Syndicated credit facility

For a modification to a syndicated loan facility, you would would apply the debt modification guidance under ASC 470-50 on a creditor by creditor basis. This is because each creditor has loaned a specific amount to the debtor and has its own right to repayment. If a creditor leaves the bank syndicate in connection with a debt modification or exchange, the debtor accounts for the debt previously held by the withdrawing creditor as an extinguishment because the obligation to the withdrawing creditor is paid. The portion of any unamortized debt discount and debt issuance costs on the overall syndicate borrowings are allocated to the withdrawing creditor to determine the net carrying amount of that debt when recognizing the gain or loss on extinguishment. This allocation is based on the ratio of the principal balance of the debt held by that creditor to the overall principal balance held by the syndicate. For continuing creditors, you would need to perform a separate analyses using the borrowing capacity test to determine whether any portion of the unaccreted deferred costs attributable to those creditors should be written off. If the borrowing capacity is greater than or equal to the original capacity, any unamortized deferred costs paid for the original loan would be amortized over the term of the new loan. If the borrowing capacity is less than the original capacity, any unamortized deferred costs would be written off in proportion to the decrease in capacity. Any new costs associated with the amendment would be deferred and amortized over the term of the new loan. If the debt previously held by the withdrawing creditor is refinanced with other existing syndicate lenders, that refinancing is accounted for as a modification or extinguishment, depending on the results of the cash flow test for each of the syndicate lenders. If the debt previously held by the withdrawing creditor is refinanced with a new lender, it is accounted for as a new borrowing.