Sears Holdings Corp. (fka SHLDQ)

[north007]

Nevertheless, a buyer may benefit from section 382(l)(5) the Tax Code, which provides that if an ownership change occurs while a corporation is under the protection of title 11,


a “limitation” on the use of the NOLs will not occur if the debtor corporation’s historic
shareholders and/or creditors prior to the ownership change receive more than 50 percent of the newly reorganized corporation pursuant to the plan of reorganization.


If this section is applied, the NOLs are reduced for certain interest payments made within the past three years made to the creditors that become the new shareholders of the company and certain amounts related to cancellation of indebtedness income.

However, this exemption would not be applicable to a third party purchaser that was not a prior shareholder or creditor of the debtor, and consequently, such a buyer would be subject to the limitation on the use of the tax attributes .