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The Tax Cuts and Jobs Act signed into law on December 22, 2017, amended the Internal Revenue Code of 1986 (IRC) and made significant changes to the treatment of individual and corporate taxpayers beginning January 1, 2018. While many understand that the overall corporate tax rate is going down, the specific effects of this tax reform on distressed companies, debtors, creditors, and lenders are still being uncovered. Practical Law asked Patrick M. Cox of Baker McKenzie LLP to discuss his views on the Tax Cuts and Jobs Act (TCJA) and its potential impact on the Chapter 11 process.

This is part of a series of articles discussing restructuring and insolvency related provisions of the Tax Cuts and Jobs Act, which is now expected to become law this week (the “Act”).

Previously we discussed net operating losses (“NOLs”) and cancellation of the debt (“COD”). The provisions on NOLs have generally remained the same (adopting the Senate version of the revisions, but immediately capping the use of NOLs to 80% of taxable income). However, the changes to COD rules we discussed are not part of the current version of the Act.

This is the second part in a series of articles discussing certain restructuring and insolvency related provisions of the Tax Reform. Previously we discussed net operating losses (“NOLs”), and noted that the House and Senate plans are quite similar when it comes to NOLs. That is not the case with the provisions in H.R. 1 that relate to cancellation of the debt (“COD”).

Congress is attempting to pass tax reform legislation and presently the House of Representatives and the Senate have separate proposals under consideration (separately, H.R. 1 and the Senate Plan, respectively, and collectively, “Tax Reform”). The Tax Reform is changing daily, but one thing seems likely and that is that the Tax Reform will change the treatment of net operating losses (“NOLs”). These changes would have the most significant impact to bankruptcy cases filed after December 31, 2017.

On 25 April 2017, the President of the Republic of Azerbaijan signed a decree approving the Law on Amendments to the Bankruptcy Law (the Amendments).

The Amendments incorporate the definition of related parties to the debtor in accordance with the Civil Code of the Republic of Azerbaijan (the Civil Code). The related parties include the persons described in Article 49-1.1 of the Civil Code as well as individuals dismissed from the debtor’s management bodies within one year prior to the beginning of bankruptcy.

On 25 April 2017, the President of the Republic of Azerbaijan signed a decree approving the Law on Amendments to the Bankruptcy Law (the Amendments).

The Amendments incorporate the definition of related parties to the debtor in accordance with the Civil Code of the Republic of Azerbaijan (the Civil Code). The related parties include the persons described in Article 49-1.1 of the Civil Code as well as individuals dismissed from the debtor's management bodies within one year prior to the beginning of bankruptcy.

On 7 April 2017, the President of the Republic of Azerbaijan signed a decree (the Decree) approving significant amendments to the Law On Banks dated 16 January 2004 (the Amendments) and relating to local banks experiencing financial difficulties.

Financial Rehabilitation