Voluntary Reorganization Under Chapter 11	9 Months Ended
Voluntary Reorganization Under Chapter 11	Nov. 30, 2011
Voluntary Reorganization Under Chapter 11 [Abstract]
Voluntary Reorganization Under Chapter 11	Note 2, Voluntary Reorganization under Chapter 11 On December 12, 2011(the "Petition Date"), the Company filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code ("Chapter 11") in the United States Bankruptcy Court of the Eastern District of Virginia (the "Bankruptcy Court"), Case No.11-37790-DOT (the "Chapter 11 Case"). The Company continues to operate the business as a "debtor-in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of Chapter 11 and orders of the Bankruptcy Court. MDG is not part of the Company's bankruptcy filing and has had no changes to its business operations. The Bankruptcy Case was filed because the Company's working capital position and the losses from operations raised substantial doubt about the Company's ability to continue as a going concern without the relief and reorganization options provided by the filing. Operation and Implication of the Chapter 11 Case Under Section 362 of the Bankruptcy Code, the filing of a bankruptcy petition automatically stays most actions against a debtor, including most actions to collect indebtedness incurred prior to the Petition Date or to exercise control over property of the debtor. Accordingly, although commencement of the Chapter 11 Case triggered defaults on substantially all of the Company's debt obligations, creditors are stayed from taking any actions as a result of such defaults. Absent an order of the Bankruptcy Court, substantially all pre-petition liabilities are subject to settlement under a plan of reorganization. As a result of the Chapter 11 Case, the realization of assets and the satisfaction of liabilities are subject to uncertainty. Further, a confirmed plan of reorganization or other arrangement may materially change the amounts and classifications in a debtor's unaudited condensed financial statements. The Company requested and received approval from the Bankruptcy Court to pay or otherwise honor certain pre-petition obligations generally designed to stabilize the Company's operations including certain employee wage and benefit obligations, cash management, tax matters, certain customer programs and payment of pre-petition claims of certain vendors deemed critical to the Company's ongoing business. The Company intends to continue paying claims arising after the Petition Date in the ordinary course of business. The Company has retained legal and financial professionals to advise the Company on the Chapter 11 Case and certain other professionals to provide services and advice to the Company in the ordinary course of business. The fees of these legal and financial professionals are subject to Bankruptcy Court approval. The Company has incurred and expects to continue to incur significant costs associated with the reorganization and the Chapter 11 Case. The amount of these expenses is expected to significantly affect the Company's financial position and results of operations. The Company cannot accurately predict the affect the Chapter 11 Case will have on its business at this time. Plan of Reorganization For the Company to successfully emerge from the Chapter 11 Case, the Company must obtain the Bankruptcy Court's approval of a plan of reorganization, which will enable the Company to transition from the Chapter 11 Case into ordinary course operations. In connection with the plan of reorganization, the Company must also obtain a new credit facility, or "exit financing." The ability to obtain such approval and financing will depend on, among other things, the timing and outcome of various ongoing matters in the Chapter 11 Case. A plan of reorganization determines the rights and satisfaction of claims of various creditors and security holders, and is subject to the ultimate outcome of negotiations with the Company's stakeholders and Bankruptcy Court decisions ongoing through the date on which the plan of reorganization is confirmed. The Company has not yet filed a plan of reorganization or a related disclosure statement with the Bankruptcy Court. The Company expects to have ongoing discussions with its creditors regarding a plan of reorganization until the proposed plan is filed with the Bankruptcy Court. There can be no assurance that the Company will be able to secure approval of a proposed plan by the Bankruptcy Court, or that the proposed plan will be accepted by the Company's lenders or secured and unsecured creditors. Confirmation of a plan of reorganization could materially alter the classifications and amounts reported in the unaudited condensed financial statements, which do not give effect to any adjustments to the carrying values of assets or amounts of liabilities that might be necessary as a consequence of confirmation of such plan, or the effect of any operational changes that may be implemented. Financing During Pendency of the Chapter 11 Case See Note 4 to the Condensed Consolidated Financial Statements below for information regarding the Company's arrangement for