Fresh Start accounting services
Bankruptcy reorganization under ASC 852
Deloitte’s Turnaround & Restructuring team and professionals from across Deloitte are leaders in helping companies implement Fresh Start accounting. Our team is on the ground with our clients, bringing specialists in bankruptcy, accounting and valuation, IT, and tax. From planning and systems readiness to implementation and validation, Deloitte’s Fresh Start accounting specialists have experience managing some of the largest corporate bankruptcies in US history.
Implementing a chapter 11 reorganization plan and revaluing your business
Recording the emergence from bankruptcy is one of the most complex and demanding accounting challenges an organization may face. It places significant demands on an organization’s management team to deal with the equivalent of a year-end close upon the emergence of, accounting for the restructuring of legal entities, adopting the requirements of ASC 852, and establishing the opening balance sheet of the successor organization.
Understanding the chapter 11 reorganization process and the related technical accounting requirements, obtaining a valuation of all the assets and liabilities of a business enterprise, and pushing the results down to every legal entity can be an enormous burden on financial, operational, and systems management and their supporting teams. Completing the process as quickly as possible will allow management to move forward and focus on the operations of the newly reorganized business.
Fresh Start accounting guidance and implementation: How we can help
The Fresh Start accounting process necessitates two significant accounting events:
- Recording the effects of a chapter 11 plan of reorganization
- The revaluation of both assets and liabilities for debtors and nondebtors alike
These events are also typically coupled with a significant amount of merger and restructuring activity. Each event must be completed in accordance with ASC 852 and other accounting requirements.
Our Fresh Start accounting team and other specialists support companies in performing required activities, such as:
- Developing a plan and readiness assessment to determine accounting implications during and upon emergence from a chapter 11 reorganization.
- Developing an implementation approach for recording accounting impacts on ledgers and subsystems.
- Determining the fair value of specific assets and liabilities to be reported in accordance with ASC 805.
- Determining accounting adjustments required for the plan of reorganization transactions and the balance sheet revaluation.
- Identifying system requirements and designing and testing system updates are necessary to record Fresh Start accounting impacts, including a general ledger stub-period solution and push down to subsystems.
- Developing financial statement presentations and necessary disclosures.
- Determining the federal, state, and foreign jurisdiction tax impacts of the plan of reorganization and related adjustment to a deferred tax asset and liability amounts.
Learn more about our Fresh Start accounting services in the PDF available for download, including:
- How we can help
- Fresh Start accounting guidance and planning
- The implementation of Fresh Start accounting services