A reporting entity emerging from bankruptcy must record the effects of its reorganization plan. In most cases, the reporting entity will also qualify for fresh-start reporting whereby balance sheet items are adjusted to their fair values to denote a "fresh start" upon emergence from bankruptcy. If the criteria to apply fresh-start reporting are met, the reporting entity should apply fresh-start reporting once the Court has confirmed the reporting entity's reorganization plan and it has emerged from Chapter 11. This chapter outlines the criteria and application of fresh-start reporting, as well as guidance for a reporting entity that does not qualify for fresh-start reporting. Throughout the chapter, references are made to the "predecessor" and "successor" companies when applying fresh-start reporting. As discussed in BLG 4.4, the separate references are the result of the predecessor company exiting the bankruptcy process and becoming the successor company as a result of applying fresh-start reporting. This successor company is considered to be a "new" reporting entity, separate from the predecessor for accounting and financial reporting purposes. In essence, as a result of its emergence from bankruptcy and the adoption of fresh-start reporting, the reporting entity has a new beginning, which should be reflected in its financial statements.