such budget, (iii) to fund amounts necessary to pay certain fees; and (iv) to fund amounts necessary to pay certain professional fees in accordance with such Budget. Global Settlement Agreement in Principle in Bankruptcies On May 7, 2019, a global settlement in principle of the Chapter 11 Cases and the Suit was announced on the record to, and filed with, the Bankruptcy Court jointly by the Debtors and Defendants (the "Proposed Settlement"). The Proposed Settlement would be effected together with the plan of reorganization, in accordance with the following schedule: (x) the Proposed Settlement and plan of reorganization, and other relevant documents, would be filed with the Bankruptcy Court by May 24, 2019, (y) the parties would use their best efforts to have the Proposed Settlement approved by the Bankruptcy Court by June 7, 2019, and (z) the parties would use their best efforts to have a confirmation hearing for approval of the plan of reorganization by the Bankruptcy Court held on or before June 21, 2019. Pursuant to the Proposed Settlement, among other things:
In addition, in order to provide sufficient cash flow to the Company during this period, and subject to negotiation of mutually-agreed upon terms and conditions, the Debtors shall have the right to use proceeds from the maturity of any portfolio policy and resolution of certain claims, and LNV will provide the Debtors a revolving $15.0 million of debtor-in-possession financing (which amount may be increased if found to be insufficient) through December 30, 2019 (the "DIP Financing"). On June 5, 2019, the Bankruptcy Court approved an agreement memorializing the Proposed Settlement (the "Settlement Agreement") and the DIP Financing. The plan of reorganization for the Chapter 11 Cases, which implements the Settlement Agreement and the DIP Financing (the "Plan of Reorganization") was confirmed by the Bankruptcy Court on June 19, 2019. On July 18, 2019, the Company entered into a commitment letter (the "Commitment Letter") with Lamington, White Eagle and Jade Mountain Partners ("Jade Mountain") in connection with the Plan of Reorganization. The Commitment Letter provided for a transaction in which Jade Mountain and/or certain of its affiliates and/or certain investors would acquire 72.5% of the equity interests of White Eagle in exchange for $384.3 million as may be adjusted in accordance with the final documentation. The Commitment Letter and its terms and the transactions contemplated thereby were approved by the Bankruptcy Court on July 22, 2019. Repayment and Termination of the White Eagle Revolving Credit Facility On August 16, 2019, the Company entered into a subscription agreement (the "Subscription Agreement") with Lamington Road ("Class B Limited Partner"), White Eagle, WEGP ("Withdrawing General Partner"), and Palomino JV, L.P. ("Palomino" or "Class A Limited Partner"), in connection with the commitment letter signed on June 22, 2019 with Jade Mountain Partners, LLC ("Jade Mountain"), pursuant to which White Eagle sold to Palomino 72.5% of its limited partnership interests, consisting of all of the newly issued and outstanding Class A and Class D interests, and WEGP sold to an affiliate of Jade Mountain (the "Manager") all of its general partnership interests (collectively, the "WE Investment") for a purchase price of approximately $366.2 million and $8.0 million for the Class A and Class D interests, respectively. Pursuant to the Subscription Agreement, Lamington received 27.5% of the limited partnership interests of White Eagle, consisting of all of the newly issued and outstanding Class B interests in exchange for all of its previously owned White Eagle limited partnership interests with a value of approximately $138.9 million on the closing date. The proceeds of the WE Investment were used to satisfy in full (i) the White Eagle Revolving Credit Facility , and (ii) DIP Financing extended by CLMG, as Administrative Agent ("CLMG"), as agent, and LNV, as Lender, to White Eagle, each in connection with the termination of the White Eagle Revolving Credit Facility and the release of the related liens on the collateral thereunder pursuant to a Master Termination Agreement dated as of August 16, 2019 among WEGP, Lamington, White Eagle, Markley Asset Portfolio, LLC, CLMG, as administrative agent, LNV, as initial lender, Wilmington Trust, National Association, in its capacities as securities intermediary, custodian and agent, and Palomino (the "Master Termination Agreement"). The repayment and termination of the White Eagle Revolving Credit Facility and the termination of the DIP Financing, which had not been drawn against, were in accordance with the Plan of Reorganization for Lamington, WEGP and White Eagle approved by the Bankruptcy Court with respect to the previously announced voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code of Lamington, WEGP and White Eagle (the "Chapter 11 Cases"). The WE Investment was consummated, and the White Eagle Revolving Credit Facility was paid off in full and terminated, on August 16, 2019. The payoff totaled $402.5 million, which included payment directly to CLMG by Palomino of $374.2 million and payment to CLMG by White Eagle of $28.3 million, collectively sufficient to repay, under the White Eagle Revolving Credit Facility, the outstanding principal of $368.0 million, accrued and unpaid interest of $21.3 million plus, under the Plan of Reorganization, an early payment amount due to LNV of $7.4 million and lender-allowed claims of $5.8 million. Of the $374.2 million purchase price of the limited partnership, $8.0 million was allocated to the Class D interests which amount is to be repaid in accordance with the distribution terms of the amended and restated Limited Partnership Agreement of White Eagle. In connection with the WE Investment, the Limited Partnership Agreement of White Eagle was amended and restated (the "A&R LPA") to provide for the issuance of the Class A, B and D limited partnership interests, and for funding of an "Advance Facility" to maintain reserves sufficient to fund premiums, certain operating expenses of White Eagle and certain minimum payments to Lamington as the holder of the Class B interests. Pursuant to the A&R LPA, holders of Class A interests are entitled to receive distributions on the amounts paid or contributed by them in relation to the WE Investment and funding of the Advance Facility after payment of premiums on the portfolio policies and other fees and expenses. The A&R LPA provides generally that holders of the Class A and Class B Interests receive distributions of proceeds of the assets of White Eagle based on their 72.5% and 27.5% ownership, respectively, after certain expenses and reserves are funded (including such minimum payments to Lamington totaling approximately $8.0 million per year for the first three (3) years and $4.0 million for the subsequent seven (7) years), provided that commencing after year three (3), such minimum payments will be utilized to repay the Class D Return of $8.0 million, which was advanced at closing, plus the greater of $2.0 million or 11% per annum on such $8.0 million to the extent necessary to fully repay such Class D Return. The minimum payments to the Company will occur regardless of maturities with payments through the premium/expense reserve account when there are no maturity proceeds available for distributions as described below). However, the A&R LPA also provides that all payments to holders of the Class B interests (other than such minimum payments to Lamington during the first eight (8) years following the Closing Date) are fully subordinated to payments in respect of the minimum returns to holders of the Class A and Class D interests (including repayment of all amounts advanced in respect of the Advance Facility) and to any indemnification payments, if any, due to such holders and related indemnified persons pursuant to the indemnities afforded them in and in relation to the A&R LPA, Subscription Agreement, Master Termination Agreement and related documents. As of the closing of the Investment, Lamington Bermuda resigned as manager of the portfolio and was replaced by Jade Mountain or an affiliate thereof. On August 16, 2019, Lamington also entered into (i) a pledge agreement (the "Pledge Agreement") pursuant to which it pledged the 27.5% limited partnership interests of White Eagle owned by it to Palomino and certain other secured parties in support of the payment and indemnification obligations described above, and (ii) an assumption agreement among White Eagle, Lamington, the Company and WEGP (the "Assumption Agreement") pursuant to which Lamington assumed all liabilities and obligations of White Eagle and WEGP as of the closing date of the Transactions, and Lamington, the Company and WEGP agreed to terminate, waive and release any intercompany debt, obligations and liabilities of White Eagle to Lamington, the Company and WEGP. On August 16, 2019, Emergent entered into an indemnification agreement (the "Indemnification Agreement") pursuant to which it indemnified Wilmington Trust, National Association against claims and liabilities that may arise in relation to policies that have matured prior to the Closing Date but as to which Wilmington Trust, National Association has historically held title as securities intermediary. See Note 11, "Investment in Limited Partnership", to the accompanying consolidated financial statements for further information. Deconsolidation and Subsequent Measurement of the Deconsolidated Entities Lamington and its subsidiaries' (White Eagle, WEGP and Lamington Bermuda), financial results were excluded from the Company’s consolidated results for the period from November 14, 2018, the Petition Date to August 16, 2019 the day the date the White Eagle Revolving Facility was terminated. ASC 810, Consolidation require that an entity whose financial statements were previously consolidated with those of its parent that files for protection under the U.S. Bankruptcy Code, whether solvent or insolvent, generally must be prospectively deconsolidated from the parent and presented as an equity investment (deconsolidation applies to Lamington and all subsidiaries owned, directly or indirectly, by Lamington, including WEGP, White Eagle and Lamington Bermuda which collectively are referred to herein as the ("Deconsolidated Entities" or the "Debtors"). Therefore, our 2019 results