|
< Return to Firm News ST&G Obtains NOL Protective Order for Fremont General Corp.
On June 18, 2008, Stutman, Treister & Glatt, P.C. ("ST&G") and its co-counsel Patton Boggs LLP filed a chapter 11 petition for Fremont General Corporation, a financial services holding company ("Fremont"), in the United States Bankruptcy Court for the Central District of California, Santa Ana division. Fremont's chapter 11 case is proceeding as Case No. 8:08-bk-13421 before the Honorable Erithe A. Smith.
While preparing for the bankruptcy filing, Fremont and its professionals determined that Fremont had federal consolidated net operating loss carryovers ("NOLs") of nearly $700 million, which NOLs were at immediate risk of being impaired or lost by an "ownership change" under federal tax law. Determined to protect the valuable NOLs for the benefit of Fremont's bankruptcy estate, ST&G helped Fremont prepare "first day" motions which included a request that the Bankruptcy Court enter an order limiting certain transfers of Fremont's equity interests and approving related notice procedures. Those procedures were specifically designed to allow Fremont the ability to take proactive steps during the bankruptcy case to preserve its NOLs without unnecessarily disrupting the market for Fremont shares.
Following a hearing on June 19, 2008, the Bankruptcy Court entered the proposed NOL order on a final basis, retroactive to the petition date. While the Court observed that such an order was not part of the "typical" first day motion practice, the Court nevertheless agreed with Fremont's arguments about why such an order was permitted under applicable case law and was appropriate in Fremont's case.
ST&G's prompt steps to help protect Fremont's NOLs provide a clear example of how ST&G's expertise can provide significant value to corporate debtors and their stakeholders.
|
