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Bar, read this, but the way I see it, he can cancel all shares and issues new ones and still use NOL.
Bankruptcy Exception
The most important portion of section 382 in the bankruptcy context is section 382(l)(5). Under this provision, the section 382 limits on the use of NOLs following an ownership change will not apply if:
1. The corporation is under the jurisdiction of the court in a bankruptcy case before the ownership change; and
2. The corporation's pre-change shareholders and qualified creditors (determined immediately before the ownership change) own at least 50 percent of the value and voting power of the loss corporation's stock immediately after the ownership change and as a result of being pre-change shareholders or qualified creditors immediately before the ownership change.
This second requirement actually encompasses a whole list of requirements, including some important definitions. Before we get to those all-important definitions, though, note what the bankruptcy NOL exception means in the event it applies. Instead of being limited in using NOL's post bankruptcy (and post ownership change) by the long-term tax exempt rate, the NOLs will be available in a unrestricted fashion. The only price tag for using the NOL's in this way is that they will be reduced to the extent of interest deducted during the three year period that precedes the tax year in which the ownership change occurs, and during the portion of the year of the ownership change (but before that change occurs). See I.R.C. §382(l)(5)(B).
More Definitions
One of the key aspects of qualifying for NOL relief is determining just who the "qualified creditors" are. After all, it is simple to determine the identity of the pre-change shareholders. These pre-change shareholders, together with the "qualified creditors," must own at least 50 percent of both the value and voting power of the loss corporation's stock when the smoke clears. Comparing the shareholders before and after the ownership change is fairly straightforward.
Significantly, it is not even important what the percentage is between the portion of the company owned by the pre-change shareholders and the ownership interests held by the qualified creditors. Thus, it may be that the qualified shareholders will own all of the corporation after the smoke clears, and that the common shareholders will be frozen out entirely. That actually occurs with some frequency. This is still okay under section 382(l)(5). NOL relief will still be available.
To be a qualified creditor, a creditor must meet one of two tests. The creditor must have been a creditor at least 18 months before the date of the filing of the bankruptcy case. Alternatively, the debt must have arisen in the ordinary course of the business of the debtor, and be held by the person who at all times held the beneficial interest in that indebtedness.
This second wing of the "qualified creditor" definition focuses on trade debt, debt that is acquired by the debtor in the ordinary course of the debtor's business (not in the ordinary course of the creditor's business). Thus, lenders who may acquire claims in the ordinary course of their own lending business would not constitute qualified creditors for this purpose, unless they held their debt for at least 18 months prior to the bankruptcy filing date.
Interestingly, there is no statutory continuity of interest requirement before the section 382(l)(5) exception is available. This means that the business of the old debtor corporation need not be continued insofar as the preservation of the NOLs is concerned.
Advantages of Section 382(l)(5)
The advantages of these rules set forth in section 382(l)(5) are fairly obvious: a corporation can maintain its NOLs (and maintain them in unrestricted fashion) notwithstanding the fact that the company's stock might otherwise be deemed to have been the subject of an ownership change and therefore be limited in the subsequent use of its NOLs. Although the section 382(l)(5) provision is available only in a bankruptcy case (or similar proceeding), this provision allows the corporation to exchange outstanding debt for new stock without falling subject to the dreaded 382 limitations. (It's always been puzzling what a proceeding "similar" to a bankruptcy case might be, but it doesn't appear to expand the availability of the provision in any substantial way.)
In evaluation whether the ability to extinguish debt with stock (without triggering section 382 limits) is significant in a particular case, other factors should be considered. Predominately non-tax considerations will likely govern the appropriateness of the bankruptcy filing. Moreover, the importance of avoiding the section 382 limits can only be thoroughly evaluated by calculating the 382 limits in a particular case.
If I am reading it right it may be that CODs will offset the NOL.
Read this, if I am reading it right, that is not correct.
http://www.woodllp.com/Publications/Articles/ma/030301.htm
According to what I am reading, Lambert can cancel all of our shares and still take advantage of NOL.
http://www.woodllp.com/Publications/Articles/ma/030301.htm
Thanks, I seen this a little earlier, I guess this is one thing that is for sure cleared up and not looming over our heads.
If you look at the volume today and it’s not good volume, this has nothing to do with charts. In my opinion it has a lot further to fall, still way to much uncertainty.
I understand but if you could buy another million shares cheep, why not.
The other thing that still bothers me, has the managing firm for the retirees reviewed the plan or will that be brought up with the judge?
What’s your thoughts on this, now it’s something I been thinking on do awhile now and if it’s plausible then I think info would come out during normal trading.
