beatandraise : SEC Filings Research with AI

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1.0.0.3 false Sale of Bankruptcy Claims Related to a Derivative Counterparty. false 1 $ false false iso4217_USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 iso4217_USD_per_shares Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares 0 shares Standard http://www.xbrl.org/2003/instance shares 0 5 Sale of Bankruptcy Claims Related to a Derivative Counterparty. 3 ms_SaleOfBankruptcyClaimsRelatedToADerivativeCounterpartyTextBlock ms false na duration string Disclosure describes the sale of bankruptcy claims related to a derivative counterparty. false false false false false false false false false 1 false false 0 0 <div> 16.    Sale of Bankruptcy Claims Related to a Derivative Counterparty.   During 2009, the Company entered into multiple participation agreements with certain investors whereby the Company sold undivided participating interests representing 81% (or $1,105 million) of its claims totaling $1,362 million, pursuant to International Swaps and Derivatives Association (“ISDA”) master agreements, against a derivative counterparty that filed for bankruptcy protection. The Company received cash proceeds of $429 million and recorded a gain on sale of $319 million in 2009. The gain is reflected in the consolidated statement of income in Principal transactions-trading revenues within the Institutional Securities business segment.   As a result of the bankruptcy of the derivative counterparty, the Company, as contractually entitled, exercised remedies as the non-defaulting party and determined the value of the claims under the ISDA master agreements in a commercially reasonable manner. The Company filed its claims with the bankruptcy court. In connection with the sale of the undivided participating interests in a portion of the claims, the Company provided certain representations and warranties related to the allowance of the amount stated in the claims submitted to the bankruptcy court. The bankruptcy court will be evaluating all of the claims filed against the derivative counterparty. To the extent, in the future, any portion of the stated claims is disallowed or reduced by the bankruptcy court in excess of a certain amount, then the Company must refund a portion of the purchase price plus interest from the date of the participation agreements to the repayment date. The maximum amount that the Company could be required to refund is the total proceeds of $429 million plus interest. The Company recorded a liability for the fair value of this possible disallowance. The fair value was determined by assessing mid-market values of the underlying transactions, where possible, prevailing bid-offer spreads around the time of the bankruptcy filing, and applying valuation adjustments related to estimating unwind costs. The investors, however, bear full price risk associated with the allowed claims as it relates to the liquidation proceeds from the bankruptcy estate. The Company also agreed to service the claims and, as such, recorded a liability for the fair value of the servicing obligation. The Company will continue to measure these obligations at fair value with changes in fair value recorded in earnings. These obligations are reflected in the consolidated statement of financial condition as Financial instruments sold, not yet purchased—derivatives and other contracts, in Note 4 as Level 3 instruments, and in Note 10 as Derivatives not designated as accounting hedges. The disallowance obligation is also reflected in Note 11 in the guarantees table. </div> 16.    Sale of Bankruptcy Claims Related to a Derivative Counterparty.   During 2009, the Company entered into multiple participation false false Disclosure describes the sale of bankruptcy claims related to a derivative counterparty. No authoritative reference available. false false 1 1 false UnKnown UnKnown UnKnown false true