HURCO COMPANIES INC (HURC) presents a modestly positive liquidation recovery posture as of January 31, 2026, driven primarily by a large cash and inventory base relative to a clean liability stack with no funded debt. Applying standard liquidation haircuts: cash of $48.0M recovers at par; AR of $25.8M (net of $1.2M allowance) recovers approximately $24-25M at 90-95%; inventory of $141.7M recovers approximately $85-91M at 60% (finished goods $96.3M, WIP $11.3M, raw materials $34.2M — all subject to the same composite haircut given the specialized nature of CNC machine tool inventory); PP&E net book value of $7.6M (gross $38.9M, accumulated depreciation $31.3M) recovers approximately $4-5M at 50-60% of NBV; capitalized software of $8.4M and other intangibles of $0.4M recover zero. ROU assets of $11.2M recover zero — they are offset by the corresponding operating lease liability carried at face value. Derivative assets of $0.1M have marginal recovery; derivative liabilities of $3.1M remain at face value. Total adjusted asset recovery approximates $165-175M before liability deductions. Total liabilities consist of current liabilities of $53.2M (including $27.6M accounts payable, $5.4M deferred revenue, $4.4M current lease liability, $6.3M accrued employee benefits, and other accruals), non-current liabilities of $13.3M (including $7.2M non-current lease liability and $6.1M deferred credits/other), and zero funded debt as of January 31, 2026. Total face-value liabilities approximate $66.5M. Estimated liquidation recovery to equity falls in the range of approximately $98-109M, broadly consistent with MFFAIS's OLV of $155M (which likely uses less punitive haircuts) and well above the CLV of negative $12.4M. The key structural change from the prior period (10-K as of October 31, 2025) is the replacement of the unsecured $40M 2018 Credit Agreement with a secured $20M 2026 Credit Agreement that now pledges substantially all personal property of the parent and subsidiary guarantors as collateral — this reduces unencumbered asset coverage for unsecured creditors in a liquidation scenario, though currently $0 is drawn. Separately, full valuation allowances are now recorded against Italian, U.S., and Chinese deferred tax assets, signaling management's own assessment that those jurisdictions' DTAs lack recoverability — consistent with zero liquidation value attributed to DTAs. The 2026 Credit Agreement's leverage covenant effectively blocks borrowing while EBITDA is negative, so the facility provides limited incremental liquidity until profitability recovers. Inventory remains the single largest asset at $141.7M book value, and its liquidation recovery is the primary swing factor in equity recovery. The deferred revenue liability of $5.4M extinguishes without cash payment in a wind-up, as the underlying service obligations cease — this provides modest uplift versus face value treatment, but that offset is not captured in the standard lens applied here. Filing discusses deferred tax valuation allowances in MD&A but does not separately XBRL-tag the aggregate DTA valuation allowance balance as of January 31, 2026.
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