Company: TWO-PC
Filing Date: 2025-07-29
Form Type: 10-Q
Source: 0001465740-25-000140
Chunk: 230

Company: TWO HARBORS INVESTMENT CORP.
Filing Date: 2025-07-29
Form: 10-Q
Item: Item 8
Chunk 230
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; damages in an amount to be determined at a hearing and/or trial; disgorgement of the Company’s wrongfully obtained profits; and fees and costs incurred by the plaintiffs in pursuing the action. The Company filed its answer to the Federal Complaint and made counterclaims against PRCM Advisers and Pine River Capital Management L.P. On November 8, 2023, the Company and the plaintiffs filed motions for summary judgment, seeking judgment in their favor on the pending claims and counterclaims. Each party opposed the other party’s motion for summary judgment.

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Table of ContentsTWO HARBORS INVESTMENT CORP.Notes to the Consolidated Financial Statements (unaudited)

On March 31, 2025, the magistrate judge issued a report and recommendation (“R&R”) on the parties’ motions for summary judgment. The R&R recommended that the Company’s motion for summary judgment be denied in its entirety, and that PRCM Advisers’, Pine River Domestic’s and Pine River Capital’s motion for summary judgment be denied in part and granted in part. On April 30, 2025, the Company filed objections to the R&R. On May 23, 2025, the objections were overruled by the Court. The plaintiffs’ motion for summary judgment has been granted to the extent that the Company did not have a basis on which to terminate the Management Agreement for cause and as to the Company’s pending counterclaims, and the plaintiffs’ motion for summary judgment otherwise has been denied. The Company’s motion for summary judgment has been denied. The parties have since agreed to participate in mediation, though the potential outcome cannot be determined at this time.As of June 30, 2025, the Company’s consolidated financial statements reflect a contingency liability and related expense of $199.9 million. This contingency liability is reflective of the $139.8 million termination fee that the Company believes would have been payable to PRCM Advisers for termination on the basis of unfair compensation pursuant to the Management Agreement, plus applicable pre-judgment interest on such termination fee that has accrued through June 30, 2025. The Company’s consolidated financial statements as of June 30, 2025 do not recognize or disclose a range of reasonably possible loss under ASC 450 related to claims in the Federal Complaint for which summary judgment was not granted because management does not believe that a loss or expense related to such claims is probable or reasonably estimable. The specific factors that limit the Company’s ability to reasonably