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Fresh Start Accounting

Valuation Services for Fresh Start Accounting


Emergence from Chapter 11 bankruptcy with a change of control often requires fresh start accounting, which means restatement of the emergence balance sheet in accordance with FASB ASC 852, Reorganizations.  The fresh start balance sheet allocates the value of the emerging business to the qualifying identifiable assets and liabilities at their fair values, in conformity with FASB ASC 805, Business Combinations, and FASB ASC 820, Fair Value Measurements and Disclosures.

Fresh start accounting projects require the involvement of a team of professionals, with the management of an emerging entity receiving support from auditors, tax and accounting consultants and valuation professionals. Regulatory constraints prevent auditors from performing emergence-related valuation exercises for their own attest clients; thus, companies must choose a valuation expert with experience in a fresh start context.American Appraisal professionals have participated in many fresh start engagements, including those resulting from some of the largest bankruptcy filings in history, and have the expertise needed to enable an emerging entity to minimize errors, delays and disruptions.

In fresh start accounting, a valuation professional will:

  • Work with management to identify the qualifying assets, liabilities and reporting units
  • Allocate the reorganization value within the reporting unit structure at fair value
  • Establish the fair values of the qualifying tangible and intangible assets of each reporting unit
  • Support the analysis provided in a manner consistent with the requirements of audit review

We can also provide:

  • Critical early advice regarding asset identification, asset aggregation and methodology selection to support reporting obligations under SOP 90-7/ASC 805 
  • Enterprise and asset valuations in support of best interest and other bankruptcy-related filings

Why American Appraisal?
Establishing a fresh start balance sheet upon emergence from Chapter 11 bankruptcy requires planning and expertise. Choosing an experienced valuation firm is critical. American Appraisal is experienced in handling all valuation issues that can arise during the fresh start process. We have guided clients through and developed solutions for some of the most complex issues in this area. We are experienced in handling all the valuation issues that may arise during the fresh start process.

Clients we have assisted with valuation services for fresh start accounting include:

  • Armstrong World Industries, Inc.
  • Anchor Glass
  • WorldCom, Inc./MCI, Inc.
  • Solutia, Inc.
  • Delta Air Lines, Inc.
  • Interstate Bakeries Corporation
  • Owens Corning
  • Philadelphia Media Network
  • LyondellBasell Industries