Entities operating under bankruptcy protection are not relieved of their obligations to report periodically under the Securities Exchange Act of 1934 (Exchange Act). However, they might be eligible for relief from certain Exchange Act filings if the conditions in Staff Legal Bulletin No. 2 (SLB 2) are met. SLB 2 sets forth a framework for a registrant to replace its Form 10-Qs and Form 10-Ks by filing on Form 8-Ks the monthly financial reports that must be filed with the Court. See BLG 1.5 for discussion of monthly financial reports.
While SLB 2, as issued, indicates that registrants must request an accommodation from the Division of Corporation Finance, at the March 2023 meeting of the SEC Regulations Committee, the SEC staff indicated there is no requirement to request a no-action letter from the SEC staff. During the discussion, the SEC staff indicated that registrants often rely on previous no-action letters. However, a registrant may consider discussing eligibility for relief with the SEC staff under the SLB 2 reporting accommodation if facts and circumstances differ from previous no-action letters. The SEC staff emphasized it would not give a no-action letter to an entity that (1) is not current with respect to its prior Exchange Act reporting obligations or (2) has securities still trading on an exchange or otherwise has an active trading market.
The SEC staff also observed that the timing of financial information is usually driven by the Court and they would not expect to see significant delays between the time the financial information was filed with the Court and when the Form 8-K was filed. The SEC staff acknowledged that many Form 8-K due dates have been accelerated from 15 calendar days to 4 business days since the 1997 issuance of SLB 2. However, the SEC staff indicated it will continue to accept filings of monthly financial reports within the 15 calendar-day deadline in SLB 2.
Registrants that have filed on Form 8-K all monthly reports required by the Bankruptcy Code while in bankruptcy may also request an accommodation from the SEC staff to file a comprehensive annual report on Form 10-K upon emergence from bankruptcy. Such an accommodation releases the registrant from having to file multiple interim and annual reports, but generally does not reduce the information that would otherwise be included in such reports. Requests to file a comprehensive Form 10-K should be directed to the Office of the Chief Accountant, Division of Corporation Finance. If granted, the accommodation will allow the filing of a comprehensive Form 10-K, including all audited financial statements and other material information that would have been available had the registrant filed timely, complete reports during bankruptcy. This comprehensive report also must include unaudited quarterly financial statements in a level of detail consistent with the requirements of Rule 10-01(a) and (b) of Regulation S-X. The comprehensive Form 10-K will also need to include a discussion of operating results, trends, and liquidity for each interim and annual period.
The relief from the Form 10-K and Form 10-Q filing requirements does not apply to the registrant's other Exchange Act reporting obligations—for example, Form 8-K filings to disclose any material events related to the bankruptcy proceedings or other events, such as a sale of the debtor's assets or deconsolidation of a majority-owned subsidiary. Generally, any Form 8-K must continue to be filed during bankruptcy within four business days after the occurrence of a material event.
The SEC staff has indicated that the filing of a comprehensive Form 10-K would not result in the registrant being considered “current.” This may impact the registrant's ability to use certain SEC forms (e.g., Form S-8) and may have other implications. Additionally, the SEC staff has indicated that the registrant would not be eligible for Form S-3-level disclosures until it establishes a sufficient history of making timely filings.
The implications of SLB 2 for post-reorganization filings can be complex and judgmental. Entities considering following SLB 2 and using their monthly financial reports filed on Form 8-K in lieu of filing Form 10-Q and Form 10-K should have a thorough understanding of the SEC reporting requirements at each stage of the reorganization proceedings and consider consulting with their legal counsel or other professional advisors, as needed.
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