Accounting for corporate reorganizations

Bankruptcy law in the United States is codified in federal law under Title 11 of the United States Code (Bankruptcy Code), which provides a uniform federal law governing all bankruptcy cases. There are two types of bankruptcy filings under the Bankruptcy Code available to business entities: Chapter 7 and Chapter 11. Chapter 11 is the most common type of filing for businesses. A case filed under Chapter 11 is often referred to as a reorganization proceeding. In other words, a business that files for Chapter 11 protection is attempting to continue its business by restructuring the debt that existed prior to the proceeding. For accounting purposes, bankruptcy proceedings under Chapter 11 are within the scope of FASB ASC 852-10, Reorganizations—Overall.