Wilbur Ross buys H&R Block's Option One

We're not clear on what kind of write-down H&R will have to take as a result of this sale, or what kind of portfolio (or buyback) liabilities they are left with. As far as whether they are out of the woods, apparently option traders and short sellers disagree.

This article talks a little more about the liabilities aspect and gain vs. loss:

Block said that the sale isn't expected to cause a significant gain or loss in its reported earnings.

The sale is subject to conditions including a financing contingency limiting the buyer's obligations, Block said in the release. Under the purchase agreement, the buyer will acquire all of the assets and certain liabilities related to Option One's servicing business, including the assets of Option One's call center subsidiary in India.

Some liabilities? Wonder what those are... and which ones are being left on the table. The fact that the transaction is not expected to net any accounting gain suggests to me that the proceeds are being set against a mere estimate of how severe the liabilities are, which in turn suggest H&R could remain exposed to significant losses as the underlying economic situation deteriorates.

If anyone knows more or has more insight, please drop us a line.