Crisis, restructuring and restatement – Accounting Services

Filing for bankruptcy can place significant demand on accounting and reporting teams to generate information in short order while applying a high degree of precision to meet attorney and creditor needs. These demands ignore the teams existing workload making for a difficult time for all parties concerned. 

On Day 1, filing requirements are immediately triggered to a host of recipients including, but not limited to the bankruptcy court, the Securities Exchange Commission and private shareholders and creditors. Many of these filings involve the application of a different basis of accounting and unique data presentations which substantially increases the volume of activities in the Finance and Accounting functions of the organization. 

From inception and well after the bankruptcy process, accounting and valuation challenges result due to the application of the bankruptcy accounting standard. Examples of such challenges include presenting balance sheet liabilities as items that are fully secured and those that may be subject to compromise, and adjusted to estimated allowed claim amount. Determining the appropriate presentation of expenses related to the bankruptcy and considering the various valuation matters pre and post emergence is another challenge to navigate.  

To meet these challenges, our accounting advisory team works seamlessly with other principals involved in the filings to plan and execute all reporting requirements. Our PwC professionals are disciplined in the practice of bankruptcy accounting, SEC reporting, tax structuring, valuation and the Chapter 11 filing process. PwC's multi-disciplined offering allows us to provide a unique solution that is both relevant and effective to meet the challenges throughout the bankruptcy process.  

The right advice at the right time. Accounting under ASC 852 "Reorganizations" can be complex and requires a significant amount of planning. The key to success is obtaining a deep understanding of the issues and having a well reasoned approach to meeting those challenges, well in advance of having to deal with the issues.

Prior to Filing

At Filing

Nearing Emergence

Emergence

Prior to Filing

  • Operational assessments and project plan development
  • Preparation of and best practice of cut-off procedures at petition date
  • Impairment considerations and disclosures
  • SEC reporting impact and roadmap
  • Vendor communication plan

At Filing

  • Develop new tax strategies
  • Bankruptcy & financial reporting for both Court and GAAP basis
  • Valuation impact from a bankruptcy filing on recurring reporting
  • Address complex accounting matters (e.g., variable interest entities, debt presentation, liability measurement, deconsolidation, inter-company transaction, etc.)

Nearing Emergence

  • Finalize taxing strategies
  • Prepare for Fresh Start Accounting and related “4 Column Balance Sheet” footnote and blackline presentation, if applicable
  • Identification of SEC reporting deadlines and presentation requirements
  • Develop an IT systems plan
  • Develop methodology to record Plan Effects
  • Claim reconciliations for both Court and GAAP purposes

Emergence

  • Determine approach to enter new capital markets and assess strategic alternatives
  • Finalize historical financial statements for the predecessor and successor entities, if required
  • Implement optimization strategies for both operational and financial items

For more information, please see Crisis, Restructuring, and Restatements