Allison Transmission Holdings (ALSN) as of March 31, 2026 presents a deeply negative liquidation posture, consistent with the MFFAIS-reported CLV of -$5.3B, LLV of -$4.4B, and OLV of -$3.6B. The quarter reflects a transformative change from the prior period: the January 1, 2026 acquisition of the Acquired Off-Highway Business (the 'Acquisition') for approximately $2.6B net of cash acquired, funded primarily by a new $1.2B Incremental Term Loan plus revolving credit draws and existing cash. This materially shifted the balance sheet in every dimension relevant to liquidation analysis. On the asset side: cash dropped from $1,495M (December 31, 2025) to $311M; gross intangibles grew to $3,028M (net $1,685M) and goodwill rose to $2,827M, up $752M from the acquisition. Under liquidation haircuts, intangibles and goodwill recover zero, representing the largest single driver of the negative recovery. PP&E (net $1,667M) recovers at 50-70%, so roughly $834M-$1.2B. Inventory ($835M gross, recovering at ~60% = ~$500M) carries elevated risk given $63M of stepped-up basis inventory recognition flow-through in the current quarter—a one-time ASC 805 purchase accounting charge that flowed through cost of sales, distorting the inventory cost basis upward temporarily. AR ($892M gross, $11M allowance, recovering at 90-95% = ~$805-$847M) is the highest-quality liquid asset after cash. On the liability side at face value: total long-term debt and capital lease obligations stand at $4,295M ($508M Term Loan, $1,200M Incremental Term Loan, $150M revolver, $2,400M Senior Notes across four tranches), plus $1,247M current liabilities including $728M accounts payable, $129M accrued compensation, $76M deferred revenue (current), and various other accruals. Deferred tax liabilities ($844M) do not extinguish in liquidation. Other noncurrent liabilities ($299M) including $103M noncurrent deferred revenue and $60M noncurrent warranty accrual also remain at face. The Allison Off-Highway segment generated a $21M operating loss in its first quarter of consolidation, partly due to stepped-up basis charges ($63M inventory + $13M PP&E depreciation). The filing does not separately disclose pension obligations in the TAG_CONTEXT, though legacy pension exposure existed pre-acquisition; any unfunded pension status would further worsen liquidation recovery. The first lien net leverage ratio of 1.29x is well within covenant limits on a going-concern basis but is irrelevant to the liquidation calculus: all debt stays at face. The $845M undrawn revolver capacity has no liquidation value. The primary change since the prior annual filing (10-K for year ended December 31, 2025) is the step-change increase in both intangible/goodwill assets (zero recovery) and debt obligations, confirming deepening negative equity under the liquidation lens.
▼ Community Notes