CODI is Cancellation of Debt Income
Since a lot of these are MLPs where ALL income is passed to the partners (holders of the shares) for tax purposes, the IRS considers CODI as income. The shareholders are then responsible for paying income tax on the cancelled debt. The per share CODI can be as much as $5+. So if one had 10,000 shares of common that got completely wiped out, they would still owe short term income tax on a $50,000 gain. At 30% tax bracket that would be a $15,000 tax bill.
So, obviously, it is something to be aware of. That being said, contrary to popular opinion, CODI is not applicable in every BK case. My brief survey of BK cases shows CODI in about 30-40%.
