Hidden reserves
What are hidden reserves?
So-called hidden reserves represent the difference between the actual value of an asset and the value recognised for it in the balance sheet (book value). The disposal of such assets for a sale price exceeding their book value leads to the realisation of the hidden reserve and thus to a capital gain that improves the equity position. In the context of restructuring proceedings, the realisation of hidden reserves through the disposal of assets not essential to operations therefore presents itself as a financial restructuring measure. Provided that no income tax arising from the capital gain needs to be funded, the proceeds from the sale are available for the repayment of liabilities and/or for financing purposes.
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