Jurisdiction-specific insolvency disclosure covering assets, creditors, security, realizable value, transactions, and financial history.
A statement of affairs is a formal insolvency or bankruptcy disclosure about a debtor’s financial position, creditors, and financial history. Its exact contents and legal effect depend on the jurisdiction and procedure. In Canada and England and Wales, the term commonly refers to a statement listing assets, liabilities, creditor security, and estimated realizable amounts. In U.S. bankruptcy, the official Statement of Financial Affairs is primarily a questionnaire about income, payments, transfers, lawsuits, property, and prior financial activity, filed separately from schedules of assets and liabilities.
It is not an ordinary balance sheet, a personal net-worth worksheet, or proof of the amount creditors will recover.
The same label does not describe one universal document.
| Jurisdiction or context | What the document generally covers | Important distinction |
|---|---|---|
| Canada, individual bankruptcy or proposal | Form 79 includes assets, estimated value, exempt-property status, secured amounts or liens, net realizable value, and liabilities classified as unsecured, secured, or preferred | Current form and filing requirements depend on the estate’s filing date and the Bankruptcy and Insolvency Act process |
| Canada, corporate bankruptcy or proposal | Form 78 covers corporate assets, secured amounts, realizable values, and creditor claims | Corporate and individual forms are not interchangeable |
| England and Wales, company liquidation or bankruptcy | Assets, debts and liabilities, creditors, and security, verified by a statement of truth under the applicable procedure | The official receiver has procedure-specific powers and discretion; a statement is not required in identical circumstances in every case |
| United States, bankruptcy | Official Forms B 107 or B 207 ask about income, payments, transfers, lawsuits, business connections, property held for others, and other prior activity | Assets and liabilities are primarily reported on separate schedules, so the U.S. form is not simply a liquidation-value balance sheet |
This comparison is descriptive, not filing guidance. Forms, thresholds, deadlines, exemptions, and required periods can change.
Where the form uses an asset-and-creditor format, common fields include:
The controlling form determines what belongs in each category. A person should not decide creditor priority or exemption status from a generic definition.
Assume a fictional company in a jurisdiction using a realizable-value statement reports:
| Asset | Book value | Estimated gross realization | Secured claim against asset | Simplified net amount before costs |
|---|---|---|---|---|
| Receivables | $180,000 | $120,000 | $0 | $120,000 |
| Inventory | $140,000 | $85,000 | $50,000 | $35,000 |
| Equipment | $220,000 | $130,000 | $100,000 | $30,000 |
| Cash | $20,000 | $20,000 | $0 | $20,000 |
| Total | $560,000 | $355,000 | $150,000 | $205,000 |
The company also reports $310,000 of unsecured claims. Before administration costs, priority claims, disputed security, taxes, or other adjustments, the simplified deficiency relative to those unsecured claims is:
This does not establish a distribution or recovery rate. Collection costs can reduce receivable proceeds, inventory may sell below estimate, secured claims can include interest and enforcement costs, and applicable law determines priority. Some assets or proceeds may not be available to the estate.
The example demonstrates why historical book value is not a reliable proxy for cash available in insolvency.
| Issue | Statement of affairs in a realizable-value insolvency format | Ordinary balance sheet |
|---|---|---|
| Primary purpose | Administer or disclose an insolvency proceeding | Present financial position under an accounting framework |
| Measurement emphasis | Estimated realization, security, exemptions, and creditor claims | Accounting carrying amounts under recognition and measurement standards |
| Users | Trustee, official receiver, court, creditors, and other parties defined by law | Investors, lenders, management, regulators, and other financial-statement users |
| Verification | Prescribed declaration, statement of truth, oath, or certification may apply | Management assertions and, where applicable, audit or review procedures |
| Historical transactions | May require transfers, payments, income, related parties, or prior events | Primarily a point-in-time statement supported by accompanying notes |
| Recovery conclusion | Does not guarantee creditor recovery | Does not present liquidation proceeds unless the applicable basis requires it |
A balance sheet prepared on a going-concern basis can differ sharply from an insolvency statement built around estimated realization and creditor claims.
Depending on the procedure, the statement can help authorized users:
It does not replace asset searches, valuations, security reviews, proofs of claim, or legal determinations.
This article provides general financial education, not legal, bankruptcy, insolvency, tax, valuation, accounting, or filing advice. Procedures and consequences depend on current law, official forms, deadlines, and case-specific facts.