But let’s look at it from this angle, which I have been thinking on for a while now. Why not keep it all quite for as long as possible and hope there is no leaks and let the price naturally keep dropping because of uncertainty and normal cancellations of commons. If I was Lambert, I would want the price to drop as much as possible, I would also want my best man on the trigger to buy as many shares as I could buy once the news was released. You may even tell you buddies to be ready for some action without telling them what it was about. Course who knows but we will know for sure shortly.
It’s good
First off, Marta Stuart went to jail for a lot less. But let’s look at it from this angle, which I have been thinking on for a while now. Why not keep it all quite for as long as possible and hope there is no leaks and let the price naturally keep dropping because of uncertainty and normal cancellations of commons. If I was Lambert, I would want the price to drop as much as possible, I would also want my best man on the trigger to buy as many shares as I could buy once the news was released. You may even tell you buddies to be ready for some action without telling them what it was about. Course who knows but we will know for sure shortly.
It’s a great thing I always loved going to sears and it sucks ours closed down several years ago, so it is in great hopes it will survive an do well going forward. I’m just scared the commons want, but we shell see.
There is nothing solid about it in regard to shareholders, that’s the peace of the puzzle that we need to know.
Who are you hearing this from?
I did find this, so I don’t think 401s will help us.
https://www.google.com/amp/s/www.forbes.com/sites/ebauer/2018/10/15/sears-bankruptcy-the-pbgcs-debt-and-your-retirement/amp/
I have to wonder, out of those 50,000 employees, how many of them have there 401s tied up with sears? That could really help us with the judge in keeping shares intact.
There are people on here that have a far better understanding of our current situation then I do, but with that said. I feel like we will see a little price action today and that will continue till February when it goes back in front of the judge. It is then when we will truly know the fat of our investment.
From the way I read the timeline, there has been granted a period for any objections leading up to February, so it seems to me that we want see any huge spike until all dates have been played out and a ruling from the judge in February. Please give your thoughts.
Yea and I sure hope it’s them and not me.
Ok thanks, I have been reading everything I could find on the subject so I appreciate your help in understanding your original post.
Thanks for sharing, all we can hope for now is Sears slate get wipe clean too.
Ok thanks for the clip, but from what I have read once a company has filed bankruptcy the Q stays on the ticker for ever unless the bankruptcy is canceled. Course the judge would have to agree to this as well as all the creditors, so it seems that it is much easier to declare bankruptcy then to have it dismissed or canceled. If bankruptcy is followed through with then the Q remains and new shares would be issued without the Q, but that then begs the question as to weather there is enough to go around for shareholders.
Understand I own shares here so I’m not bashing but I can’t find one example where a Q has ever been dropped. From what I have read new shares has to be issued.
Thanks
What is NVSOS?
At the end of the day it seems very positive and wished I had bought more, but I’ve been burnt before.
Please explain, it seems more positive then negative. The judge has urged Sears to accept a suitable offer. So that means the judge would rather see the company to remain operational. It also states that they believe he will prevail.
Why do you say that, there was nothing in the news that you could draw any conclusion, if anything it seems more on the positive side, in that the judge did urge sears to take a deal that would save the company
I just copied and pasted it
Edward Lampert's $5 Billion Sears Rescue Under Scrutiny as Auction Nears
1/11/19, 19:02
By Soma Biswas, Peg Brickley and Lillian Rizzo
Billionaire Edward Lampert's sweetened $5 billion offer for Sears Holdings Corp. is less than meets the eye, but it may be good enough to keep the 126-year-old retailer from being pulled apart in bankruptcy.
Sears filed for chapter 11 bankruptcy in October, and is headed toward an auction Monday that will pit Mr. Lampert, the chairman of Sears and the founder of ESL Investments, against Abacus Advisory Group LLC, a liquidator that has offered to clear the stores of inventory.
The retailer's board rejected Mr. Lampert's first rescue offer, but he came back this week with a deal that he says is more than $600 million richer.
He added no new cash, asked for more real estate and other goods and beefed up promises to take on bills owed to suppliers, landlords, tax authorities and others.
"He may be saying, 'I'm giving $1 of cash and you give me assets worth $1.10,'" said David Wander, a lawyer at Davidoff Hutcher & Citron LLP who represents a Sears supplier.
Heading into the weekend, there is still no sign of an agreement between Mr. Lampert and the official committee of unsecured creditors, a body that has threatened to challenge $1.3 billion of his bid. Some members of the committee have urged liquidation as the best answer for Sears, and the committee has said it would object to a $1.3 billion "credit- bid" portion of Mr. Lampert's offer, which is being submitted through his ESL Investments hedge fund.
