from page 6 of 315, a description of assets to be purchased:
i. Certain prepaid taxes and certain rights to any refund, rebate or credit of taxes;
additionally, the apa had the following language:
Section 2.12 Tax Reorganization. (a) The Parties intend that the transactions set forth in this Agreement, asstructured and implemented as described in Section 9.2(a), together with the Bankruptcy Plan (as defined below), will, unless and except to the extent that Buyer elects otherwise with respect to a particular Seller or Sellers pursuant to Section 2.12(b), (i) constitute one or more plans of reorganization under section 368(a) of the Code (as defined below) and (ii) as qualifying as one or more reorganizations thereunder (a “Tax Reorganization”).
Final analysis from an article on the issue from a Jones Day Publication:
High profile bankruptcy cases such as the chapter 11 cases filed by WorldCom, Enron, Global Crossing, Kmart and Conseco have focused attention on investing in the debt of troubled companies and highlighted the arguably dominant role played by vulture investors in large and medium-sized chapter 11 cases. These cases and many others also illustrate some of the challenges confronted by companies seeking to reorganize in bankruptcy. The practical challenge for debtors that possess sizeable NOLs is to safeguard these tax attributes by avoiding an ownership change (or excessive claims trading) until confirmation and consummation of a plan of reorganization. Notwithstanding rulemakers’ efforts in 1991 to remove the bankruptcy court from the claims trading market, recent developments indicate that the courts are still very much involved in regulating trading of claims and interests if the success of the debtor’s reorganization is at stake.
These developments also suggest that as part of pre-bankruptcy strategic planning, potential debtors should determine whether they have any NOLs or other tax attributes (like built-in losses) that require protection. The unwary debtor may find that it has already undergone an ownership change (or has lost its ability to qualify for section 382(l)(5)) prior to filing, or that it is dangerously close to the threshold. Swift action may be necessary given the robust market for trading in the claims and stock of financially troubled companies. Creditors should also be vigilant to ensure that when a debtor seeks court approval of procedures restricting claim and equity trading, it demonstrates that the benefit to the estate through preserving tax attributes outweighs prejudice to creditors and shareholders who are being precluded from liquidating their holdings.
