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Upon emergence from Chapter 11 of the U.S. Bankruptcy Code, a company’s balance sheet is to be restated to fair value, pursuant to Accounting Standards Codification (“ASC”) Topic 852 (“ASC 852”), Reorganizations, which incorporated the guidance in AICPA Statement of Position 90-7, Financial Reporting by Entities in Reorganization Under the Bankruptcy Code. 

ASC 852 states that the reorganization value of an entity adopting fresh start reporting should be allocated to the entity’s assets based upon determinations of fair value, as defined in ASC Topic 820 (“ASC 820”), Fair Value Measurement, and in conformity with ASC Topic 805 (“ASC 805”), Business Combinations. 

Kroll specializes in financial reporting valuations based on the rules and guidance relating to business combinations, fresh start accounting, fair value measurements and impairment testing of goodwill and other assets. We offer an array of valuation and advisory services in connection with a company’s fresh start accounting through and upon emergence from the Chapter 11 bankruptcy process.

  • Estimation of the reorganization value, either in a range or a point estimate, to assist the debtor and the court as negotiations between  interested parties may not reflect fair value.
  • Estimation of the fair value of identified tangible and intangible assets 
Sample Intangible Assets Sample Tangible Assets*  Other Assets and Liabilities
Intellectual Property Inventory Financial Assets
Customer Contracts and Relationships Real Property (e.g., land and buildings) Investments in Joint Ventures/Affiliates
Trade Names/Trademarks Personal Property (e.g., machinery and equipment) Contingent Claims/Liabilities (e.g., operating and non-operating liabilities that remain after the reorganization) 

*Economic obsolescence is considered in the fair value measurement, as appropriate

  • Allocation of the single point reorganization value and goodwill to various reporting units (in compliance with ASC Topic 350, Intangibles – Goodwill and Other) and legal entities (tax structuring).  This step is critical as a material misallocation could result in significant impairment risk for either goodwill or long-lived assets subsequent to emergence.
  • Finalize fair value conclusions for all assets and liabilities for inclusion in the opening balance sheet upon emergence, including electronic fixed asset ledgers and other supporting documentation.
  • Consider any tax and regulatory requirements associated with legal entities that emerge from the bankruptcy proceedings.
  • Work with clients to ensure all accounting and regulatory issues, including all necessary documentation, are met and provide support in responding to auditor questions, SEC comment letters, and IRS and other regulatory requests.


Independent Accounting Advisory
  • Application of Fresh Start Reporting – Assist with determining whether the planned reorganization qualifies for fresh start reporting
  • Predecessor Entity Financial Statements – Drafting the financial statements and reporting of the predecessor entity, as of and for the period immediately preceding the confirmation date in accordance with U.S. Generally Accepted Accounting Standards (“U.S. GAAP”) and the requirements of ASC 852.
  • Successor Entity Financial Statements – Drafting the financial statements and footnote disclosures of the new reporting entity to present and describe the impact of the reorganization plan and the allocation of ‘reorganizational value’.
  • “Push-Down” of Fresh Start Reporting – Preparing and executing “push-down” accounting journal entries to apply and record reorganized asset and liability balances on subsidiary and statutory level books and records.
  • Technical Accounting Position Papers – Drafting technical accounting documentation and preparing analyses to document the new reporting entity’s judgments and U.S. GAAP accounting conclusions reached in applying fresh start reporting.
  • Accounting Policies – Drafting, updating and reviewing accounting policies and procedures for the new reporting entity.


Related Consulting

Kroll (and its predecessor companies) has advised clients on valuation and corporate finance issues since 1932, earning a reputation as the leading provider of insightful, independent and objective valuation advice. 

Contact one of our professionals to learn more about our capabilities and to discuss your specific situation. 

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Myron Marcinkowski
Myron Marcinkowski
Managing Director and North American Valuation Services Leader
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David Ball
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