Fresh start accounting is a general term used to describe the financial reporting requirements for companies exiting bankruptcy. On emergence from Chapter 11 of the U.S. Bankruptcy Code (“Chapter 11”), a company’s balance sheet is to be restated to Fair Value, as required by AICPA Statement of Position 90-7: Financial Reporting by Entities in Reorganization Under the Bankruptcy Code (“SOP 90-7”). SOP 90-7 provides financial reporting guidance to entities that have entered bankruptcy and plan to emerge as going concerns under Chapter 11. Upon emergence from Chapter 11, companies meeting certain criteria are required to adopt fresh start accounting.
Fresh start accounting allocates the reorganization value of an entity in conformity with the rules and guidance of ASC 805. The identifiable assets of the reorganized business are valued at fair value, as defined and described by ASC 820.
Adams Capital’s experience with fresh start accounting valuation will enhance a company’s ability to reflect accurately fresh start value reporting, thereby building a solid financial reporting basis critical for future business. Contact us today to discuss fresh start valuation services.