The Bottom Line
The Bottom Line
The Bottom Line
The IRS announced in July that it has withdrawn proposed regulations (the net value regulations) that provided guidance regarding corporate formations, reorganizations and liquidations of insolvent corporations. Those regulations, which were proposed in 2005, required the exchange (or, in the case of the liquidation of a subsidiary into its parent, the distribution) of “net value” in order for the transaction to qualify for nonrecognition treatment under the Internal Revenue Code (the Code).
The Net Value Regulations
Net Value in 332 Liquidations
The Bottom Line
A recent decision by the U.S. District Court for the Southern District of New York in Cumulus Media Holdings Inc. v. JP Morgan Chase Bank, N.A. (SDNY Feb. 24, 2017) found that a proposed refinancing that was consented to by the company’s revolving credit lenders nevertheless violated the negative covenants in the company’s Credit Agreement.
The Proceedings
As many investors anticipated, the deep trough in the commodities market over recent years resulted in a number of companies in commodity industries restructuring their balance sheets through a Chapter 11 bankruptcy process. Because companies often reorganize in the midst of a market downturn, a commodity company’s low EBITDA during this time usually results in low values being placed on the company’s reorganized equity.
As of December 1, 2015, a new bankruptcy form for filing proofs of claim has gone into effect.
The form has undergone a number of non-substantive, cosmetic changes, which should make it easier to complete. The only substantive change is the addition of a new Item 10, which asks whether the claim is based on a lease and, if so, the amount necessary to cure defaults outstanding as of the petition date. Finally, the name of the form has been changed to Form 410.
The Bottom Line:
The Bottom Line: