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ASSET IMPAIRMENTS, ASSETS HELD FOR SALE AND OTHER | 12 Months Ended
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Dec. 31, 2019
Asset Impairment Charges [Abstract] |
ASSET IMPAIRMENTS, ASSETS HELD FOR SALE AND OTHER |
(9) | ASSET IMPAIRMENTS, ASSETS HELD FOR SALE AND OTHER
The table below summarizes the number of vessels impaired and the amount of impairment and other expense incurred.
|  | Successor |  |  |  | Predecessor
|  |  |  |  |  |  |  |  |  | Period from |  |  |  | Period from |  |
|  | Year |  |  | Year |  |  | August 1, 2017 |  |  |  | April 1, 2017 |  |
|  | Ended |  |  | Ended |  |  | through |  |  |  | through |  |
(In thousands) |  | December 31, 2019 |  |  | December 31, 2018 |  |  | December 31, 2017 |  |  |  | July 31, 2017 |  |
Number of vessels impaired during the period |  |  | 35 |  |  |  | 56 |  |  |  | 5 |  |  |  |  | 79 |  |
Amount of impairment and other expense incurred |  | $ | 37,773 |  |  | $ | 61,132 |  |  | $ | 16,777 |  |  |  |  | 184,748 |  |
During the third quarter of 2019, in conjunction with our review of conditions that would indicate potential impairment in the value of our assets, we identified certain obsolete marine service and vessel supplies and parts inventory and charged $5.2 million of impairment expense. We considered this valuation approach to be a Level 3 fair value measurement due to the level of estimation involved in valuing obsolete inventory. In 2011, we contracted with a Brazilian shipyard to construct a vessel that was not completed. We initiated arbitration proceedings (per the construction contract) seeking completion of the hull or rescission of the contract and the return of funds. In response, the shipyard initiated a separate lawsuit seeking the amounts due under the contract. As of the fresh-start date, we recorded $1.8 million in other assets which represented the unimpaired balance of the construction costs that were expected to be returned to us once the dispute was resolved. During 2019, our final appeal was denied and the case was remanded back to the original courts. Our local counsel informed us that is now more likely that not that the shipyard will prevail in the dispute and that we would be liable for the additional payment of $4.0 million. As a result, a $5.8 million expense was recorded in the fourth quarter of 2019. Also in the fourth quarter of 2019, we evaluated our fleet for vessels to be considered for disposal. We determined that 42 of our 61 stacked vessels should be scrapped or sold. In addition, we identified four vessels in our active fleet that should be designated for sale. At December 31, 2019 we reclassified the vessels from property and equipment to assets held for sale. In conjunction with this reclassification, we adjusted the carrying value of these assets to the lower of current net book value or the expected net realizable sale value. This resulted in a $26.7 million charge to impairment expense and the reclassification of the remaining $39.3 million of carrying value to assets held for sale. We considered this valuation approach to be a Level 3 fair value measurement due to the level of estimation involved in valuing assets to be scrapped or sold. We do not separate our asset impairment expense by segment because of the significant movement of our assets between segments. Impairments incurred since July 2017, when we emerged from bankruptcy, are primarily the result of our customers' reduction in offshore exploration and production expenditures caused by the ongoing and sustained low levels of crude oil and natural gas prices as well as our efforts to reduce the oversupply of vessels which currently exists in the offshore supply vessel market through the scrapping of vessels. Please refer to Note (1) for a discussion of our accounting policy for accounting for the impairment of long-lived assets.

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- Definition The entire disclosure for the details of the charge against earnings resulting from the aggregate write down of all assets from their carrying value to their fair value. Disclosure may also include a description of the impaired asset and facts and circumstances leading to the impairment, amount of the impairment loss and where the loss is located in the income statement, method(s) for determining fair value, and the segment in which the impaired asset is reported. + References No definition available. + Details
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