Expand
For entities not qualifying for fresh-start reporting, the effects of the bankruptcy are recorded through the financial statements, and a new accounting entity is not created. Therefore, the financial statements are not divided between the pre- and post-bankruptcy periods (i.e., predecessor and successor financial statements are not presented).

ASC 852-10-45-29

Entities emerging from Chapter 11 that do not meet the criteria in paragraph 852-10-45-19 do not qualify for fresh-start reporting. Liabilities compromised by confirmed plans shall be stated at present values of amounts to be paid, determined at appropriate current interest rates. Forgiveness of debt, if any, shall be reported as an extinguishment of debt and classified in accordance with Subtopic 220-20.

When most of a reporting entity's liabilities are restated as a result of restructurings or modifications that occur under the purview of the Court, the provisions of ASC 470-60, Troubled Debt Restructurings by Debtors, do not apply. With that in mind, the following should be considered at the emergence date:
  • Liabilities that were compromised under the bankruptcy process are recorded at the present value of the amounts to be paid, which can differ from fair value, with any resulting gain generally being recorded as a reorganization item
  • Asset values and uncompromised liabilities' carrying amounts are not adjusted to fair value
  • Retained earnings or accumulated deficit and accumulated other comprehensive income are not reset to zero

The extinguishment of debt is typically classified as a reorganization item.
Expand Expand
Resize
Tools
Rcl

Welcome to Viewpoint, the new platform that replaces Inform. Once you have viewed this piece of content, to ensure you can access the content most relevant to you, please confirm your territory.

signin option menu option suggested option contentmouse option displaycontent option contentpage option relatedlink option prevandafter option trending option searchicon option search option feedback option end slide