Much of the $600 million in additional Sears liabilities Mr. Lampert has agreed to take on is linked to the new assets he is buying.
"Assumption of those obligations doesn't mean they'll actually be paid. There's a risk that ESL would be unable or unwilling to pay those bills, " said Jeffrey Schwartz, a lawyer at McKool Smith, which represents two Sears vendors.
Representatives for Sears and the creditors committee weren't available for comment. A spokesman for ESL declined to comment.
ESL is Sears's largest creditor, and the hedge-fund manager wants to pay for some of the Sears takeover by canceling debt instead of bidding with its own cash.
The problem with that, according to creditors, is that Mr. Lampert's debt is tainted by improper "sweetheart" deals before bankruptcy. Chief among the alleged suspicious deals is the 2015 transaction that sold hundreds of Sears properties to a new, publicly traded real-estate investment trust, Seritage Growth Properties, for $2.7 billion.
Mr. Lampert is the chairman of Seritage and owns a major stake in it, as well as in Sears. Sears creditors are investigating whether he took advantage of his insider status to build Seritage at Sears's expense, a suspicion he has denied repeatedly.
A Sears shareholder lawsuit that challenged the Seritage transaction settled in 2017, with no admission of wrongdoing by Mr. Lampert, his lawyers noted in court papers.
While Sears weighs Mr. Lampert's bid, lawyers for other big creditors -- mall owners, vendors and the government's pension insurer -- are weighing their chances of beating ESL in a court fight.
Mr. Lampert's latest bid includes $35 million to buy a "release" from creditors, which would protect his right to credit bid in the auction. Creditors may demand more money for the release as negotiations unfold on Monday.
Company officials have to calculate what Sears actually will get from his offer and how much it could make if it instead sold off the real estate and other assets he has earmarked to buy.
However, people involved in the case predict the auction will be held, Mr. Lampert will be there and that he has a good chance of winning.
Opinions are divided about whether Mr. Lampert's offer will really save 50,000 jobs, or how long Sears will survive in the rough retail environment.
Nothing in Mr. Lampert's offer prevents him from continuing to shrink the chain if he wins. Instead of salvation, Sears could be headed toward a slow-motion liquidation that enables Mr. Lampert to take his time cashing out, some people involved in the case believe.
Vendors, landlords and lawyers disagree about Sears's long-term survival prospects, but the judge presiding over the bankruptcy, Robert Drain, has urged Sears to accept a deal that saves the company, according to people familiar with the communications.
There's not a lot of cash for creditors in Mr. Lampert's bid, but his going concern offer improves Sears's chances of paying the essential costs of running a bankruptcy.
Mr. Lampert's revised bid absorbs some significant costs, including up to $139 million of priority vendor claims and $166 million for goods that have been ordered but are still sitting in warehouses, easing Sears's worries it will leave more unpaid bills behind after exiting bankruptcy.
Mr. Lampert's pledge to pay those bills should put some vendors minds at ease, said Mr. Wander of Davidoff Hutcher.
Write to Soma Biswas at soma.biswas@wsj.com, Peg Brickley at peg.brickley@wsj.com and Lillian Rizzo at Lillian.Rizzo@wsj.com
(END) Dow Jones Newswires
01-11-19 1902ET
Copyright (c) 2019 Dow Jones & Company, Inc.
I have as well and nothing
Thanks for sharing, but why are you sharing????
I sent him a text about two weeks ago and have heard nothing. I would like to think that something is in the works, but we shall see.
Thanks for sharing. I still think that one day this will still be my golden goose.
Fortunately time is all we have at this point. I just hope the ship is upright before we start trading again.
This board cracks me up, people on here invested in pinky land but had the expectation of a blue chip. Things don’t always go as planned especially on such a high risk investment. People always tend to blame someone else for their mistakes, when they should have done a little more DD. Kevin is right here in the thick of it with us and I still feel he is trying to do what is right and hopefully at the end of the day we will be rewarded but it going to take time and patience something that so meany people lack any more.
One day I’m going to look at this board and it’s going to be lit up with hundreds of posts.
I just looked back at today’s trades and it is very misleading. I bought 9,900,000 shares this morning at .0001 at 9:51. The only thing I see is that amount at .0002 at 10:00 something with the wrong price. At the time my order went through 9:51 it shows as sells. So it’s seems to be a good thing that MMS are trying to hold the price down, maybe what is showing is not sells but buys by HAON.
I hope so, cause I’m now sitting on 11 million shares, so let this baby run.
Well my order of 9mil at .0001 got filled, very surprising, so let’s see what it will do.
Thanks for sharing, good update