are not comparable with our 2018 results. Under ASC 810, this loss of control would likely trigger a gain or loss for the parent as the parent would remeasure its retained noncontrolling investment at fair value each reporting period. We assessed the inherent uncertainties associated with the outcome of the Chapter 11 reorganization process and the anticipated duration thereof, and concluded that it was appropriate to deconsolidate Lamington and its subsidiaries effective on the Petition Date. Lamington and WEGP had pledged their respective interests in White Eagle to secure its obligations under the White Eagle Revolving Credit Facility, with the termination of the facility, this pledge was also terminated. There was no outstanding third party liabilities for either Lamington or WEGP at August 16, 2019 besides intercompany obligations to Emergent. On September 16, 2019, subsequent to the quarter end, the Bankruptcy Court entered an order and a final decree closing the White Eagle Chapter 11 Case, the Lamington and WEGP case were not yet dismissed as of the filing date of this Form 10Q. However pursuant to ASC 810, Consolidation, management took the position that given that all third party claims had been satisfied in the case, consolidation of Lamington and WEGP as of August 17, 2019 was appropriate. As part of the WE Investment, the Company sold 72.5% of its ownership in White Eagle, which is the most substantial asset of the Company, resulting in a reduction in its ownership from 100% to 27.5%. Given the new percentage ownership, this is considered an equity investment. Based on the A&R LPA, the Company will receive funds from White Eagle through a monthly distribution which is highly driven by maturities of the portfolio. Although the Company is guaranteed certain monthly payments, the Class A Partner must be made whole based on their established IRR of 11% which exposes the Company as to the amount and timing of funds that will be received. Although White Eagle continues to be a VIE under ASC 810, Consolidation, the Company has not met the criteria for consolidation as they do not have a controlling interest in While Eagle, financially or otherwise. Based on the A&R LPA, the Company's management responsibilities are very limited. The Company's remaining ownership of White Eagle does not give the Company any control over decisions of White Eagle and the Company is the minority owner. As a result, the Company is precluded from consolidating White Eagle Asset Portfolio at August 31, 2019. White Eagle previously valued its life settlement policies at fair value whose valuation were based on inputs that are both significant to the fair value measurement and unobservable. The Company now holds an equity investment of 27.5% in White Eagle whose only assets are these life settlements. Additionally, the investment includes a mezzanine financing which the Company assumed at closing which repayment by, and ultimate distributions to, the Company are based on a prescribed waterfall with a guaranteed 11% return to the majority owner partner. Given the nature of this ownership, fair value is not readily redeemable and inputs are not observable. The Company will utilize a fair value approach to account for its 27.5% investment in White Eagle Asset Portfolio, and the calculation will be performed consistent with ASC 820, Fair Value Measurement with changes in fair value recorded in current earnings. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The Company and its deconsolidated subsidiaries carry life settlements and debt under the White Eagle Revolving Credit Facility at fair value as shown in the consolidated balance sheets. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. Fair value measurements are classified based on the following fair value hierarchy: Level 1-Valuation is based on unadjusted quoted prices in active markets for identical assets and liabilities that are accessible at the reporting date. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment. Level 2-Valuation is determined from pricing inputs that are other than quoted prices in active markets that are either directly or indirectly observable as of the reporting date. Observable inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and interest rates and yield curves that are observable at commonly quoted intervals. Level 3-Valuation is based on inputs that are both significant to the fair value measurement and unobservable. Level 3 inputs include situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value generally require significant management judgment or estimation. Assets and liabilities measured at fair value on a recurring basis The balances of the Company’s assets measured at fair value on a recurring basis as of August 31, 2019, are as follows (in thousands):
The balances of the Company’s assets measured at fair value on a recurring basis as of November 30, 2018, are as follows (in thousands):
The balances of the Company’s liabilities measured at fair value on a recurring basis as of November 30, 2018, are as follows (in thousands):
The below is a quantitative analysis of the Company's level 3 assets fair value measurements:
Following is a description of the methodologies used to estimate the fair values of assets and liabilities measured at fair value on a recurring basis and within the fair value hierarchy. The primary asset in the investment in limited partnership is life settlements. Life settlements—The Company has elected to account for the life settlement policies it acquires using the fair value method. The Company uses a present value technique to estimate the fair value of its life settlements, which is a Level 3 fair value measurement as the significant inputs are unobservable and require significant management judgment or estimation. The Company currently uses a probabilistic method of valuing life insurance policies, which the Company believes to be the preferred valuation method in the industry. The most significant assumptions are the estimates of life expectancy of the insured and the discount rate. The Company provides medical records for each insured to life expectancy report providers ("LE providers"). Each LE provider reviews and analyzes the medical records and identifies all medical conditions it feels are relevant to the life expectancy determination of the insured. Debits and credits are assigned by each LE provider to the individual’s health based on identified medical conditions which are derived from the experience of mortality attributed to relevant conditions in the portfolio of lives that the LE provider monitors. The health of the insured is summarized by the LE provider into a life assessment of the individual’s life expectancy expressed both in terms of months and in mortality factor. The mortality factor represents the degree to which the given life can be considered more or less impaired than a life having similar characteristics (e.g. gender, age, smoking, etc.). For example, a standard insured (the average life for the given mortality table) would carry a mortality rating of 100%. A similar but impaired life bearing a mortality rating of 200% would be considered to have twice the chance of dying earlier than the standard life relative to the LE provider’s population. Since each provider’s mortality factor is based on its own mortality table, the Company calculates its own factors to apply to the table selected by the Company. The Company calculates mortality factors so that when applied to the mortality table selected by the Company, the resulting LE equals the LE provided by each LE provider. The resulting mortality factors are then blended to determine a factor for each insured. A mortality curve is then generated based on the calculated mortality factors and the rates from the Company selected mortality table to generate the best estimated probabilistic cash flow stream. The net present value of the cash flows is then calculated to determine the policy value. If the insured dies earlier than expected, the return will be higher than if the insured dies when expected or later than expected. The calculation allows for the possibility that if the insured dies earlier than expected, the premiums needed to keep the policy in force will not have to be paid. Conversely, the calculation also considers the possibility that if the insured lives longer than expected, more premium payments will be necessary. The Company uses the 2015 Valuation Basic tables, smoker distinct ("2015 VBT"), mortality tables developed by the U.S. Society of Actuaries (the "SOA"). The mortality tables are created based on the expected rates of death among different groups categorized by factors such as age and gender. The 2015 VBT is based on a large dataset of insured lives, face amount of policies and more current information and its dataset includes 266 million policies. The experience data in the 2015 VBT dataset includes 2.55 million claims on policies from 51 insurance carriers. Life experiences implied by the 2015 VBT are generally longer for male and female nonsmokers between the ages of 65 and 80, while smokers and insureds of both genders over the age of 85 have significantly lower life expectancies. The table shows lower mortality rates in the earlier select periods at most ages, so while the Company continues to fit the life expectancies from the LE providers to the 2015 VBT, the change in the mortality curve changes the timing of the Company’s expected cash flow streams. Historically, the Company has procured the majority of its life expectancy reports from two life expectancy report providers (AVS Underwriting LLC and 21st Services, LLC) for valuation purposes and average or "blending," the results of the two life expectancy reports to establish a composite mortality factor. On October 18, 2018, 21st Services, LLC ("21st Services") announced revisions to its underwriting methodology, which revisions have generally been understood to lengthen the average reported life expectancy furnished by this life expectancy provider by 9%. On October 29, 2018, AVS Underwriting LLC ("AVS"), also announced revisions to its underwriting methodology without an estimated impact, which resulted in an average lengthening of the life expectancies by approximately 13%. To account for the impact of the revisions by 21st Services and based off of market responses to the methodology change, the