procedure used to eliminate a retained earnings deficit by restating certain assets, liabilities, and capital accounts. It allows a company a fresh start when it appears that operations can be turned around. It permits the company to proceed on much the same basis as if it had been legally reorganized, without the difficulty and expense generally connected with such a legal reorganization. Stockholders and creditors must agree to it. The following steps are taken: (1) assets are written down to fair market value; (2) capital stock is restated, creating additional paid-in capital by reducing par value; and (3) a zero balance in retained earnings is created by eliminating the deficit in retained earnings by transferring part of capital to the account. Retained earnings bear the date of the quasireorganization.