HT ... thanks for posting that.
As regards the part (I believe) you made bold:
3. Special Rules in Bankruptcy
A couple of special, and somewhat complicated, rules apply when a corporation is a debtor in bankruptcy.
If a 50% ownership change is expected to result during the bankruptcy proceeding because of the transfer of stock to the former creditors, an exception under Code Section 382(l)(5) may offer some protection. Section 382(l)(5) provides that the Section 382 Limitation will not apply to a corporation if (1) the corporation, immediately before the ownership change, is under the jurisdiction of a court in a Title 11 or similar case, and (2) the shareholders and creditors of the old corporation own at least 50% of the total voting power and value of the stock of the corporation after the ownership change as a result of being shareholders and creditors before the change. Stock transferred to such creditors counts only if it is transferred with respect to “old and cold” indebtedness; that is, if the indebtedness (1) was held by the creditor for at least 18 months before the date of the filing of the Title 11 case, or (2) arose in the ordinary course of the trade or business of the old corporation and is held by the person who at all times held a beneficial interest in that debt. This last rule prevents debtor corporations who have a significant portion of their outstanding debt acquired by vulture funds within 18 months of the bankruptcy petition date from making use of the Section 382(l)(5) protection.
I confess to having trouble grasping all the nuances of such complex provisions. But, after reading several times, as this would pertain to CORSQ, am I correct ... if there is a sponsor and he currently controls the overwhelming majority of shares and uses some of those shares (plus cash) toward the satisfaction of the creditors but still retains sufficient shares as to control the emerging structure that we satisfy the requisite?
You all have probably been saying this all along but sometimes it takes a while for things to penetrate near solid bone.
R
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