Company decided to lengthen the life expectancies furnished by 21st Services by 9% during the eleven months ended November 30, 2018, the resulting impact was approximately $124.0 million reduction in the fair value of its life settlements. Further, the Company has decide to no longer utilize the results of life expectancy reports furnished by AVS for valuation purposes. The Company's decision was based on a series of events leading up to the announcement on October 29, 2018, which includes AVS' inability to furnish timely reports to allow the Company to blend the results to facilitate timely quarterly reporting. Market participants have expressed concerns regarding their inability to connect the new AVS model to past model. During the eleven months ended November 30, 2018, the Company discontinued its blending approach. The resulting impact was approximately $23.1 million reduction in the fair value of its life settlements. Moving forward, the Company will procure its life expectancy report from 21st Services on a periodic basis and expects to continue to lengthen life expectancies furnished by 21st Services that have not been re-underwritten using their updated methodology. Future changes in the life expectancies could have a material adverse effect on the fair value of the Company’s life settlements, which could have a material adverse effect on its business, financial condition and results of operations. Life expectancy sensitivity analysis If all of the insured lives in the Company’s life settlement portfolio lived six months shorter or longer than the life expectancies provided by these third parties, the change in estimated fair value as of August 31, 2019 would be as follows (dollars in thousands):
Discount rate The discount rate incorporates current information about market interest rates, the credit exposure to the insurance company that issued the life insurance policy and our estimate of the risk premium an investor in the policy would require. The Company re-evaluates its discount rates at the end of every reporting period in order to reflect the estimated discount rates that could reasonably be used in a market transaction involving the Company’s portfolio of life settlements. In doing so, consideration is given to the various factors influencing the rates, including risk tolerance and market activity. The Company relies on management insight, engages third party consultants to corroborate its assessment, engages in discussions with other market participants and extrapolates the discount rate underlying actual sales of policies. In considering these factors, at August 31, 2019, the Company determined that the weighted average discount rate calculated based on death benefit was 14.92% compared to 13.42% at November 30, 2018. Credit exposure of insurance company The Company considers the financial standing of the issuer of each life insurance policy. Typically, we seek to hold policies issued by insurance companies that are rated investment grade by the top three credit rating agencies. At August 31, 2019, the Company had no life insurance policies issued by one carriers that were rated non-investment grade as of that date. The following table provides information about the life insurance issuer concentrations that exceed 10% of total death benefit and 10% of total fair value of the Company’s life settlements as of August 31, 2019:
Market interest rate sensitivity analysis The discount rate incorporates current information about market interest rates, the credit exposure to the insurance company that issued the life insurance policy and our estimate of the risk premium an investor in the policy would require. The extent to which the fair value could vary in the near term has been quantified by evaluating the effect of changes in the weighted average discount rate on the death benefit used to estimate the fair value. If the weighted average discount rate was increased or decreased by 1/2 of 1% and the other assumptions used to estimate fair value remained the same, the change in estimated fair value as of August 31, 2019 would be as follows (dollars in thousands):
Future changes in the discount rates we use to value life insurance policies could have a material effect on the Company's yield on life settlement transactions, which could have a material adverse effect on our business, financial condition and results of our operations. At the end of each reporting period we re-value the life insurance policies using our valuation model in order to update our estimate of fair value for investments in policies held on our balance sheet. This includes reviewing our assumptions for discount rates and life expectancies as well as incorporating current information for premium payments and the passage of time. White Eagle Revolving Credit Facility— White Eagle holds life insurance policies previously pledged by White Eagle to serve as collateral for its obligations under the White Eagle Revolving Credit Facility. On August 16, 2019, the Company entered into a subscription agreement (the "Subscription Agreement") pursuant to which White Eagle sold 72.5% of its limited partnership in the form of newly issued limited partnership interests (the "WE Investment"). The proceeds of the WE Investment were used to satisfy in full (i) White Eagle’s Revolving Credit Facility, and (ii) the DIP Financing extended by CLMG, as agent, and LNV, as lender, to White Eagle, each in connection with the termination of the White Eagle Revolving Credit Facility and the release of the related liens on the collateral thereunder pursuant to the Master Termination Agreement. The repayment and termination of the White Eagle Revolving Credit Facility and the termination of the DIP Financing, which had not been drawn against, were in accordance with the Plan of Reorganization. Investment in deconsolidated subsidiaries - As previously discussed in Note 4, upon the deconsolidation of Lamington, an investment was recorded for $278.4 million which represented the fair value of the Company's investment in Lamington at November 13, 2018. The amount was equivalent to the carrying value of Lamington's net assets. The fair value measurements were calculated using unobservable inputs, primarily discounted cash flow analysis and classified as Level 3, requiring significant management judgment due to the absence of quoted market prices or observable inputs for assets of similar nature. The investment was further valued at November 30, 2018 by a third party also using unobservable inputs, which utilizes a discounted cash flow analysis considering the anticipated date the Company would emerge from bankruptcy, the settlement amount of debt, and future expenses, resulted in a fair value of approximately $128.8 million. Effective August 16, 2019, Lamington and WEGP were reconsolidated under the provisions of ASC 810, Consolidation. It was determined that the investment in White Eagle, which was no longer wholly owned, would be treated as an equity investment. The Company further evaluated its investment at August 16, 2019 and recognized a gain of approximately $37.9 million, which amount is reflected in current earnings as change in fair value of investment in deconsolidated subsidiaries. The amount is associated with gains incurred by Lamington for the period up to August 16, 2019 in considering the proceeds received through the transactions for the Subscription Agreement, the actual payoff of the White Eagle Revolving Credit Facility and all other third party claims. Investment in limited partnership - In connection with the WE Investment, the Limited Partnership Agreement of White Eagle was amended and restated (the "A&R LPA") to provide for the issuance of the Class A, B and D limited partnership interests, and for funding of an "Advance Facility" evidenced by the Class D limited partnership interests, to maintain reserves sufficient to fund premiums, certain operating expenses of White Eagle and certain minimum payments to Lamington as the holder of the Class B interests. The A&R LPA provides generally that holders the Class A and Class B Interests receive distributions of proceeds of the assets of White Eagle based on their 72.5% and 27.5% ownership, respectively, after certain expenses and reserves are funded (including such minimum payments to Lamington totaling approximately $8.0 million per year for the first three (3) years and $4.0 million for the subsequent seven (7) years, provided that commencing after year three (3), such minimum payments will be utilized to repay the Class D Return of $8.0 million, which was advanced at closing, plus the greater of $2.0 million or 11% per annum on such $8.0 million to the extent necessary to fully repay such Class D Return. The minimum payments to the Company will occur regardless of maturities with payments through the premium/expense reserve account when there are no maturity proceeds available for distribution as described below). However, the A&R LPA also provides that all payments to holders of the Class B interests (other than such minimum payments to Lamington during the first eight (8) years following the Closing Date) are fully subordinated to payments in respect of the minimum returns to holders of the Class A and Class D interests (including repayment of all amounts advanced in respect of the Advance Facility) and to any indemnification payments, if any, due to such holders and related indemnified persons pursuant to the indemnities afforded them in and in relation to the A&R LPA, Subscription Agreement, Master Termination Agreement and related documents. ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities requires that a reporting entity should account for its equity investments that are not consolidated or accounted for under the equity method at fair value, with changes to fair value recorded in current earnings. White Eagle previously valued its life settlement policies at fair value whose valuation are based on inputs that are both significant to the fair value measurement and unobservable. The Company now holds an equity investment of 27.5% in White Eagle whose only assets are these life settlement. Additionally, the investment includes a mezzanine financing which the Company assumed at closing which repayment by, and ultimate distributions to, the Company are based on a prescribed waterfall with a guaranteed 11% return to the majority owner partner. Given the nature of this ownership, fair value is not readily redeemable and inputs are not observable. The Company will utilize a fair value approach to account for its 27.5% investment in White Eagle Asset Portfolio, and the calculation will be performed consistent with ASC 820, Fair Value Measurement with changes in fair value recorded in current earnings. On August 16, 2019, Lamington's capital contribution to the limited partnership was an estimated fair value of approximately $138.9 million. The Company performed a valuation at August 31, 2019 resulting in a value of approximately $132.3 million using an estimated discount rate of approximately 15.03%. See Note 11, "Investment in Limited Partnership", to the accompanying consolidated financial statements for further information. Discount rate of investment in limited partnership The discount rate incorporates current information about market interest rates, the credit exposure to the insurance company that issued the life insurance policy, the Company's estimates of the return and investor would require and the current rate of return of the major partner. The Company re-evaluates its discount rates at the end of every reporting period in order to reflect the estimated discount rates that could reasonably be used in a market transaction involving the Company’s 27.5% investment in White Eagle Asset Portfolio. In doing so, consideration is given to the various factors influencing the rates, including risk tolerance and market activity. The Company relies on management insight, engages third party consultants to corroborate its assessment and engages in discussions with other market participants. In considering these factors, at August 31, 2019, the Company determined that the estimated discount rate was 15.03%. Market interest rate sensitivity analysis of the investment in limited partnership The extent to which the fair value of the investment in limited partnership could vary in the near term has been quantified by evaluating the effect of changes in the weighted average discount. If the weighted average discount rate were increased or decreased by 1/2 of 1% and the other assumptions used to estimate fair value remained the same, the change in estimated fair value of investment in limited partnership as of August 31, 2019 would be as follows (dollars in thousands):
Changes in Fair Value The following table provides a roll-forward in the changes in fair value for the nine months ended August 31, 2019, for all life settlement assets for which the Company determines fair value using a material level of unobservable (Level 3) inputs, which consists solely of life settlements (in thousands):
The following table provides a roll-forward in the changes in fair value for the nine months ended August 31, 2019, for investment in limited partnership for which the Company determines fair value using a material level of unobservable (Level 3) inputs, which consists solely of life settlements (in thousands):
The following table provides a roll-forward in the changes in fair value for the nine months ended August 31, 2019, for the White Eagle Revolving Credit Facility for which the Company determines fair value using a material level of unobservable (Level 3) inputs (in thousands):
The following table provides a roll-forward in the changes in fair value for the period ended nine months ended August 31, 2019, for the investment in subsidiaries for which the Company determines fair value using a material level of unobservable (Level 3) inputs (in thousands):
The following table provides a roll-forward in the changes in fair value for the nine months ended August 31, 2018, for all assets for which the Company determines fair value using a material level of unobservable (Level 3) inputs, which consists solely of life settlements (in thousands):
The following table provides a roll-forward in the changes in fair value for the nine months ended August 31, 2018, for the White Eagle Revolving Credit Facility for which the Company determines fair value using a material level of unobservable (Level 3) inputs (in thousands):
There were no transfers of financial assets or liabilities between levels of the fair value hierarchy during the nine months ended August 31, 2019 and 2018. Other Fair Value Considerations - Carrying value of certificate of deposits, prepaid expenses and other assets, receivable for maturity of life settlements, investment in affiliates, 8.5% Senior Secured Notes, 5.0% Senior Unsecured Convertible Notes, accounts payable and accrued expenses approximate fair value due to their short-term maturities and/or low credit risk. |
Income Taxes |
9 Months Ended |
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Aug. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s provision for income taxes from continuing operations is estimated to result in an effective tax rate of 15.99% as of August 31, 2019 and a total tax expense of approximately $3.2 million for the nine months ended August 31, 2019. The Company’s effective tax rate is principally impacted by expected income inclusions under the GILTI tax regime, limitations imposed on the use of historical NOLs, and interest expense limitations under IRC Sec. 264(a)(4) that are expected to apply when determining tested income for the GILTI inclusion. As a result of the WE Investment (described below), the Company must now rely on information from the Manager in order to reasonably forecast and project taxable income related to its distributive share of White Eagle. As the forecasted allocable share of taxable income from the WE investment represents a significant portion of the Company’s expected taxable income, the Company is currently working with the Manager to obtain reasonable forecasts that can be used for purposes of applying the annual effective tax rate method to computing the overall tax provision. As such, in accordance with ASC 740 principles, the Company’s tax provision recorded to date is based on actual results through August 31, 2019. The Company believes this approach most fairly represents its income tax provision as of August 31, 2019. Based on the Company’s evaluation, a deferred tax valuation allowance was established against its net deferred tax assets. In its evaluation, management considers taxable loss carryback availability, expectations of sufficient future taxable income, trends in earnings, existence of taxable income in recent years, the future reversal of temporary differences, and available tax planning strategies that could be implemented, if required. Valuation allowances are established based on the consideration of all available evidence using a more likely than not standard. This valuation allowance was determined to be necessary as an offset to the full amount of the federal and state deferred tax asset. During the nine months ended August 31, 2019, the Company does not expect that position to change and therefore is not recording any income tax benefit. For tax years beginning after December 31, 2017 under certain circumstances, Section 245A enacted by the TCJA eliminated U.S. federal income tax on dividends received from foreign subsidiaries of domestic corporations under a new participation exemption. However, the TCJA also created a new tax on certain foreign income under new Section 951A. Specifically, for tax years beginning after December 31, 2017, income earned in excess of a deemed return on tangible assets held by a CFC (the excess referred to as "GILTI") must generally be included as U.S. taxable income on a current basis by its U.S. shareholders. In general, the gross income inclusion can be offset by a deduction in an amount up to 50% of the inclusion (through the end of 2025, thereafter the deduction is reduced to 37.5%) subject to certain limitations. The Company changed the tax year of its U.S. parent (Emergent Capital, Inc.) from December 31st to November 30th coupled with a concurrent change to the tax year of Lamington, its wholly-owned Irish subsidiary. The change was timely made by filing Form 1128, Application to Adopt, Change, or Retain a Tax Year, in accordance with Rev. Proc. 2006-45 and resulted in a short tax year ended November 30, 2017. The Company timely filed federal and state tax returns for the short period ended November 30, 2017. As a result of the change in tax year, the Company is subject to GILTI for its first tax year beginning on December 1, 2018. Based on the Company’s life settlement assets held within Ireland, the net income generated from these activities qualify entirely as GILTI. On January 10, 2018 the FASB provided guidance on how to account for deferred tax assets and liabilities expected to reverse in future years as GILTI. The FASB provided that a Company may either (1) elect to treat taxes due on future U.S. inclusions of GILTI as a current-period expense when incurred or (2) factor such amounts into the Company’s measurement of its deferred taxes. For ASC 740 purposes, the Company adopted an accounting policy to treat any future GILTI inclusion as a current-period expense instead of providing for U.S. deferred taxes on all temporary differences related to future GILTI items. On August 16, 2019, the WE Investment was consummated whereby White Eagle, an indirectly-owned entity of the Company, sold to Palomino a 72.5% limited partnership interest in White Eagle, consisting of newly issued and outstanding Class A and Class D interests. Pursuant to the agreement, Lamington received 27.5% of the limited partnership interests of White Eagle, consisting of all of the newly issued and outstanding Class B interests. For U.S. income tax purposes, this transaction was treated as a contribution by White Eagle of its assets and liabilities to a newly formed partnership in exchange for the 27.5% interest in White Eagle’s capital and profits. The Company recognized no gain or loss as a result of the transaction. The Company and its subsidiary companies are subject to U.S. federal income tax, as well as to income tax in Florida and other states and foreign jurisdictions in which it operates. |
Life Settlements (Life Insurance Policies) (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, All Other Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Life Settlements | The weighted average life expectancy calculated based on death benefit of insureds in the policies owned by the Company at August 31, 2019 was 11.6 years.
