"most important portion of section 382 in the bankruptcy context is section 382(l)(5). Under this provision, the section 382 limits on the use of NOLs following an ownership change will not apply if:
1. The corporation is under the jurisdiction of the court in a bankruptcy case before the ownership change; and
2. The corporation's pre-change shareholders and qualified creditors (determined immediately before the ownership change) own at least 50 percent of the value and voting power of the loss corporation's stock immediately after the ownership change and as a result of being pre-change shareholders or qualified creditors immediately before the ownership change.
This second requirement actually encompasses a whole list of requirements, including some important definitions. Before we get to those all-important definitions, though, note what the bankruptcy NOL exception means in the event it applies. Instead of being limited in using NOL's post bankruptcy (and post ownership change) by the long-term tax exempt rate, the NOLs will be available in a unrestricted fashion. The only price tag for using the NOL's in this way is that they will be reduced to the extent of interest deducted during the three year period that precedes the tax year in which the ownership change occurs, and during the portion of the year of the ownership change (but before that change occurs). See I.R.C. §382(l)(5)(B)."
"advantages of these rules set forth in section 382(l)(5) are fairly obvious: a corporation can maintain its NOLs (and maintain them in unrestricted fashion) notwithstanding the fact that the company's stock might otherwise be deemed to have been the subject of an ownership change and therefore be limited in the subsequent use of its NOLs. Although the section 382(l)(5) provision is available only in a bankruptcy case (or similar proceeding), this provision allows the corporation to exchange outstanding debt for new stock without falling subject to the dreaded 382 limitations. (It's always been puzzling what a proceeding "similar" to a bankruptcy case might be, but it doesn't appear to expand the availability of the provision in any substantial way.)
In evaluation whether the ability to extinguish debt with stock (without triggering section 382 limits) is significant in a particular case, other factors should be considered. Predominately non-tax considerations will likely govern the appropriateness of the bankruptcy filing. Moreover, the importance of avoiding the section 382 limits can only be thoroughly evaluated by calculating the 382 limits in a particular case."
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