Company Emerges from Bankruptcy Compliant with Fresh-Start Accounting Guidelines; Valuable Intangible Assets Identified
Client: International Pulp and Paper Company
Challenge: Help Company Emerge From Bankruptcy by Complying With Fresh-Start Accounting Guidelines
A $200 million privately held pulp, paper and corrugated packaging producer filed for bankruptcy. Its plan of reorganization called for the company to exit very quickly. AccuVal was asked to provide an independent and supportable basis for a fair value restatement of its balance sheet for financial reporting in compliance with fresh-start accounting guidelines.
AccuVal Approach
The engagement included appraising both intangible and tangible assets. AccuVal valued the real estate; machinery and equipment in both the United States mill and in five packaging locations in Canada; and intellectual property-related assets believed at the time to solely consist of custom software. Time was of the essence and the appraisal was complicated by United States and Canadian operations that had different economic drivers. While the Canadian plants primarily manufactured corrugated boxes and sold into a relatively small geographic footprint, the pulp and types of paper produced in the United States had multiple applications – everything from laminated roll wrap for fine paper to industrial packaging – and were marketed into a global commodity market. Identifying the company's reportable intangible assets would involve conferring with plant managers in the two countries over an intensive five-week period.
AccuVal stayed focused on identifying all of the company's assets, even valuable ones that had been consistently overlooked. As a result, the value of intangible assets – including trade names, patents, customer relationships, propriety software and unique technology – were identified and contributed substantial value to the overall evaluation.
Bottom Line: Additional Intangible Assets Discovered; Company Emerges Smoothly from Bankruptcy
Within an aggressive timeframe, AccuVal delivered a fully documented and supportable evaluation that allowed the company to smoothly emerge from bankruptcy as a new entity under the Fresh-Start accounting provisions.
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