The weighted average life expectancy calculated based on death benefit of insureds in the policies owned by the Company at November 30, 2018 was 12.2 years.
The weighted average life expectancy calculated based on death benefit of insureds in the policies owned by the White Eagle at November 30, 2018 was 8.9 years.
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Schedule of Analysis of Policy Maturity | The below is an analysis of policy maturities for the three months and nine months ended August 31, 2019 and 2018.
* Cost includes purchase price and premiums paid into the policy to date of maturity. Accumulated change in fair value is impacted by changes in discount rate, updated life expectancy estimates on the life insurance policy and cost of insurance increase. |
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Schedule of Estimated Premiums To Be Paid | Estimated premiums to be paid for each of the five succeeding fiscal years and thereafter to keep the life insurance policies in force as of August 31, 2019, are as follows (in thousands):
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Consolidation of Variable Interest Entities (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Consolidation of Variable Interest Entities | The following table presents the consolidated assets and consolidated liabilities of VIEs for which the Company has concluded that it is the primary beneficiary and which are consolidated in the Company’s financial statements as of August 31, 2019 and November 30, 2018, as well as non-consolidated VIEs for which the Company has determined it is not the primary beneficiary (in thousands):
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Description of Business (Details) $ in Thousands |
1 Months Ended | ||||||||||||||||
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Aug. 16, 2019
USD ($)
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Jul. 18, 2019
USD ($)
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May 07, 2019 |
Jan. 25, 2019
USD ($)
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Jan. 15, 2019 |
Nov. 14, 2018 |
Nov. 13, 2018 |
May 31, 2019 |
Dec. 30, 2019
USD ($)
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Sep. 17, 2019 |
Aug. 31, 2019
USD ($)
contract
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Aug. 15, 2019 |
Dec. 13, 2018 |
Nov. 30, 2018
USD ($)
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Organization and Nature of Operations [Line Items] | |||||||||||||||||
Investment in life settlements fair value | $ 1,254 | $ 506,407 | |||||||||||||||
Life insurance policies with aggregate death benefit | 12,000 | ||||||||||||||||
Investment in limited partnership | $ 132,334 | 0 | [1] | ||||||||||||||
8.5% Senior Secured Notes and New Convertible Notes | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Debt instrument, interest rate | 8.50% | ||||||||||||||||
Limited Partner | IRELAND | Lamington | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Ownership interest percentage | 99.99% | ||||||||||||||||
General Partner | WEGP | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Ownership interest percentage | 0.01% | ||||||||||||||||
Revolving Credit Facility | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Repayment of outstanding principal on line of credit | $ 368,000 | ||||||||||||||||
Repayment of accrued and unpaid interest on line of credit | 21,300 | ||||||||||||||||
Revolving Credit Facility | White Eagle | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Period during which debtors are authorized to use proceeds from pre-petition cash collateral (equivalent to 20 weeks) | 2 months 7 days | 5 months | 2 months 7 days | ||||||||||||||
WE Investment | Lamington | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Equity investment ownership percentage | 27.50% | ||||||||||||||||
Investment in limited partnership | $ 138,900 | $ 132,300 | |||||||||||||||
Subsidiaries | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Investment in life settlements fair value | 1,172 | ||||||||||||||||
Subsidiaries | LNV | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Equity stake percentage | 45.00% | ||||||||||||||||
Subsidiaries | LNV | DIP Financing | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Amount of debt committed to in connection with receiving an equity stake percentage | $ 370,000 | ||||||||||||||||
Equity stake percentage | 45.00% | ||||||||||||||||
Subsidiaries | Limited Partner | IRELAND | Lamington | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Ownership interest percentage | 99.99% | 99.99% | |||||||||||||||
Subsidiaries | General Partner | WEGP | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Ownership interest percentage | 0.01% | 0.01% | |||||||||||||||
Subsidiaries | Forecast | LNV | DIP Financing | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Equity stake percentage | 45.00% | ||||||||||||||||
Subsidiaries | Forecast | LNV | WEGP | DIP Financing | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Debtor-in-possession financing | $ 15,000 | ||||||||||||||||
Subsidiaries | If paid by September 17, 2019 | Forecast | LNV | White Eagle | DIP Financing | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Default rate of outstanding principal and accrued interest | 102.00% | ||||||||||||||||
Subsidiaries | If paid by December 30, 2019 | Forecast | LNV | White Eagle | DIP Financing | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Default rate of outstanding principal and accrued interest | 104.00% | ||||||||||||||||
Subsidiaries | WE Investment | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Equity investment ownership percentage | 27.50% | ||||||||||||||||
Subsidiaries | WE Investment | Lamington | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Equity investment ownership percentage | 27.50% | ||||||||||||||||
Subsidiaries | WE Investment | White Eagle | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Number of consolidated life insurance policies owned | contract | 2 | ||||||||||||||||
Equity investment ownership percentage | 27.50% | ||||||||||||||||
Investment in limited partnership | $ 132,300 | ||||||||||||||||
Subsidiaries | WE Investment | Class B Interests | Lamington | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Equity investment ownership percentage | 27.50% | ||||||||||||||||
Affiliates | Jade Mountain | White Eagle | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Exchange price on sale of equity interest in subsidiary | $ 384,300 | ||||||||||||||||
Affiliates | Palomino | White Eagle | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Percentage of equity interest sold | 72.50% | ||||||||||||||||
Percentage of equity interest in affiliate owned | 100.00% | ||||||||||||||||
Affiliates | White Eagle | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Percentage of equity interest sold | 72.50% | ||||||||||||||||
Proceeds from sale of limited partnership interest | $ 366,200 | ||||||||||||||||
Affiliates | Class A Interests | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Internal rate of return guaranteed to majority owner of partnership investment | 11.00% | ||||||||||||||||
Affiliates | Class A Interests | Palomino | White Eagle | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Percentage of equity interest sold | 72.50% | ||||||||||||||||
Affiliates | Class D Interests | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Internal rate of return guaranteed to majority owner of partnership investment | 11.00% | ||||||||||||||||
Affiliates | Class D Interests | Palomino | White Eagle | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Proceeds from sale of limited partnership interest | $ 8,000 | ||||||||||||||||
Affiliates | Class B Interests | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Period for distribution of proceeds from limited partnership interest | 8 years | ||||||||||||||||
Internal rate of return guaranteed to majority owner of partnership investment | 11.00% | ||||||||||||||||
Affiliates | For the first 3 years | Class A Interests | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Proceeds from sale of limited partnership interest | $ 8,000 | ||||||||||||||||
Period for distribution of proceeds from limited partnership interest | 3 years | ||||||||||||||||
Affiliates | For the subsequent 7 years | Class A Interests | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Proceeds from sale of limited partnership interest | $ 4,000 | ||||||||||||||||
Period for distribution of proceeds from limited partnership interest | 7 years | ||||||||||||||||
CLMG | Revolving Credit Facility | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Line of credit payoff | $ 402,500 | ||||||||||||||||
CLMG | Revolving Credit Facility | White Eagle | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Line of credit payoff | 28,300 | ||||||||||||||||
