FairPoint Communications 2013 Annual Report Download - page 75

73
Plan and (ii) certain modifications to the requirements imposed by state regulatory authorities as a condition to approval of the
Merger (each a "Merger Order", and collectively, the "Merger Orders").
On June 30, 2011 and on November 7, 2012, the Bankruptcy Court entered final decrees closing certain of
the Company's bankruptcy cases due to such cases being fully administered. Of the 80 original bankruptcy cases, only the Chapter
11 Case of Northern New England Telephone Operations LLC (Case No. 09-16365) remains open.
Financial Reporting in Reorganization
The Company applied the Reorganizations Topic of the ASC effective as of the Petition Date. The Reorganizations Topic of
the ASC, which is applicable to companies in Chapter 11, generally does not change the manner in which financial statements are
prepared. However, it does require that the financial statements for periods subsequent to the filing of the Chapter 11 Cases
distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business.
Amounts that can be directly associated with the reorganization and restructuring of the business after the Petition Date must be
reported separately as reorganization items in the statements of operations. In addition, cash provided by and used for reorganization
items must be disclosed separately.
The Company's consolidated statement of operations for the twenty-four days ended January 24, 2011 includes the results
of operations during the Chapter 11 Cases. As such, any revenues, expenses, and gains and losses realized or incurred that are
directly related to the bankruptcy case are reported separately as reorganization items due to the bankruptcy.
Reorganization Items. Reorganization items represent expense or income amounts that have been recognized as a direct
result of the Chapter 11 Cases and are presented separately in the consolidated statements of operations pursuant to the
Reorganizations Topic of the ASC. Such items consist of the following (amounts in thousands):
Predecessor
Company
Twenty-Four
Days Ended
January 24, 2011
Professional fees (a) $ (13,965)
Cancellation of debt income (b) 1,351,057
Goodwill adjustment (c) (351,931)
Intangible assets adjustment (c) (30,381)
Property, plant and equipment adjustment (c) (56,258)
Pension and post-retirement healthcare adjustment (c) 22,076
Other assets and liabilities adjustment (c) (16,037)
Tax account adjustments (c) 4,313
Other (d) (11,561)
Total reorganization items $ 897,313
(a) Professional fees relate to legal, financial advisory and other professional costs directly associated with the reorganization
process.
(b) Net gains and losses associated with the settlement of liabilities subject to compromise, of which $1,351,055 was
recognized on the Effective Date.
(c) Revaluation of long-lived assets and certain assets and liabilities upon adoption of fresh start accounting.
(d) Includes expenses associated with the Long Term Incentive Plan (as defined hereinafter in note (16) "Stock-Based
Compensation") adopted as part of the Plan, the FairPoint Litigation Trust entered into as part of the Plan and the write-
off of the Predecessor Company's long term incentive plans and director and officer policy.
After the Effective Date, income or expense amounts recognized as a result of settling outstanding bankruptcy claims and
professional fees directly associated with the reorganization process are included in operating expenses as Reorganization related
expense in the consolidated statements of operations.
Magnitude of Bankruptcy Claims
Claims totaling $4.9 billion were filed with the Bankruptcy Court against the Company. As of February 28, 2014, through
the claim resolution process, $3.8 billion of these claims have been settled and $1.1 billion of these claims have been disallowed