Fresh Start Accounting

6 Months Ended

Jun. 30, 2025

Fresh-Start Balance Sheet [Abstract]

Adoption of Fresh Start Accounting

In connection with the emergence from bankruptcy and in accordance with ASC 852, the Company qualified for and adopted fresh start accounting on the Emergence Date because (1) the holders of the then-existing common shares of the Predecessor received less than 50% of the Common Stock shares of the Successor outstanding upon emergence and (2) the reorganization value of the emerging entity’s assets immediately prior to confirmation of the Plan of $1,023,549 was less than the total of all post-petition liabilities and allowed claims of $1,797,341.

With the application of fresh start accounting, the Company allocated its reorganization value to its individual assets and liabilities based on their estimated fair value. Accordingly, the unaudited consolidated financial statements after June 24, 2025 are not comparable with the consolidated financial statements as of or prior to that date. The fair value of the assets and liabilities following the reorganization may differ from their recorded values as reflected on the historical balance sheet of the Predecessor.

Reorganization Value

The reorganization value derived from the range of enterprise values associated with the Plan was allocated to the Company’s identifiable tangible and intangible assets and liabilities based on their fair values. Under ASC 852, reorganization value generally approximates the fair value of the entity before considering liabilities and is intended to approximate the amount a willing buyer would pay for the assets immediately after the effects of the restructuring. The Plan confirmed by the Court estimated a range of enterprise values between $500,000 and $900,000, with the midpoint determined to be the most appropriate value.

The following table reconciles the enterprise value to the reorganization value of Successor’s assets that has been allocated to the Company’s individual assets as of the Emergence Date:


	Emergence Date
Enterprise value	$	700,000
Plus: Excess cash and cash equivalents		90,585
Plus: Current liabilities excluding debt		133,079
Plus: Long-term liabilities excluding debt		46,419
Plus: Net working capital adjustment		53,466
Reorganization value of Successor’s assets	$	1,023,549

The following table reconciles the enterprise value to the total implied equity value of the Successor as of the Emergence Date:


	Emergence Date
Enterprise value	$	700,000
Plus: Excess cash and cash equivalents		90,585
Less: Fair value of exit debt facility net of deferred financing costs		(465,518	)
Plus: Net working capital adjustment		53,466
Total implied equity value	$	378,533

Management determined, with the assistance of its advisors, the enterprise and corresponding equity value of the Successor using various valuation methods, including (i) discounted cash flow analysis (“DCF”), (ii) public comparable analysis and (iii) precedent transaction analysis. The use of each approach provides corroboration for the other approaches.

DCF Analysis. The DCF analysis is an enterprise valuation methodology that estimates the value of an asset or business by calculating the present value of expected future cash flows to be generated by that asset or business plus a present value of the estimated terminal value of that asset or business. The DCF analysis used estimated debt-free and after-tax free cash flows. These cash flows were then discounted at a range of estimated weighted average costs of capital (“Discount Rate”). The Discount Rate reflects the estimated blended rate of return that would be expected by debt and equity investors to invest in the Company’s businesses based on a target capital structure. The enterprise value was determined by calculating the present value of the Company’s unlevered after-tax free cash flows plus an estimate for the value of the Company beyond the period covered by the projections reviewed known as the terminal value.

Selected Publicly Traded Companies Analysis. The selected publicly traded companies analysis is based on the enterprise values of selected publicly traded companies that have operating and financial characteristics comparable in certain respects to the Company. For example, such characteristics may include similar industry, size, and scale of operations, operating margins, growth rates, and geographical exposure. Under this methodology, certain financial multiples that measure financial performance and value are calculated for each selected company and then applied to the Company’s financial statements to imply an enterprise value for the Company. Management, with the assistance of its advisors, used, among other measures, enterprise value (defined as market value of equity, plus book value of debt and book value of preferred stock and minority interests, less cash, subject to adjustments for underfunded obligations and other items where appropriate) for each selected company as a multiple of such company’s publicly available consensus projected EBITDA for fiscal years 2025 and 2026. Although the selected companies were used for comparison purposes, no selected publicly traded company is either identical or directly comparable to the Company or its businesses. Accordingly, the comparison of selected publicly traded companies to the Company and its businesses, and its analysis of the results of such comparisons, was not purely mathematical, but instead involved considerations and judgments concerning differences in operating and financial characteristics and other factors that could affect the relative values of the selected publicly traded companies and the Company. The selection of appropriate companies for this analysis is a matter of judgment and subject to limitations due to sample size and the public availability of meaningful market-based information.