CLMG | Revolving Credit Facility | Class A Interests | Palomino | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Purchase price of acquired equity interest | 374,200 | ||||||||||||||||
CLMG | Revolving Credit Facility | Class D Interests | Palomino | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Purchase price of acquired equity interest allocated to Class D | 8,000 | ||||||||||||||||
Annual amount guaranteed to majority owners of limited partnership | $ 2,000 | ||||||||||||||||
Internal rate of return guaranteed to majority owner of partnership investment | 11.00% | ||||||||||||||||
LNV | Revolving Credit Facility | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Early repayments of line of credit | $ 7,400 | ||||||||||||||||
Lender-allowed claims | $ 5,800 | ||||||||||||||||
Collateral pledged | Revolving Credit Facility | White Eagle | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Investment in life settlements fair value | 505,236 | ||||||||||||||||
Life insurance policies with aggregate death benefit | $ 2,775,915 | ||||||||||||||||
Collateral pledged | WE Investment | Lamington | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Equity investment ownership percentage | 27.50% | ||||||||||||||||
Collateral pledged | Subsidiaries | WE Investment | Lamington | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Equity investment ownership percentage | 27.50% | ||||||||||||||||
Collateral pledged | Subsidiaries | WE Investment | White Eagle | |||||||||||||||||
Organization and Nature of Operations [Line Items] | |||||||||||||||||
Equity investment ownership percentage | 27.50% | ||||||||||||||||
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Consolidation of Variable Interest Entities |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidation of Variable Interest Entities | Consolidation of Variable Interest Entities The Company evaluates its interests in variable interest entities ("VIEs") on an ongoing basis and consolidates those VIEs in which it has a controlling financial interest and is thus deemed to be the primary beneficiary. A controlling financial interest has both of the following characteristics: (i) the power to direct the activities of the VIE that most significantly impact its economic performance; and (ii) the obligation to absorb losses of the VIE that could potentially be significant to it or the right to receive benefits from the VIE that could be potentially significant to the VIE. The following table presents the consolidated assets and consolidated liabilities of VIEs for which the Company has concluded that it is the primary beneficiary and which are consolidated in the Company’s financial statements as of August 31, 2019 and November 30, 2018, as well as non-consolidated VIEs for which the Company has determined it is not the primary beneficiary (in thousands):
Imperial Settlements Financing 2010, LLC ("ISF 2010"), which was formed as an affiliate of the Company to serve as a special purpose financing entity to allow the Company to sell structured settlements and assignable annuities, is a non-consolidated special purpose financing entity, as well as a non-consolidated VIE for which the Company has determined it is not the primary beneficiary. Approximately $2.4 million is included in investment in affiliates in the accompanying balance sheet as of each of August 31, 2019 and November 30, 2018. In connection with the WE Investment, the Limited Partnership Agreement of White Eagle was amended and restated (the "A&R LPA") to provide for the issuance of the Class A, B and D limited partnership interests, and for funding of an "Advance Facility" evidenced by the Class D limited partnership interests, to maintain reserves sufficient to fund premiums, certain operating expenses of White Eagle and certain minimum payments to Lamington as the holder of the Class B interests. The A&R LPA provides generally that the Class A and Class B Interests receive distributions of proceeds of the assets of White Eagle based on their 72.5% and 27.5% ownership. The limited partnership is a non-consolidated VIE for which the Company has determined it is not the primary beneficiary. The Company accounts for its equity investment at fair value with changes in fair included in current earnings. |
Life Settlements (Life Insurance Policies) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, All Other Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Life Settlements (Life Insurance Policies) | Life Settlements (Life Insurance Policies) The Company accounts for policies it acquires using the fair value method in accordance with ASC 325-30-50 Investments-Other-Investment in Insurance Contracts. Under the fair value method, the Company recognizes the initial investment at the purchase price. For policies that were relinquished in satisfaction of premium finance loans at maturity, the initial investment is the loan carrying value. For policies purchased in the secondary or tertiary markets, the initial investment is the amount of cash outlay at the time of purchase. At each reporting period, the Company re-measures the investment at fair value in its entirety and recognizes changes in the consolidated statements of operations in the periods in which the changes occur. Emergent Capital, through its subsidiaries, owns two life insurance policies, also referred to as life settlements, with a fair value of $1.3 million and an aggregate death benefit of approximately $12.0 million at August 31, 2019. Additionally, through a subsidiary, the Company owns a 27.5% equity investment, having an estimated fair value of approximately $132.3 million at August 31, 2019, in White Eagle Asset Portfolio, LP ("White Eagle"), which was previously a wholly-owned subsidiary of the Company that holds a portfolio of life settlements. The Company primarily earns income through change in fair value and death benefits from these two polices and change in fair value and distributions from its equity investment in White Eagle. As of November 30, 2018, the Company through its consolidated and deconsolidated subsidiary companies owned 588 policies, with an aggregate estimated fair value of life settlements of $506.4 million. See Note 4, "Deconsolidation of Subsidiaries" and Note 5, "Condensed and Consolidated Financial Statements for Entities in Bankruptcy," to the accompanying consolidated financial statements for further information. The following describes the Company’s life settlements as of August 31, 2019 (dollars in thousands): Policies Pledged Under White Eagle Revolving Credit Facility and Deconsolidated On August 16, 2019 the Company and its subsidiaries entered into a Subscription Agreement where White Eagle sold 72.5% of its limited partnership interests for a purchase price of approximately $366.2 million and recognized a gain on disposal of approximately $21.3 million. The proceeds were used to satisfy all outstanding indebtedness held by the White Eagle’s Revolving Credit Facility thus terminating the credit facility and releasing the related pledge to the lender of the life settlements owned by White Eagle. The Company now owns a 27.5% equity investment in White Eagle. As of August 31, 2019, there were no policies pledged under the White Eagle Credit Facility due to its termination. The weighted average life expectancy calculated based on death benefit of insureds in the policies owned by the White Eagle at November 30, 2018 was 8.9 years.
*Based on remaining life expectancy at November 30, 2018, as derived from reports of third party life expectancy providers, and does not indicate the timing of expected death benefits. See "Life Settlements," in Note 16, "Fair Value Measurements," of the accompanying consolidated financial statements. During the three months ended August 31, 2019 and 2018, the Company experienced maturities of 6 and 3 life insurance policies, respectively, with face amounts totaling $31.8 million and $14.3 million, respectively, resulting in a net gain of approximately $20.0 million and $7.1 million, respectively. During the nine months ended August 31, 2019 and 2018, the Company experienced maturities of 18 and 15 life insurance policies, respectively, with face amounts totaling $100.4 million and $68.2 million, respectively, resulting in a net gain of approximately $70.3 million and $35.1 million, respectively. The below is an analysis of policy maturities for the three months and nine months ended August 31, 2019 and 2018.
* Cost includes purchase price and premiums paid into the policy to date of maturity. Accumulated change in fair value is impacted by changes in discount rate, updated life expectancy estimates on the life insurance policy and cost of insurance increase. Policies Not Pledged The weighted average life expectancy calculated based on death benefit of insureds in the policies owned by the Company at August 31, 2019 was 11.6 years.
The weighted average life expectancy calculated based on death benefit of insureds in the policies owned by the Company at November 30, 2018 was 12.2 years.
