Court docket #4, information from day one...NOLs= $1.7B
155. Equity Trading Procedures Motion.
The Debtors have generated, and are currently generating, a significant amount of net operating loss carryforwards (“NOLs” and, collectively with any capital losses, unrealized built-in losses, and certain other tax and business credits, the “Tax Attributes”) for U.S. federal income tax purposes. As of December 31, 2015, the Debtors had approximately $1.7 billion of unlimited NOLs that were available to offset taxable income. These NOLs and other tax attributes could translate into potential future federal income tax savings for the Debtors. The Debtors’ NOLs are a valuable asset because the Debtors generally can carry forward their NOLs to offset future taxable income and tax liability, thereby potentially freeing up funds to meet working capital requirements and service debt. In particular, the NOLs may be available to the Debtors to offset taxable income generated by transactions completed during the course of the Chapter 11 Cases.
156. It is my understanding that the Debtors’ ability to use their tax attributes, however, could be severely limited under Section 382 of title 26 of the United States Code as a result of the trading and accumulation of their equity securities prior to consummation of a chapter 11 plan. The Debtors thus seek to establish procedures for continuously monitoring the trading of their equity securities, so that the Debtors can preserve their ability to seek substantive relief at the appropriate time, particularly if it appears that additional trading may jeopardize the use of their NOLs under Section 382. Therefore, I submit that the relief requested in the Equity Trading Procedures Motion is necessary and in the best interests of the Debtors’ estates, their creditors and other parties in interest.
