Most restructuring lawyers see “tax” and immediately run for help from specialists down the hallway or maybe at other firms. That’s the right thing to do, and we tax lawyers appreciate the job security. Still, there are a number of provisions that restructuring lawyers should be aware of in the once-in-a-generation tax reform bill signed by President Trump on Dec. 22, 2017.

The Act generally reduces the tax payable by companies with good financial performance. The headline corporate tax rate was reduced from 35 percent to 21 percent, the corporate alternative minimum tax was eliminated, and a deduction (that happens to be incomprehensibly complex) was added that operates to reduce the tax rate for the income that flows out of some (but not all) entities that are subject to “flow-through” tax treatment.

Unfortunately, several of the Act’s “pay-fors” have the potential to significantly harm financially distressed companies.

The following discussion tries to give some color on how some of the Act’s key provisions might influence restructuring transactions on a going-forward basis.