Estimated premiums to be paid for each of the five succeeding fiscal years and thereafter to keep the life insurance policies in force as of August 31, 2019, are as follows (in thousands):
The amount of $6.0 million noted above represents the estimated total future premium payments required to keep the life insurance policies in force during the life expectancies of all the underlying insured lives and does not give effect to projected receipt of death benefits. The estimated total future premium payments could increase or decrease significantly to the extent that insurance carriers increase the cost of insurance on their issued policies or that actual mortalities of insureds differs from the estimated life expectancies. |
Fair Value Measurements - Life Insurance Issuer Concentrations (Details) - Credit Concentration Risk - Sun Life Assurance Company of Canada - Moody's Rating Aa3 - S&P Rating AA |
9 Months Ended |
---|---|
Aug. 31, 2019 | |
Percentage of Total Fair Value | |
Concentration Risk [Line Items] | |
Concentrations risk percentage | 100.00% |
Percentage of Total Death Benefit | |
Concentration Risk [Line Items] | |
Concentrations risk percentage | 100.00% |
Commitments and Contingencies (Details) |
3 Months Ended | 9 Months Ended | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
May 22, 2019
USD ($)
contract
claim
|
May 11, 2019
USD ($)
|
Jan. 25, 2019
USD ($)
|
Oct. 01, 2018
USD ($)
|
Mar. 13, 2018
USD ($)
|
Jul. 29, 2013
USD ($)
|
Aug. 31, 2019
USD ($)
|
Aug. 31, 2018
USD ($)
|
Aug. 31, 2019
USD ($)
|
Aug. 31, 2018
USD ($)
|
Aug. 16, 2019 |
Dec. 13, 2018 |
Nov. 30, 2018
USD ($)
|
[1] | Jul. 28, 2017 |
Jan. 12, 2017
appeal
|
Apr. 18, 2013
policy
|
|||
Commitments and Contingencies [Line Items] | |||||||||||||||||||
Lease expiration date | Sep. 30, 2020 | ||||||||||||||||||
Annual base rent | $ 261,000 | ||||||||||||||||||
Percentage of annual increase of base rent (as percent) | 3.00% | ||||||||||||||||||
Rent expense under operating lease | $ 63,000 | $ 109,000 | $ 215,000 | $ 338,000 | |||||||||||||||
Sublease annual base rent | $ 89,000 | $ 78,000 | |||||||||||||||||
Life settlement receivable | $ 1,254,000 | $ 1,254,000 | $ 1,172,000 | ||||||||||||||||
8.5% Senior Secured Notes | |||||||||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||||||||
Debt instrument, interest rate | 8.50% | 8.50% | 8.50% | 8.50% | |||||||||||||||
Settled Litigation | Lincoln Benefit Life Company, White Eagle Asset Portfolio, L.P. and Emergent Capital, Inc. | |||||||||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||||||||
Litigation settlement received | $ 21,300,000 | ||||||||||||||||||
Settled Litigation | Allstate Company and Emergent Capital, Inc. | |||||||||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||||||||
Litigation settlement paid | $ 2,000,000 | ||||||||||||||||||
Settled Litigation | White Eagle | Lincoln Benefit Life Company, White Eagle Asset Portfolio, L.P. and Emergent Capital, Inc. | |||||||||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||||||||
Number of policies owned | contract | 55 | ||||||||||||||||||
Settled Litigation | White Eagle | Allstate Company and Emergent Capital, Inc. | |||||||||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||||||||
Number of separate legal actions | claim | 6 | ||||||||||||||||||
Life settlement receivable | $ 39,100,000 | ||||||||||||||||||
Receivable for maturity of life settlement write off recorded as change in fair value of life settlements | $ 17,800,000 | ||||||||||||||||||
Proceeds from litigation settlements | 2,000,000 | ||||||||||||||||||
Pending Litigation | |||||||||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||||||||
Insurance policies issued (at least) | policy | 28 | ||||||||||||||||||
Compensatory damages sought in addition to an award of punitive damages (at least) | $ 30,000,000 | ||||||||||||||||||
Loss contingency, number of appeals | appeal | 2 | ||||||||||||||||||
Chief Financial Officer | |||||||||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||||||||
Severance annual base salary | $ 352,229 | $ 352,229 | |||||||||||||||||
Severance period | 12 months | ||||||||||||||||||
Period within change of control | 2 years | ||||||||||||||||||
Base salary multiplier | 200.00% | ||||||||||||||||||
Vice President and Chief Investment Officer | |||||||||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||||||||
Severance annual base salary | $ 275,000 | ||||||||||||||||||
Severance period | 6 months | ||||||||||||||||||
Employee agreement term | 1 year | ||||||||||||||||||
Employee agreement extension period | 1 year | ||||||||||||||||||
Period to give written notice to terminate employment agreement | 60 days | ||||||||||||||||||
Vice President, Chief Legal Officer and General Counsel | |||||||||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||||||||
Severance annual base salary | $ 250,000 | ||||||||||||||||||
Severance period | 6 months | ||||||||||||||||||
Employee agreement term | 1 year | ||||||||||||||||||
Employee agreement extension period | 1 year | ||||||||||||||||||
Period to give written notice to terminate employment agreement | 60 days | ||||||||||||||||||
Subsidiaries | LNV | |||||||||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||||||||
Equity stake percentage | 45.00% | ||||||||||||||||||
Affiliates | Palomino | White Eagle | |||||||||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||||||||
Percentage of equity interest sold | 72.50% | ||||||||||||||||||
Affiliates | White Eagle | |||||||||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||||||||
Percentage of equity interest sold | 72.50% | ||||||||||||||||||
DIP Financing | Subsidiaries | LNV | |||||||||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||||||||
Amount of debt committed to in connection with receiving an equity stake percentage | $ 370,000,000 | ||||||||||||||||||
Equity stake percentage | 45.00% | ||||||||||||||||||
WE Investment | Subsidiaries | |||||||||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||||||||
Equity investment ownership percentage | 27.50% | 27.50% | |||||||||||||||||
WE Investment | Subsidiaries | White Eagle | |||||||||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||||||||
Equity investment ownership percentage | 27.50% | 27.50% | |||||||||||||||||
WE Investment | Collateral pledged | Subsidiaries | White Eagle | |||||||||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||||||||
Equity investment ownership percentage | 27.50% | ||||||||||||||||||
Class A Interests | Affiliates | Palomino | White Eagle | |||||||||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||||||||
Percentage of equity interest sold | 72.50% | ||||||||||||||||||
|
Fair Value Measurements - Assets And Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands |
Aug. 31, 2019 |
Nov. 30, 2018 |
|||
---|---|---|---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Investment in limited partnership | $ 132,334 | $ 0 | [1] | ||
Investment in life settlements | 1,254 | 506,407 | |||
Investment fair value | 133,588 | ||||
Investment in deconsolidated subsidiaries | 0 | 128,795 | [1] | ||
Total fair value of liabilities | 346,670 | ||||
Consolidated | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Investment in life settlements | 1,172 | ||||
Deconsolidated | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Investment in life settlements | 505,235 | ||||
Investment in deconsolidated subsidiaries | 128,795 | ||||
Deconsolidated | Revolving Credit Facility | White Eagle | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Revolving Credit Facility debt, at estimated fair value | 346,670 | ||||
