OIL2013. Tax Challenges for Debt Financings and Restructurings

As companies are navigating the current economic and market conditions, many are faced with adjusting their capital structure to manage liquidity and put themselves in a better position to handle an unpredictable future. In this session, we will begin with a review of basic income tax concepts applicable to debt instruments and borrowing. We will then discuss US income tax issues commonly encountered by oil and gas companies when they look to restructure debt through negotiation with creditors or a bankruptcy proceeding. From delaying interest payments to a Chapter 11 reorganization, transactions that involve debt also involve complex tax rules that can either be an opportunity or a trap.

Learning Objectives:

• Review basic tax concepts related to debt instruments
• Recognize certain tax implications of debt modifications and exchanges
• Analyze the application of cancellation of debt to corporations and partnerships
• Consider industry specific issues in the context of a debt restructuring