Galaxy Energy restricts stock trading to preserve tax benefits

By Caroline Salls

Pittsburgh, Oct. 28 - Galaxy Energy Corp. obtained court approval of its request to establish procedures and restrict transfers of claims against and interests in the company's estates to protect its net operating loss carryforwards for tax purposes, according to an 8-K filed with the Securities and Exchange Commission.

According to the order entered by the U.S. Bankruptcy Court for the District of Colorado, unrestricted trading in claims against and equity interests in the company before its emergence from Chapter 11 bankruptcy could severely limit Galaxy's ability to use its NOL carryforwards and other tax attributes for U.S. federal income tax purposes.

As a result, the trading procedures and restrictions were deemed necessary to preserve the NOL carryovers and other tax attributes.

Under the restrictions, any person or entity that owns at least 3 million shares of Galaxy's stock or plans to purchase enough stock to put it over this threshold is required to notify the company of their ownership information.

Galaxy, a Denver-based independent oil and gas company, filed for bankruptcy on March 14, 2008. Its Chapter 11 case number is 08-13164.

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