when a company undergoes a quasi reorganization it is allowed to continue paying dividends avoids the costs and time associated with a chapter 11 bankruptcy and possibly realizes tax advantages as a quasi reorganization does nothing to improve the actual operational aspect of a business they are usually accompanied by other changes such as consolidations eliminating excess and improving efficiency 3 
goals of a quasi reorganizationthe main goal of a quasi reorganization is to bring the retained earnings balance to zero first overvalued assets should be written down to fair value with a direct reduction in retained earnings although this increases the deficit momentarily it will reduce future depreciation expenses liabilities are also restated to their fair values with any resulting offsets going to the retained earnings deficit 3 once assets have been reduced to fair value either additional paid in capital or the par value of common stock is reduced to balance out the elimination of the retained earnings deficit companies have some flexibility when deciding how to proceed with the quasi reorganization it is possible to reduce par value increase additional paid in capital and zero out retained earnings at the same time 3 