Note 5 – Liabilities Subject to Compromise

Liabilities Subject to Compromise represents liabilities incurred prior to the Petition Date which may be affected by the Chapter 11 process. These amounts represent the Debtors’ allowed claims and their best estimate of claims expected to be allowed which will be resolved as part of the bankruptcy proceedings.

Liabilities Subject to Compromise consists of the following as of December 31, 2014:



Accounts Payable	$	6,079
Debt		790,246
Accrued Interest and Dividends		44,719

Total Liabilities Subject to Compromise	$	841,044

Interest Expense

The Debtors have discontinued recording interest on unsecured or under secured liabilities subject to compromise on the Petition Date. Contractual interest on liabilities subject to compromise not reflected in the Condensed Combined Statement of Operations was approximately $18.6 million; representing interest expense from the Petition Date through December 31, 2014.

Reorganization Items

Reorganization items represent the direct and incremental costs of being in bankruptcy, such as professional fees, pre-petition liability claim adjustments and losses related to terminated contracts that are probable and can be estimated.

Reorganization items consist of the following for the year ended December 31, 2014:



Professional fees	$	(9,421)
Debt Issue Costs		(16,946)
Debt Discount		(16,572)

Total Reorganization Items	$	(42,939)