Selected Transaction Analysis. The selected transactions analysis is based on the implied enterprise values of companies and assets involved in publicly disclosed merger and acquisition transactions for which the targets had operating and financial characteristics comparable in certain respects to the Company. Under this methodology, the enterprise value of each such target is determined by an analysis of the consideration paid and the net debt assumed in the merger or acquisition transaction. The enterprise value is then compared to a selected financial metric, in this case EBITDA for the Company for fiscal years 2025 and 2026, to determine an enterprise value multiple. In this analysis, the EBITDA enterprise value multiples were utilized to determine a range of implied enterprise value for the Company.

The enterprise value and corresponding equity value are dependent upon achieving the future financial results set forth in the Company’s valuations, as well as the realization of certain other assumptions. All estimates, assumptions, valuations and financial projections, including the fair value adjustments, the enterprise value and equity value projections, are inherently subject to significant uncertainties and the resolution of contingencies beyond the Company’s control. Accordingly, the Company cannot provide assurances that the estimates, assumptions, valuations or financial projections will be realized, and actual results could vary materially.

Unaudited Consolidated Balance Sheet as of the Emergence Date

The adjustments included in the following fresh start unaudited consolidated balance sheet as of June 24, 2025 reflect the effects of the transactions contemplated by the Plan and executed by the Predecessor on the Emergence Date (reflected in the column Reorganization Adjustments), and fair value and other required accounting adjustments resulting from the adoption of fresh start accounting (reflected in the column Fresh Start Adjustments). The explanatory notes provide additional information with regard to the adjustments recorded, the methods used to determine the fair values and significant assumptions.

Intangible Assets

In accordance with ASC 852, with the application of fresh start accounting, the Company allocated its reorganization value to its other individual assets and liabilities based on their estimated fair values, including those of intangible assets and liabilities.

Other intangible assets were measured based upon estimates of the future performance and cash from the Successor at the Emergence Date. Values and economic lives assigned to other intangible assets were based on estimated value and use of these assets by a market participant. Trade names and developed technology-based intangibles were valued under the relief from royalty income approach. The income approach determines fair value by estimating the after-tax cash flows attributable to an identified asset over its useful life (Level 3 inputs) and then discounting these after-tax cash flows back to a present value. Database intangibles were valued using the cost approach and direct cost approach. The cost approach determines fair value by estimating the cost to replace or reproduce an asset at current prices and is reduced for functional and economic obsolescence. Customer related intangible assets that were valued using the multi-period excess earnings method. The multi-period excess earnings method is a valuation method that determines fair value by estimating the cash flows solely attributable to that specific asset, after deducting returns on all other assets that contribute to generating those cash flows, and then discounting those asset-specific cash flows to their present value.

The Company has also presented all franchise rights acquired from the Predecessor Period as part of other intangible assets, net.

Debt

In connection with the Debtors’ emergence from bankruptcy, the Company issued the New Term Loan Facility with a par amount of $465,000. The fair value of $466,816 was estimated using a discounted cash flow approach.

The consolidated balance sheet as of the Emergence Date was as follows:


