Case Studies

Bankruptcy / Fresh Start Accounting

Background

A privately-held specialty retailer emerges from Chapter 11 and subsequently changes its fiscal year-end, which results in the need to obtain three external audits for the predecessor and successor periods in addition to applying "Fresh Start Accounting" under ASC 852.  Paradigm is brought in by one of the private equity sponsors to assist management with complex technical accounting issues, external audit support and to build and lead project management efforts.

Solutions

  • Prepared for and supported the audit of two predecessor periods and a successor period
  • Prepared technical accounting memorandums to support the conclusions reached to apply fresh start accounting under the reorganization under ASC 852
  • Prepared “four column” balance sheet and related footnote disclosures in accordance with ASC 852
  • Assisted with preparation of key tax filings
  • Built and led project management activities to support the workstreams above and coordination spanning executive management, external valuation specialists, internal and external tax specialists, internal financial reporting groups and external auditors

Outcomes

The combination of technical accounting expertise and robust project management ensured critical milestones are achieved and technical accounting positions are presented in a “national office ready” state. The client successfully completed all three audits in advance of the lender reporting deadline.

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