Impact of Tax Reform on Financially Distressed Companies: Operating and Restructuring Challenges

New NOL Rules, Limitations on Business Interest Deductibility, Restrictions on Foreign Subsidiary Debt Guarantees

Recording of a 110-minute CPE webinar with Q&A


Conducted on Tuesday, January 22, 2019

Recorded event now available

or call 1-800-926-7926
Program Materials

This webinar will provide corporate tax executives and advisers with a practical guide to the challenges presented to distressed companies by the 2017 tax reform law's new NOL and business interest limitations. The panel will discuss the distinctions between pre- and post-2018 NOLs and strategies for maximizing the value of those different attributes, detail how the interest deduction cap fits into a scenario of the distressed or heavily leveraged company, and consider some of the critical issues that distressed companies with foreign operations will face under tax reform.

Description

Several provisions in the 2017 tax reform legislation present significant challenges to distressed or over-leveraged U.S. companies. Fundamental changes in NOL treatment, business interest deductibility under new Section 163(j), and treatment of debt guarantees by foreign subsidiaries could have a severely negative impact on businesses going through a financial downturn.

Listen as our experienced panel provides a practical guide to the impact of the 2017 Tax Act on financially distressed companies. Taken as a whole, the 2017 Tax Act creates new burdens for companies experiencing a business downturn, either currently or in the future.

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Outline

  1. Prior NOL and business interest deductibility
  2. New net operating loss rules
    1. Elimination of NOL carryback for losses generated in 2018 or later
    2. New 80% NOL offset limitation
    3. Increased value of pre-2018 NOLs
  3. New limitations on business interest deductibility under Section 163(j)
  4. Treatment of foreign subsidiary debt guarantees
  5. Planning opportunities for financially distressed companies

Benefits

The panel will discuss these and other relevant topics:

  • How the elimination of the NOL carryback could impact distressed companies in the event of a significant market downturn
  • How the 80% limitation on the use of NOL carryforwards can result in an effective minimum tax rate for businesses with insufficient current-year losses
  • How to address the business interest income limitations under 163(j), particularly in light of the extensive proposed regulations released on November 26, 2018
  • Impact of new expensing provisions on distressed companies
  • How the changes to Section 956 impact potential debt collateral packages
  • Certain problems posed by the new international tax rules for distressed companies, including how those rules interact with existing NOLs

Faculty

Sexton, Anthony
Anthony Vincenzo Sexton

Partner
Kirkland & Ellis

Mr. Sexton's practice focuses on the tax aspects of complex business transactions and reorganizations, with a...  |  Read More

Steinberg, Howard
Howard B. Steinberg
Partner-In- Charge US Tax Restructuring and Corporate Recovery
KPMG

Mr. Steinberg specializes in providing tax restructuring advisory. He has advised numerous debtor corporations on the...  |  Read More

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