	As of June 24, 2025
				Reorganization				Fresh Start
	Predecessor			Adjustments				Adjustments				Successor
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	164,008		$	(23,423	)	(a)	$	—			$	140,585
Restricted cash		19,007			13,973		(b)		—				32,980
Receivables (net of allowances)		12,115			—				—				12,115
Prepaid income taxes		38,404			—				2,417		(l)		40,821
Prepaid marketing and advertising		6,005			—				—				6,005
Prepaid expenses and other current assets		19,961			—				(131	)	(m)		19,830
TOTAL CURRENT ASSETS		259,500			(9,450	)			2,286				252,336
Property and equipment, net		3,566			—				6,176		(n)		9,742
Operating lease assets		5,117			—				(1,626	)	(o)		3,491
Goodwill		242,422			—				(43,369	)	(p)		199,053
Other intangible assets, net		82,145			—				446,855		(q)		529,000
Deferred income taxes		16,988			—				(407	)	(r)		16,581
Other noncurrent assets		18,229			—				(4,883	)	(s)		13,346
TOTAL ASSETS	$	627,967		$	(9,450	)		$	405,032			$	1,023,549
LIABILITIES AND TOTAL EQUITY (DEFICIT)
CURRENT LIABILITIES
Portion of operating lease liabilities due within one year	$	514		$	6,540		(c)	$	2,040		(t)	$	9,094
Accounts payable		9,779			—				—				9,779
Salaries and wages payable		21,768			10,670		(d)		—				32,438
Accrued marketing and advertising		9,732			—				—				9,732
Accrued interest		—			—				—				—
Other accrued liabilities		30,840			8,415		(e)		—				39,255
Income taxes payable		2,999			—				—				2,999
Deferred revenue		29,782			—				—				29,782
TOTAL CURRENT LIABILITIES		105,414			25,625				2,040				133,079
Long-term debt, net		—			463,702		(f)		1,816		(u)		465,518
Long-term operating lease liabilities		1,637			39,681		(g)		(38,730	)	(v)		2,588
Deferred income taxes		10,759			—				32,408		(r)		43,167
Other noncurrent liabilities		664			—				—				664
Liabilities subject to compromise		1,678,867			(1,678,867	)	(h)		—				—
TOTAL LIABILITIES		1,797,341			(1,149,859	)			(2,466	)			645,016
TOTAL EQUITY (DEFICIT)
Successor common stock		—			378,533		(i)		—				378,533
Predecessor common stock		—			—				—				—
Predecessor treasury stock		(3,000,164	)		3,000,164		(j)		—				—
Retained earnings		1,845,916			(2,238,288	)	(k)		392,372		(w)		—
Accumulated other comprehensive loss		(15,126	)		—				15,126		(x)		—
TOTAL EQUITY (DEFICIT)		(1,169,374	)		1,140,409				407,498				378,533
TOTAL LIABILITIES AND TOTAL EQUITY (DEFICIT)	$	627,967		$	(9,450	)		$	405,032			$	1,023,549

Balance Sheet Reorganization Adjustments

(a)

Changes in cash and cash equivalents included the following:


Funding of professional fee escrow account	$	(10,041	)
Payment for bankruptcy-related professional fees and debt issuance costs		(9,425	)
Restriction of cash related to Letter of Credit collateralization		(4,025	)
Release of cash reserved for utilities		93
Payment for continuing Letter of Credit fee		(25	)
Changes in cash and cash equivalents	$	(23,423	)

(b)

Changes in restricted cash included the following:


Funding of professional fee escrow account	$	10,041
Restriction of cash related to Letter of Credit collateralization		4,025
Release of cash reserved for utilities		(93	)
Changes in restricted cash	$	13,973

(c)

Changes in the portion of operating lease liabilities due within one year were due to the reinstatement of the portion of operating lease liabilities due within one year from liabilities subject to compromise.

(d)

Changes in salaries and wages payable were due to the reinstatement of salaries and wages payable from liabilities subject to compromise.

(e)

Changes in other accrued liabilities included the following:


Accrual of bankruptcy-related professional fees	$	13,167
Payment for bankruptcy-related professional fees		(4,752	)
Changes in other accrued liabilities	$	8,415

(f)

Changes in long-term debt, net included the following:


Issuance of New Term Loan Facility (see Note 8)	$	465,000
Capitalization of debt issuance costs		(1,298	)
Changes in long-term debt	$	463,702

(g)

Changes in long-term operating lease liabilities were due to the reinstatement of the long-term portion of operating lease liabilities from liabilities subject to compromise.

(h)

Liabilities subject to compromise settled in accordance with the Plan:


Prepetition Term Loan Facility due April 13, 2028	$	945,000
Prepetition Senior Secured Notes due April 15, 2029		500,000
Prepetition Revolving Credit Facility due April 23, 2026		171,341
Long-term portion of operating lease liabilities		39,681
Accrued salaries and wages payable		10,670
Portion of operating lease liabilities due within one year		6,540
Accrued interest payable		5,635
Total liabilities subject to compromise	$	1,678,867
Less: Issuance of New Term Loan Facility issued to holders of prepetition First Lien Claims		(465,000	)
Less: Implied equity value issued to holders of prepetition First Lien Claims (9,100 Successor common shares)		(344,465	)
Less: Reinstatement of long-term operating lease liabilities		(39,681	)
Less: Reinstatement of salaries and wages payable		(10,670	)
Less: Reinstatement of portion of operating lease liabilities due within one year		(6,540	)
Gain on settlement of liabilities subject to compromise	$	812,511

(i)

Reflects the Successor equity including the issuance of 10,000 shares of Successor Common Stock pursuant to the Plan.

