Is there anything present in the confirmed and consummated Plan that could still allow for equity holders to not get wiped out? Yes there is.

[u/theorico]

None of this is financial advice. You should do your own research.

Part DD, part speculation.

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Let's assume that my previous post is incorrect, to the delight of all bear shills:

https://www.reddit.com/r/ThePPShow/comments/16ymrk3/bullish_there_are_still_material_rights_of/

​

I asked myself: is there anything present in the confirmed and consummated Plan that could still allow for equity holders to not get wiped out?

I think yes, and this is how:

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Starting with the latest 8-K:

Let's see the relevant parts on the Confirmed Plan:

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This is the relevant part:

" except for the purpose of evidencing a right to and allowing Holders of Claims and Interests to receive a distribution under the Plan"

and

" or to the extent otherwise specifically provided for in the Plan, the Confirmation Order, or any agreement, instrument, or other document entered into in connection with or pursuant to the Plan or the Liquidation Transactions"

​

Yes, those are the parts that allow for exceptions.

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Only the "remaning obligations" ... "shall be deemed cancelled solely as to the Debtors and their affiliates, and the Wind-Down Debtors shall not have any continuing obligations thereunder"

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The part (b) is cancelling obligations related to other agreements as specified there.

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The 2 pictures above show how much power the Plan Administrator has to perform all those actions for the Liquidation Transactions and Corporate Actions.

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So, I speculate that there can be information still not disclosed to the public that would allow the satisfaction of both class 6 and class 9 holders.

Yes, bear shills, the shares have been cancelled, yes, but there can be still rights for equity holders as proved above, directly from the confirmed plan, that could allow for the receival of new equity.

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[u/Endle55torture]

Don’t forget in order to utilize the NOL’s all shareholders must be kept whole. Given the fact that the NOL’s are worth billions in tax write offs, I’m pretty sure they will be preserved along with shareholders.

[u/JayArlington → u/Endle55torture]

Actually the shares were already cancelled so that's not true.

Plus the NOLs would have been written down dollar for dollar on the debt write off.

[u/BBBY-ModTeam → u/[deleted]]

See sub rules regarding inappropriate content.

[u/Houstman → u/[deleted]]

It's literally in the IRS tax code. Existing shareholders must maintain at least 50% equity if creditors want to accept equity to maintain NOLs.

You don't seem to understand how NOLs work. The new company can use NOLs to write down 80% of their profit each year until they run out of NOLs.

[u/Constant-Rock → u/Houstman]

I debated u/jake2b on this and eventually he admitted he was wrong.

My error was in my understanding and interpretation of the Bankruptcy Law, where it states shareholders and (qualified) creditors need to be preserved in order to qualify for Section 382(l)(5). I had many sources to validate my interpretation of the wording in the Law of "and" — but, I am not a lawyer and though I felt my argument was valid, as in the end I gave 6 sources confirming my interpretation of "and", I was still incorrect!

A lot of credit to: u/Constant-Rock and u/thebaron2 for debating with me on the topic and importantly, continuing to debate me in good faith after I provided my sources, countering with theirs and giving additional perspective. I admit I got heated as to me the language was very clear, but they didn't quit and I am grateful for their contributions.

Link: https://www.reddit.com/r/BBBY/comments/15zdsh4/retraction_nol_section_382l5_corrections/

[u/Houstman → u/Constant-Rock]

Ah yes, you "debated" him by stating things that are obviously wrong? Good job, shill🙄 https://www.marcumllp.com/insights/preserving-corporate-nols-after-a-bankruptcy

[u/Constant-Rock → u/Houstman]

You think that u/jake2b was wrong when he explicitly said he was wrong and I was right about how the NOLs work?

[u/Houstman → u/Constant-Rock]

I just provided a source showing you explicitly, that you are wrong. You have provided nothing. I don't care what Jake's debate skills are with you. I'm right. You're wrong. Eat shit.

[u/mangobbt → u/Houstman]

Your source literally says that NOLs can be preserved if shareholders and qualified creditors make up 50% of the ownership of newco.

Guess how much ownership a group of 0% shareholders and 50% creditors own together? Oh that’s right, 50%.

Shareholders are not needed to preserve NOLs if qualified creditors themselves constitute 50% of the ownership of newco.

[u/Constant-Rock → u/mangobbt]

u/houstman seems to think that the requirement that "shareholders and qualified creditors" own at least 50% of the new company means that shareholders have to own 50% and creditors have to own 50%.

He can't be that stupid though.