Level 1 | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Investment in limited partnership | 0 | ||||
Investment in life settlements | 0 | 0 | |||
Investment fair value | 0 | ||||
Total fair value of liabilities | 0 | ||||
Level 1 | Consolidated | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Investment in life settlements | 0 | ||||
Level 1 | Deconsolidated | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Investment in life settlements | 0 | ||||
Investment in deconsolidated subsidiaries | 0 | ||||
Level 1 | Deconsolidated | Revolving Credit Facility | White Eagle | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Revolving Credit Facility debt, at estimated fair value | 0 | ||||
Level 2 | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Investment in limited partnership | 0 | ||||
Investment in life settlements | 0 | 0 | |||
Investment fair value | 0 | ||||
Total fair value of liabilities | 0 | ||||
Level 2 | Consolidated | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Investment in life settlements | 0 | ||||
Level 2 | Deconsolidated | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Investment in life settlements | 0 | ||||
Investment in deconsolidated subsidiaries | 0 | ||||
Level 2 | Deconsolidated | Revolving Credit Facility | White Eagle | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Revolving Credit Facility debt, at estimated fair value | 0 | ||||
Level 3 | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Investment in limited partnership | 132,334 | ||||
Investment in life settlements | 1,254 | 506,407 | |||
Investment fair value | $ 133,588 | ||||
Total fair value of liabilities | 346,670 | ||||
Level 3 | Consolidated | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Investment in life settlements | 1,172 | ||||
Level 3 | Deconsolidated | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Investment in life settlements | 505,235 | ||||
Investment in deconsolidated subsidiaries | 128,795 | ||||
Level 3 | Deconsolidated | Revolving Credit Facility | White Eagle | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Revolving Credit Facility debt, at estimated fair value | $ 346,670 | ||||
|
Life Settlements (Life Insurance Policies) - Schedule of Life Settlements (Details) $ in Thousands |
Aug. 31, 2019
USD ($)
contract
|
Nov. 30, 2018
USD ($)
contract
|
Dec. 29, 2016
contract
|
---|---|---|---|
Fair Value | |||
Total | $ 1,254 | $ 506,407 | |
Face Value | |||
Total | $ 12,000 | ||
Policies pledged | White Eagle | Revolving Credit Facility | |||
Number of Life Settlement Contracts | |||
0-1 | contract | 6 | ||
1-2 | contract | 12 | ||
2-3 | contract | 31 | ||
3-4 | contract | 37 | ||
4-5 | contract | 46 | ||
Thereafter | contract | 454 | ||
Total | contract | 0 | 586 | 190 |
Fair Value | |||
0-1 | $ 24,221 | ||
1-2 | 30,828 | ||
2-3 | 72,343 | ||
3-4 | 57,874 | ||
4-5 | 77,719 | ||
Thereafter | 242,251 | ||
Total | 505,236 | ||
Face Value | |||
0-1 | 28,796 | ||
1-2 | 46,390 | ||
2-3 | 126,402 | ||
3-4 | 139,447 | ||
4-5 | 217,450 | ||
Thereafter | 2,217,430 | ||
Total | $ 2,775,915 | ||
Policies not pledged | |||
Number of Life Settlement Contracts | |||
0-1 | contract | 0 | 0 | |
1-2 | contract | 0 | 0 | |
2-3 | contract | 0 | 0 | |
3-4 | contract | 0 | 0 | |
4-5 | contract | 0 | 0 | |
Thereafter | contract | 2 | 2,000 | |
Total | contract | 2 | 2,000 | |
Fair Value | |||
0-1 | $ 0 | $ 0 | |
1-2 | 0 | 0 | |
2-3 | 0 | 0 | |
3-4 | 0 | 0 | |
4-5 | 0 | 0 | |
Thereafter | 1,254 | 1,172 | |
Total | 1,254 | 1,172 | |
Face Value | |||
0-1 | 0 | 0 | |
1-2 | 0 | 0 | |
2-3 | 0 | 0 | |
3-4 | 0 | 0 | |
4-5 | 0 | 0 | |
Thereafter | 12,000 | 12,000 | |
Total | $ 12,000 | $ 12,000 |
Earnings Per Share - Narrative (Details) - shares |
Aug. 31, 2019 |
Nov. 30, 2018 |
[1] | Aug. 31, 2018 |
||
---|---|---|---|---|---|---|
Earnings Per Share [Abstract] | ||||||
Common stock, shares issued (in shares) | 158,659,803 | 158,733,928 | 159,028,458 | |||
Common stock, shares outstanding (in shares) | 158,051,803 | 158,125,928 | 158,420,458 | |||
Treasury stock (in shares) | 608,000 | 608,000 | 608,000 | |||
|
Stock-based Compensation - Common Stock Options Activity (Details) - USD ($) |
9 Months Ended | 11 Months Ended |
---|---|---|
Aug. 31, 2019 |
Nov. 30, 2018 |
|
Number of Shares | ||
Options outstanding, beginning balance (in shares) | 85,000 | |
Options granted (in shares) | 0 | |
Options exercised (in shares) | 0 | |
Options forfeited (in shares) | 0 | |
Options expired (in shares) | 0 | |
Options outstanding, ending balance (in shares) | 85,000 | 85,000 |
Exercisable at end of period (in shares) | 85,000 | |
Unvested at end of period (in shares) | 0 | |
Weighted Average Exercise Price per Share | ||
Options outstanding, beginning balance (in dollars per share) | $ 6.94 | |
Options granted (in dollars per share) | 0.00 | |
Options exercised (in dollars per share) | 0.00 | |
Options forfeited (in dollars per share) | 0.00 | |
Options expired (in dollars per share) | 0.00 | |
Options outstanding, ending balance (in dollars per share) | 6.94 | $ 6.94 |
Exercisable at end of period (in dollars per share) | 6.94 | |
Unvested at end of period (in dollars per share) | $ 0.00 | |
Weighted Average Remaining Contractual Term | ||
Options outstanding, weighted average remaining contractual term | 9 months | 1 year 6 months |
Exercisable, weighted average remaining contractual term | 9 months | |
Aggregate Intrinsic Value | ||
Options outstanding, beginning balance | $ 0.00 | |
Options outstanding, ending balance | 0.00 | $ 0.00 |
Unvested at end of period | $ 0.00 |
Investment in Limited Partnership - Funds in the Premium/Expense Reserve Account (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended |
---|---|---|
Aug. 31, 2019 |
Aug. 31, 2019 |
|
Investments in and Advances to Affiliates [Line Items] | ||
Premium/Expense Reserve Account | $ 8,210 | $ 8,210 |
First | ||
Investments in and Advances to Affiliates [Line Items] | ||
Premium/Expense Reserve Account | 8,210 | 8,210 |
Second | ||
Investments in and Advances to Affiliates [Line Items] | ||
Premium/Expense Reserve Account | 0 | 0 |
Third | ||
Investments in and Advances to Affiliates [Line Items] | ||
Premium/Expense Reserve Account | 0 | 0 |
Fourth | ||
Investments in and Advances to Affiliates [Line Items] | ||
Premium/Expense Reserve Account | $ 0 | $ 0 |
White Eagle Revolving Credit Facility - Reconciliation of Proceeds Distributed (Details) $ in Thousands |
9 Months Ended | |||
---|---|---|---|---|
Aug. 16, 2019
USD ($)
| ||||
Reconciliation of Proceeds | ||||
Collection account balance at December 1, 2018 | $ 500 | [1] | ||
White Eagle | Revolving Credit Facility | ||||
Reconciliation of Proceeds | ||||
Collection account balance at December 1, 2018 | 28,059 | |||
Face value collected in current quarter | 60,163 | |||
Face value collected in prior quarters | 32,342 | |||
Other collections | 2,575 | |||
Face value collected | 123,139 | |||
Expenses paid from the collection account Post-Petition | ||||
Premiums paid 2019 | (65,905) | |||
Interest expenses | (28,331) | |||
Payment toward principal | (1,804) | |||
White Eagle credit facility expenses | (9,304) | |||
Refund of premium payments advanced by parent | (3,000) | |||
Lender allowed claim-Beal | (5,839) | |||
Transfers of remaining funds to Lamington | (8,956) | |||
Total expenses paid from the collection account Post-Petition | (123,139) | |||
Collection account balance at August 16, 2019 | $ 0 | |||
|
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