Examples of ABL Facility Loans in a sentence
Each Holder of an Allowed ABL Facility Claim would continue to have the same adjusted tax basis and holding period with respect to such Holder’s pro rata share of the Exit ABL Facility Loans as such Holder had in its Allowed ABL Facility Claim immediately prior to such exchange.
Although the Exit ABL Facility Loans are expected to contain substantially the same terms as the ABL Facility, it is unclear whether the deemed extension of the maturity date and the amendments to certain covenants and maintenance requirements would qualify under the section 1001 safe harbors and, if not, whether they would give rise to a significant modification to the Allowed ABL Facility Claim under the general Section 1001 Regulations.
Although not free from doubt, the Debtors intend to take the position that neither the Exit ABL Facility Loans nor the ABL Facility are considered to be traded on an established market at the time of the exchange, and that therefore the issue price of the Exit ABL Facility Loans should generally equal their stated principal amount.
A Holder’s holding period for its pro rata share of the Exit ABL Facility Loans received in exchange for an Allowed ABL Facility Claim should begin on the day following the Effective Date.
Holders of Allowed ABL Facility Claims are urged to consult their own tax advisors as to whether the exchange of an Allowed ABL Facility Claim for a pro rata share of the Exit ABL Facility Loans constitutes a significant modification, and consequently a deemed exchange, of the ABL Facility under the Section 1001 Regulations.
A Holder’s tax basis in respect of a pro rata share of the Exit ABL Facility Loans received in exchange for such Holder’s Allowed ABL Facility Claim should equal the issue price of such Exit ABL Facility Loans.
If the exchange of an Allowed ABL Facility Claim for an interest in the Exit ABL Facility Loans does not result in a significant modification of the ABL Facility, then a Holder of an Allowed ABL Facility Claim should not recognize any gain or loss with respect to such Claim.
To the extent that a portion of the Exit ABL Facility Loans received in exchange for an Allowed ABL Facility Claim is allocable to accrued but unpaid interest, the Holder of such Claim may be required to recognize ordinary income as discussed in Section 10.3(d) below.
In addition to regular U.S. federal income tax, certain Holders that are individuals, estates or trusts are subject to a 3.8% tax on all or a portion of their “net investment income,” which may include all or a portion of their dividends on New Holdco Common Stock or interest income (including accrued OID) arising from Exit ABL Facility Loans or the Subordinated Notes pursuant to the Plan and any gain recognized on the sale or other taxable disposition of New Holdco Common Stock or Subordinated Notes.
The issue price of the Exit ABL Facility Loans will depend on whether a substantial amount of either the Exit ABL Facility Loans or the ABL Facility are considered to be “traded on an established market” (discussed in Section 10.3(b)(6) below) at the time of the exchange.