Dr.,
What do you make of this?
222:
a. Section 382.
Under section 382 of the IRC, if a corporation (or consolidated group) undergoes an
“ownership change,” the amount of its pre-change losses (including certain losses or deductions which are
“built-in,” i.e., economically accrued but unrecognized, as of the date of the ownership change) that may
be utilized to offset future income generally are subject to an annual limitation. It is unclear whether the
implementation of the Seventh Amended Plan would result in an ownership change of the Debtors. Such
determination depends, in part, on the extent to which creditors choose to receive Reorganized Common
Stock under the Seventh Amended Plan and the status of certain of the Preferred Equity Interests as
“stock” for purposes of Section 382. The remainder of this disclosure conservatively assumes that the
issuance of Reorganized Common Stock pursuant to the Seventh Amended Plan will constitute an
ownership change of the Tax Group for purposes of Section 382. As a result, as indicated above, the
entire amount of the estimated $17.7 billion NOL currently available to the Tax Group, substantially all of
which is attributable to WMB, would be subject to the annual limitation imposed by section 382 of the
IRC. In any event, as noted previously, even if there is no ownership change on the Effective Date, the
current projected income of Reorganized WMI as reflected in the Projections (see Article VII) only
utilizes a small portion of the estimated available NOL. In addition, it is possible there could be a
subsequent ownership change after the Effective Date, which would further limit Reorganized WMI’s
NOLs (see Section VIII.A.2.a.).
AI
