• Bankruptcy and Reorganization Services

Planning and effecting an organization’s emergence from bankruptcy can be one of the most taxing and complex projects from an accounting and logistical standpoint. Management must navigate complex legal restructuring and accounting requirements during the equivalent of an additional year-end close process while establishing the successor opening balance sheet and new relevant accounting policies. BDO’s Accounting & Reporting Advisory Services group will help keep your organization on track and can help reduce the overall burden of the technical accounting planning, adjustments, and disclosure requirements so management can focus on running the reorganized business. 

Pre-Emergence Planning
  • Review of balance sheet and operating/legal structure to assess the level of effort required to account for the entity’s emergence
  • Assist management with implementation timeline and assess system and process requirements for equivalent of additional year-end close process
  • Review plan document and work with management to manage the allocation and reconciliation of liabilities subject to compromise, exit financing structure, and related funds flow
  • Coordinate assistance with the entity in the evaluation of the impact to previous net operating losses, creditor recoveries & forgiveness of debt, and other income tax aspects of the reorganization
  • Work with the entity’s external auditors in the planning process
Emergence Adjustments
  • Based on review of the Plan document, assist management with the preparation of journal entries to reflect the impact of fresh start accounting in compliance with the Plan
  • Maintain the entity’s four-column balance sheet to bridge the predecessor financials through fresh start and valuation adjustments to the ultimate successor opening balance sheet
  • Coordinate assistance with the determination of gains and any distributions resulting from the plan of reorganization
Post-Emergence Accounting
  • Review successor opening balance sheet with management and assist with the development of new accounting policies and schedules as needed for any of the following areas:
    • Amortization of new intangible assets/useful life determination
    • Residual goodwill assessment and reporting
    • Accounting for the revaluation of off-market operating leases
  • Assistance with analysis and preparation of any new technical memorandums and assessments, as needed
Financial Statement Disclosures and Fresh-Start Reporting
  • Assistance with the adoption of other bankruptcy-related requirements of FASB Accounting Codification 852, Reorganizations
  • Assistance with drafting the narrative description of the effects of the plan of reorganization and impact of adoptions fresh start accounting in the footnotes, including how reorganization value was determined, quantification of various balance sheet adjustments recorded as a result of the emergence, and how pre-petition liabilities were settled
  • Assistance with new internal reporting, and comparison of post-emergence financial statements to historical operations given the effect of run-off adjustments (e.g. depreciation of revalued long-lived assets, etc.)