CODI is applied at the bankruptcy EXIT and only at the exit. IF and only IF, there is a cancellation and not an exchange. If the creditors received anything, regardless of how little, that is an exchanged. So, if the creditors exchange $1B of debt for 50 barrels of oil that is their problem, not a cancellation causing CODI for the equity holders.
Technically, management doesn't assign CODI; the IRS does. But, they have made their rules quite clear and management can use those rules to avoid CODI.
This is one of the reasons why the EC is so important. The EC will ensure that whatever the plan is, that it won't create CODI for the equity holders.
