On February 27, 2018, the United States Supreme Court resolved a circuit split regarding the proper application of the safe harbor set forth in section 546(e) of the Bankruptcy Code, a provision that prohibits the avoidance of a transfer if the transfer was made in connection with a securities contract and made by or to (or for the benefit of) certain qualified entities, including a financial institution.

The Court of Appeals for the Ninth Circuit recently held that section 1129(a)(10) of the Bankruptcy Code – a provision which, in effect, prohibits confirmation of a plan unless the plan has been accepted by at least one impaired class of claims – applies on “per plan” rather than a “per debtor” basis, even when the plan at issue covers multiple debtors. In re Transwest Resort Properties, Inc., 2018 WL 615431 (9th Cir. Jan. 25, 2018). The Court is the first circuit court to address the issue.

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.