Issue link: https://mbozikis.ufcontent.com/i/1422521
185 Section 382(l)(6) of the Internal Revenue Code applies to corporations in bankruptcy that elect out of, or do not qualify for, the Bankruptcy Exception. This provision permits a corporation to increase its value for purposes of the Section 382 limitation by taking into account increases in the value of the corporation realized through the bankruptcy process that are attributable to the conversion of debt into stock (i.e., such corporation's stock would be valued after, as opposed to before, any debt cancellation that is part of the Chapter 11 plan). Accordingly, the reorganized corporation is permitted to use NOLs in an amount equal to its reorganized value multiplied by the long-term tax-exempt bond rate (and increased by certain "built-in gains"). Use of Section 382(l)(6) may be preferable to the Bankruptcy Exception where Section 382's limitation on NOLs will allow the corporation to use its NOLs with sufficient speed and quantity because of the corporation's post-bankruptcy value, where the corporation's interest haircut is substantial and/or where the corporation expects an additional Ownership Change within the following two years. I. Conclusion of the Case 1. Closing Once an estate has been fully administered in a Chapter 11 reorganization case, a final decree closing the case must be entered, either on motion of a party in interest or by the court sua sponte. 11 U.S.C. ยง 350(a); FED. R. BANKR. P. 3022. Although the Bankruptcy Code does not provide any guidance for determining whether a case has been "fully administered," an Advisory Committee Note to Bankruptcy Rule 3022 is helpful in this regard: Entry of a final decree closing a chapter 11 case should not be delayed solely because the payments required by the plan have not been completed. Factors that the court should consider in determining whether the estate has been fully administered include (1) whether the order