(j)

Changes to Predecessor common stock and treasury stock were due to the cancellation of Predecessor common stock and treasury stock per the Plan.

(k)

Changes to retained earnings included the following:


Gain on settlement of liabilities subject to compromise	$	812,511
Accrual of bankruptcy-related professional fees		(13,167	)
Accrual of continuing Letter of Credit fees		(25	)
Payment for bankruptcy related professional fees		(3,374	)
Total adjustments impacting reorganization items, net	$	795,945
Cancellation of Predecessor common stock and treasury stock		(3,000,164	)
Implied equity value issued to Predecessor equity holders (900 Successor common shares)		(34,069	)
Changes in retained earnings	$	(2,238,288	)

Balance Sheet Fresh Start Adjustments

(l)

The change in prepaid income taxes reflects the net change in the federal and state tax deductions for the lease termination liability and write-off of sublease asset associated with the Corporate Headquarters Lease (as defined below) due to the adoption of fresh start accounting.

(m)

The change in prepaid expenses and other current assets represents the fair value adjustment to the Company’s other current assets relating to the write-off of a sublease asset associated with the Corporate Headquarters Lease.

(n)

The change in property and equipment, net primarily represents the fair value adjustment to the Company’s leasehold improvements, office furniture and equipment and computer hardware and software. The Company valued the property and equipment, net using the indirect cost method under the cost approach. The indirect cost method considers historical acquisition costs for the assets adjusted for inflation, as well as factors in any potential obsolescence based on the current condition of the assets.

(o)

The change in operating lease assets reflects the adjustment to the Company’s operating lease assets relating to the recognition of sublease interest, decrease in short term leases due to applying the short term lease exemption, and the impact of changes to the incremental borrowing rate (“IBR”).

(p)

The change in goodwill reflects the adjustment to record excess reorganization value not attributable to a specific assets class.

(q)

Changes to other intangible assets, net included the following:


Recognition of other intangible assets recorded at fair value (see Note 7)	$	529,000
Adjustment to write-off capitalized cost and related accumulated amortization of other intangible assets as part of fresh start accounting		(82,145	)
Changes in other intangible assets, net	$	446,855

(r)

The change to deferred income taxes was due to the increase of the net deferred tax liability by $32,815 resulting from the changes in fair value of assets and liabilities due to the adoption of fresh start accounting.

(s)

The change in other noncurrent assets reflects the fair value adjustment to the Company’s noncurrent assets relating to the write-off of a sublease asset associated with the Corporate Headquarters Lease.

(t)

The change in operating lease liabilities due within one year reflects the fair value adjustment to the Company’s operating lease liabilities, including the adjustments associated with the Corporate Headquarters Lease (see Note 5 “Leases” for further discussion). As part of adjusting the Corporate Headquarters Lease to the allowable claim, the operating lease liability due within one year increased by $3,749. Decreases in operating lease liabilities due within one year reflect the decrease in short term leases due to applying the short term lease exemption, and the impact of changes to the IBR.

(u)

The change in long-term debt, net reflects the fair value adjustment to the Company’s long-term debt due to the New Term Loan Facility (see Note 8 “Long-term Debt”).

(v)

Changes to long-term operating lease liabilities included the following:


Adjustment to long-term operating lease liability associated with the Corporate Headquarters Lease (See Note 5)	$	(38,545	)
Other adjustment to record long-term operating lease liabilities at fair value		(185	)
Changes in long-term operating lease liabilities	$	(38,730	)

(w)

Changes to retained earnings reflect the net cumulative impact of the fresh start adjustments on retained earnings as follows:


Other intangible assets	$	446,855
Long-term operating lease liabilities		38,730
Goodwill		(43,369	)
Accumulated other comprehensive loss		(17,206	)
Property and equipment		6,176
Other current and noncurrent assets		(5,013	)
Portion of operating lease liabilities within one year		(2,040	)
Long-term debt		(1,816	)
Operating lease assets		(1,626	)
Total fresh start adjustments impacting reorganization items, net	$	420,691
Income tax effects on deferred income taxes		(32,815	)
Income tax effects on accumulated other comprehensive income		2,079
Income tax effects on prepaid income taxes		2,417
Changes in retained earnings	$	392,372

(x)

Changes to accumulated other comprehensive income (loss) represent the reset of the Predecessor balance due to the adoption of fresh start accounting.