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7.2 General disclosures about the bankruptcy process
Publication date: 31 Jul 2023
us Bankruptcy & liquidation guide
A reporting entity should consider the following disclosures in financial statements issued during a period of financial distress that has resulted in a bankruptcy filing. In addition, while under debtor-in-possession status, the financial statements should also be labeled as such.
- A description of the events leading up to and during bankruptcy as well as a summary of the impacts and timeline of the bankruptcy proceeding
This basic information regarding the case should include the bankruptcy petition filing date, the legal entities of the reporting entity included in the filing (including any subsidiaries that are party to the bankruptcy petition), the jurisdiction where the case is being heard, the petition number, and other information that would allow the reader to gain an understanding of the proceedings or where such information can be located. - A description of key events that have occurred during the reporting period or prior to the issuance of the financial statements
These might include key hearings before the Court (such as agreements allowing the reporting entity to pay certain creditors), agreements reached with creditors, decisions made by management as a result of the bankruptcy, or other events that would be of interest to the user of the financial statements. As the filings and related information are publicly available, the disclosures included in the financial statements should be consistent with the information made available by the Court. - The impact of the filing on other areas of the financial statements (e.g., debt covenant violations, impairments of intangible or long-lived assets, going concern considerations, or other accounting matters)
Although not required to be included in the disclosures specifically related to the bankruptcy, these would likely be required to be disclosed under other applicable GAAP. - The status of any debtor-in-possession financing and exit financing, including the terms of the debt and the status of Court approval
PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
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