Even if the liquidating trust ISN'T able to secure a disbursement for CT holders, the shell company that COULD emerge post bankruptcy will have something like 60B in network operating loss (NOL) tax credits moving forward. Through mergers and acquisitions, they can utilize these NOLs to offset any future tax liability for years and years to come. Something similar happened with WAMU's bankruptcy and shareholders (myself included) were issued shares of the new company emerging from bankruptcy (WMIH) which ended up with about 6 billion in NOL carry forwards from the old WAMU bank entity. Blackstone provided some advisory services in the deal and KKR infused some money in return for part ownership and is now actively trying to find suitable M&A opportunities to pair us up with in order to allow us to grow and produce revenue in order to utilize the massive NOL credits we have, already causing the share price to run to over $3.75 just on speculation since we have very limited earnings as a reinsurance business operating in runoff mode. Once an M&A partner is announced for WMIH, share price will probably jump to over $5 just on the news and grow beyond that depending on how successful the merger is. If done right, the company could be exempt from 6B in future tax liabilities clear into 2020. This doesn't include any settlement that may come post WAMU bankruptcy due to HF insider trading, illegal acts on behalf of JPM or the FDIC or countless other instances of fraud and deception revolving around the case. The Lehman CTs holders could potentially end up owning part of a shell company with TEN times the NOLs that WMIH ended up with!!! The risk vs. reward ratio on Lehman CTs is too great to pass up and you don't need to bet the farm to take a position. You have a chance to make money on liquidation dismemberment (less likely) but IMHO that is not where the true value lies. The true value would be owning a part of the shell company emerging from bankruptcy with 50B in NOL carry forwards and watching it grow through M&As over the next 15 - 20 years. Risk involves corruption in the bankruptcy proceedings and the IRS changing it's NOL laws which both could very well occur. Even if the IRS does changes it's NOL carry forwar laws, I don't see them totally doing away with NOLs, but rather limiting or capping the amount that can be carried forward.
