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Abstract
Although the economy has been showing signs of life, the recent downturn in the economy has resulted in the incurrence of significant operating and tax losses by many companies. At the same time, corporate stock values have declined. This confluence of events creates the potential for a company to lose the potentially valuable future tax benefits that may be realized from federal tax net operating loss (NOL) carryforwards. From a creditor's perspective, the NOL rights plan can be a very valuable tool to protect the liquidity and cash flow of the debtor. The protection of a loss corporation's tax attributes can become vital to its future survival when operations begin to yield taxable income as the debtor will need attributes to shield itself from taxable income. Since the 1980s, corporate America has used poison pills as a tool to discourage hostile and unsolicited investors from taking large stakes in a corporation's publicly traded stock.