Verasun Bankruptcy
By: Gardiner Thomsen CPAs | email
We understand that many of you have received letters from legal counsel for the “reorganized debtors” of Verasun Energy Corporation. These letters were regarding preference claims associated with their bankruptcy filing on October 31, 2008. The bankruptcy trustee sent letters indicating that they were investigating and seeking recovery of the payments made to suppliers based upon a preference theory under bankruptcy law.
In light of facts and circumstances that we know today, we have been and intend to consider this to be a contingency under FAS ASC 450, Contingencies. What that means is that we will be including an additional paragraph in your “Contingencies” footnote. Under this accounting standard, a loss contingency shall be accrued if the loss is (1) probable and (2) the amount can be reasonably estimated. We currently do not have enough evidence to indicate that this is a probable loss or that the amount can be reasonably estimated.
We will continue to evaluate further information and facts as they become available and will recommend modifications to your disclosures and accruals if deemed necessary, before issuing your final audit reports. We are likely to be contacting your cooperative’s legal counsel in the course of the audit to address this topic.
