Reporting entities nearing bankruptcy will need to re-evaluate previous accounting determinations reached with respect to consolidation. Specifically, if a reporting entity has relationships with variable interest entities (VIEs) that have been historically consolidated, financial deterioration may give rise to financial restructuring activities or other events to improve the reporting entity's liquidity. To the extent that these activities involve subsidiaries, which may or may not be experiencing financial difficulties of their own, the need to reconsider the original consolidation conclusion may be necessary. ASC 810, Consolidation, lists a number of reconsideration events of whether or not a reporting entity is still a VIE, including:

Upon a reassessment, a subsidiary may remain a VIE and the parent may continue to be the primary beneficiary, or a different primary beneficiary may be identified, causing the parent to deconsolidate its subsidiary. Although unlikely, upon reassessment, the subsidiary could also be determined to be a voting interest entity. Reporting entities should remember that while the VIE determination is a trigger-based event, the assessment of the primary beneficiary is an ongoing analysis that requires constant monitoring of the facts and circumstances, which may change as an entity progresses through bankruptcy proceedings.