Item 2.02 Results of Operations and Financial Condition.
Liquidation and Dissolution Update
On May 28,
2020, in furtherance of its Plan of Complete Liquidation and Dissolution, Altaba Inc. (the “Fund”) filed with the Chancery Court of the State of Delaware (the “Court”) a verified petition (the “Petition”) for
determinations pursuant to Section 280 of the General Corporation Law of the State of Delaware (the “DGCL”). The Petition requests an interim order and final order determining the amount and form of security that will be reasonably
likely to be sufficient to provide compensation for: (i) claims that are the subject of a pending action, suit or proceeding to which the Fund is a party; (ii) other claims asserted in response to a notice provided by the Fund under
Section 280(a)(i) of the DGCL, as to which the amount and form of security for such claims has not been agreed upon by the parties; (iii) costs and expenses through the completion of the wind-up
process; and (iv) other claims, if any, that are not barred under Section 280 and have not been made known to the Fund or that have not yet arisen but that, based on facts known to the Fund, are likely to arise or become known within five
years after October 4, 2019, the date of dissolution of the Fund (the “Effective Time”), including contingent, conditional or otherwise unmatured contractual claims.
As described in the Petition, a copy of which is filed as an exhibit to this Form 8-K and is incorporated by
reference herein, the Fund will first seek an interim order from the Court (the “Interim Order”) that approves an initial conservative aggregate amount of security of approximately $7.3 billion. In addition to undisputed claims
(including claims where the Fund has agreed with the claimant on the required amount of security, either initially or following negotiation), this security amount includes, for each claim as to which the amount is in dispute, the full amount
requested by the relevant claimant. The Fund is requesting this relief in order to be able to make a cash distribution of up to approximately $5.6 billion, representing all of the Fund’s assets in excess of the aggregate security amount
approved in the Interim Order, without having to wait for the Court to adjudicate the amounts of security reasonably likely to provide sufficient compensation for the claims in dispute. Additional distributions are not expected to be made until a
determination has been reached by the Court regarding the amount and form of security reasonably likely to provide sufficient compensation for such disputed claims and the Court’s issuance of a final order, as described below. The Fund is not
able to predict with certainty when the Court will address the Fund’s Motion for Interim Distribution. The Court is not typically requested to authorize such an Interim Order in proceedings of this kind, and there can be no assurance that the
Court will approve the Interim Order and permit the distribution of excess assets based on the Interim Order or when such distribution, if approved, will occur.
Thereafter, the Fund will request a final order from the Court (the “Final Order”) establishing the final amount and form of security for contested
known, contingent and potential future claims that are likely to arise or become known within five years of the Effective Time (or such longer period of time as the Court may determine not to exceed ten years after the Effective Time), pay or make
reasonable provision for the Fund’s uncontested known claims and expenses (including any changes to amounts agreed by the Fund and claimants following the issuance of the Interim Order), and establish reserves for other claims as required by
the Final Order. In the Final Order, the Fund currently intends to ask the Court to approve an aggregate amount of security of approximately $1.4 billion, subject to resolution of any claims after the date of the Initial Order and before the
date of such request. The Final Order will reflect the Court’s own determination as to the amount and form of security reasonably likely to provide sufficient compensation for all known, contingent and potential future claims against the Fund.
There can be no assurance regarding the timing and provisions of the Final Order and the Court may require the Fund to withhold an aggregate amount of security in excess of the amount that we believe is reasonably likely to satisfy the Fund’s
potential claims and liabilities. In addition, the Fund cannot predict the impact, if any, of the Covid-19 pandemic on the timing of proceedings in the Court, and it is possible that delays could result. There
also can be no assurance as to the timing or amount of any additional distributions that we may make subsequent to the distribution we intend to make immediately following the entry of the Interim Order.
Any amounts proposed or determined to be held as security for claims against the Fund in the Petition, the Interim Order or the Final Order, or any such
amounts actually held as security by the Fund, have not been, and will not be, calculated in accordance with, or by reference to, U.S. GAAP and do not, and will not, reflect any change in the Fund’s current position with respect to its
liabilities and reserves from an accounting perspective. Rather, in the case of the Interim Order, such amounts will reflect either the amount of security currently requested by the claimant, or the security amount such claimant has negotiated with
the Fund. For the Interim Order or the Final Order, the Fund may agree with a claimant to set aside an amount as security that exceeds the amount the Fund believes it will ultimately owe such claimant, in order to allow more efficient distribution
of excess funds pending final resolution of the liability. Furthermore, under the Final Order, for claims for which a security amount has not been separately negotiated, the amounts held as security will be those calculated by the Court to ensure
that the Fund has sufficient assets to comply with its obligations to provide adequate security pursuant to the dissolution procedures under Section 280 of the DGCL, which is generally a more conservative standard than the determination
required by U.S. GAAP.
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