debtor-in-possession financing during pendency of the Chapter 11 Case. Going Concern The Company's Condensed Consolidated Financial Statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets and liquidation of liabilities and commitments in the ordinary course of business. The working capital position, losses from operations and commencement of the Chapter 11 Case have raised substantial doubt about the Company's ability to continue as a going concern. The appropriateness of reporting on the going concern basis is dependent upon, among other things, the Company's ability to comply with the financial and other covenants contained in the debtor-in-possession financing agreement, confirmation of a plan of reorganization by the Bankruptcy Court under Chapter 11, the Company's ability to successfully implement such plan, future profitable operations, the ability to generate sufficient cash from operations and financing sources to meet obligations and the Company's ability to obtain exit financing. While under the protection of Chapter 11, the Company may, subject to approval of the Bankruptcy Court, sell or otherwise dispose of assets and liquidate or settle liabilities for amounts other than those reflected in the accompanying Condensed Consolidated Financial Statements. The Condensed Consolidated Financial Statements do not include any adjustments relating to the recoverability of the value of recorded asset amounts and reclassifications of liabilities that might be necessary as a consequence of a plan of reorganization. At this time, it is not possible to predict the outcome or the financial impact of the Company of a Chapter 11 Case or the going concern uncertainty. Unsecured claims, and even secured claims, may be settled at less than their carrying amount and the equity of the Company's stockholders may have no value. The reorganization of the Company is expected to result in the closing of a significant number of stores and reductions in staffing and overhead expenses, and there are no assurances that the Company will be successful in obtaining Bankruptcy Court approval or of implementing a plan for reorganization. As of the date of this filing, the Company has closed 20 stores and a distribution center as a result of the Chapter 11 Case and is in the process of closing an additional 13 stores and a distribution center. See Note 8 to the Condensed Consolidated Financial Statements below. Since the Petition Date, subsequent to November 30, 2011, the Company has operated its business as a debtor-in-possession under the Bankruptcy Code. The American Institute of Certified Public Accountants Statement of Position 90-7, "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code" ("SOP 90-7") provides guidance for financial reporting by entities that have filed petitions with the Bankruptcy Court and expect to reorganize under Chapter 11. Under SOP 90-7, the financial statements of an entity in a Chapter 11 reorganization proceeding should distinguish transactions and events that are directly associated with the reorganization from those of operations of the ongoing business as it evolves. Accordingly, SOP 90-7 requires that the balance sheet separately classify pre-petition liabilities as those subject to compromise. Pre-petition liabilities are reported on the basis of the expected amount of such allowed claims, as opposed to the amount for which those allowed claims may be settled. Revenues and expenses, realized gains and losses, and provisions for losses resulting from the reorganization and restructuring of the business are reported in the Consolidated Statement of Operations separately as reorganization items. SOP 90-7 accounting and presentation will be applied in future financial statement filings while the Company is still a debtor-in-possession under the Bankruptcy Code. Upon emergence from bankruptcy, the amounts reported in the Company's subsequent financial statements may change materially. As of the effective date of a plan of reorganization, the Company anticipates being required to apply the "fresh start" provisions of SOP 90-7, which requires that all assets and liabilities be restated to their fair values as of such effective date. Certain of these fair values will differ materially from the values recorded on the Company's Condensed Consolidated Balance Sheet as of November 30, 2011. Additionally, the results of operations after the application of fresh start accounting will not be comparable to previous periods. Changes in accounting principles required under generally accepted accounting principles within 12 months of emerging from bankruptcy are required to be adopted at the date of emergence. Additionally, the Company may opt to make other changes in accounting practices and policies as of the plan's effective date. For all of these reasons, the Company's financial statements for periods subsequent to emergence from Chapter 11 will not be comparable with those of prior periods.

- Definition

The entire disclosure for the description and amounts of reorganization under Chapter 11 of the US Bankruptcy Code.

+ References+ Details

RoomStore, Inc. 10-Q