Quasi-Reorganization

A quasi-reorganization is a relatively obscure provision under U.S. GAAP which provides that under certain circumstances, a firm may eliminate a deficit in its retained earnings account by restating assets, liabilities, and equity in a manner similar to a bankruptcy. A firm’s stockholders must agree to allow the accounting change, which essentially resets the firm’s books as though a new company had incurred the assets and liabilities of the old firm.