Fresh Start Accounting (Tables)

6 Months Ended

Jun. 30, 2025

Fresh-Start Balance Sheet [Abstract]

Schedule of Enterprise Value Reconciles Reorganization Value of Assets

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

Schedule of Consolidated Balance Sheet as of Emergence Date

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.