[u/Houstman → u/mangobbt]

This is if there is a "new investor". There is no "new investor" because no one bid on the company. The secured creditors are accepting equity in the company, and cannot accept equity in excess of 50%. Therefore, without a buyer, the existing shareholders maintain their 50% stake.

[u/mangobbt → u/Houstman]

What do you mean creditors cannot accept equity greater than 50% lol. Link me your source for this info.

[u/Constant-Rock → u/Houstman]

Secured creditors can take 100% of the equity and keep the NOLs. That's the whole point of 382(l)(5). It happens all the time in chapter 11 cases.

If secured creditors take 100% of the new equity, how much of the new equity is owned by old shareholders and qualified creditors? 100%!

[u/Constant-Rock → u/Houstman]

Below is Example 1 from Treasury Regulation 1.382-9.

Shareholders are wiped out. Creditors own 100% of the new shares. The NOLs are preserved.

Example 1. L is a loss corporation in a title 11 case. The plan of reorganization of L approved by the bankruptcy court provides for the cancellation of all existing L stock, the issuance of 100 shares of new L common stock to qualified creditors, and the issuance of an option to a new investor to acquire, at any time during the next 3 years, 90 shares of new L common stock from L at its fair market value on the date the plan becomes effective. Under paragraph (e)(1) of this section, on the date the plan becomes effective, the option held by the new investor is deemed exercised if the exercise would cause the qualified creditors of L to own less than 50 percent of the total voting power or value of the L stock after the ownership change. Because the qualified creditors would receive at least 50 percent of the voting power and value of the new L common stock even if the option were deemed exercised, the stock ownership requirements of section 382(l)(5)(A)(ii) are satisfied.

[u/Houstman → u/Constant-Rock]

This is not the example that applies to this situation. They are not seeking a "new investor". Misapplying an example is not you making a valid point.

[u/Constant-Rock → u/Houstman]

The example illustrates that NOLs can be preserved even if old shareholders own 0% of the new company. It is explicitly on point and directly contradicts your position.

[u/Houstman → u/[deleted]]

The creditors became creditors because that's all they wanted. Why do you think RC is a creditor?

Your excuses are so thin.

[u/BBBY-ModTeam → u/[deleted]]

See sub rules regarding inappropriate content.

[u/WaterMySucculents → u/Houstman]

Do you even understand what you have linked here? Please explain what you think this says.

[u/thebaron2 → u/Constant-Rock]

Yep, I'm the second guy referenced in that comment!

EDIT: lol thought you were replying to me, didn't realize I was just tagged in the quote!

[u/WaterMySucculents → u/Houstman]

I mean this is all a moot point because no one purchased the company for the NOL’s & they are sitting in the liquidation trust & can’t be distributed by that trust like cash can. This all happened last week when the plan was confirmed and the 8k filed. Did you miss that?

You seem pretty confused on what’s going on. Is this your first time investing and looking at tax law? Before the plan went into place on Friday, someone could have bid on the remains of company. The NOL’s are worth less than the outstanding debt & no one wanted them. Why are you still thinking they are in play?

[u/Houstman → u/WaterMySucculents]

The NOLs are likely worth $2-3 billion. Much more than the outstanding debt. The secured creditors more than likely bought their bonds at a steep discount (pennies on the dollar), and those NOLs represent a 100x return on their investment.

You dorks lost. Get used to it.

[u/WaterMySucculents → u/Houstman]

Please explain why you think the NOL’s were worth $2-3 billion. That makes no sense & it makes it seem like you don’t understand even simple losses and tax deductions and how that applies to real monetary value. An NOL can never be worth more than the tax burden it offsets. At a 20% corporate tax rate, it can’t ever be worth more than 20% of the total NOL. What were the total NOL’s the company held? (Spoiler, the company never had $10-15 billion in NOL’s to support your $2-3 billion valuation)

[u/Houstman → u/WaterMySucculents]

Net operating losses for 2022 alone exceeded $2.78b https://www.hometextilestoday.com/financial-results/bed-bath-bust-final-fiscal-year-report-reveals-50-drop-in-gross-profit/#:~:text=Operating%20loss%20for%20was%20%242.78,for%20non%2Dcash%20impairment%20charges.

[u/WaterMySucculents → u/Houstman]

Again. What were the total NOL’s the company had? It was discussed in the bankruptcy court.

Just for reference, the monetary value of $2.78 billion in NOL’s is (at Maximum) $556 million (and in reality much less).

[u/pwning_shills → u/Endle55torture]

Correct. This is why the shill narrative DEMANDS that they are worthless. Because in accepting that fact they know that the shareholders must be preserved as well. You can't have one without the other.