The following article is adapted and reprinted from the M&A Tax Report, Vol. 11, No. 9, April 2003, Panel Publishers, New York, NY.


By Robert W. Wood

A few M&A Tax Report readers commented on bankruptcy rules, in response to our recent coverage, "Don't Forget Bankruptcy NOL Rules," Vol. 11, No. 8, The M&A Tax Report (March 2003), p. 1. Two notes of interest.

First, United Airlines' equity ownership has indeed changed, with the bellwether majority employee ownership (which was United's much touted hallmark before its implosion) coming to an inglorious end. Indeed, labor's stake in the beleaguered carrier fell below 20%. Though we might naturally focus on tax law changes, this ownership change triggered governance changes for UAL that ended the majority voting power the workers had enjoyed, plus its super majority's rights on the company's board. See Carey, "UAL Workers Lose Majority Rights as Stake Declines," Wall Street Journal (March 10, 2003), p. A3.

Second, United has obtained a ruling from the Service on the stock ownership issues associated with its 401(k) plan. The ruling was requested January 9, 2003, and was issued February 27, 2003, and predictably had to do with United's NOL. The rulings requested involved whether the 401(k) plan trust was a 5% shareholder under Section 382, the appropriate Section 382 testing dates, which members of the consolidated group would be treated as owning parent stock, whether a particular fund would be treated as a first-year entity under Section 1.382-2T(f)(9), and various other 382 peccadillos. (Tax Analysts Doc. No. 2003-6174, 2003 TNT 48-46.)

Any more bankruptcy stories out there?

Bankruptcy Notes, Vol. 11, No. 9, The M&A Tax Report (April 2003), p. 2.