Troubled companies may elect to file early for Chapter 11 to beat tax law change.

Bankruptcy filings are expected to increase as companies rush to beat a federal tax law change, effective Jan. 1.

"That's why people think there will be a massive amount of bankruptcy filings before the end of this year," Robert Willens, a managing director in Lehman Brothers Inc.'s investment banking division, said yesterday.

Does Willens think those people are right?

"Absolutely," he said.

As part of the tax package Congress approved in August, a "stock for debt exception" was repealed, Willens said.

Under the old rules, if a bankrupt company had $100 of debt outstanding for which it planned to exchange $30 of stock, the company would not have been taxed on the $70 difference. The $70 also would not have to be deducted from the company's tax loss carryforward.

Willens described the tax loss carryforward as "a very valuable asset." It consists of losses accumulated in previous years that can be applied to profits earned in subsequent years to reduce tax liability.

While the new rule still would not tax the company on the $70 difference. it would force the company to subtract the $70 from its tax loss carryforward.

If a company files for bankruptcy by Dec. 31, the old rules still apply, no matter when the bankruptcy process is completed. Willens said. A company that files in 1994 and completes a bankruptcy by the end of the year would still qualify under the old rules. But filing before Dec. 31 of this year ensures that it will quality, he said.

Kingman D. Penniman, an executive vice president at Duff & Phelps Corp., said he doesn't see companies rushing to file for Chapter 11 based oil the tax law change alone. But for those considering a 1994 filing, the deadline may lead them to accelerate it, he said.

For troubled companies weighing whether to pursue convenant changes or sell assets with which they don't want to part, the impending change may make a stronger case for the bankruptcy option, he said.

But Penniman doesn't see a rash of bankruptcies, noting that the universe of bankruptcy candidates has shrunk because many of the weaker companies have filed already.

"There just aren't that many companies on the verge of bankruptcy anymore." he said.

Brian Bogart, a group vice president at Duff & Phelps, said Stone Container Corp., a company he follows that was the subject of bankruptcy rumors earlier this year, is unlikely to seek bankruptcy.

"I don't think Stone has plans to file." Bogart said, adding that he doesn't see the deadline influencing the company. The company has strongly denied bankruptcy rumors.

Yesterday, Ira N. Stone, senior vice president of corporate marketing, communications, and public affairs at the company, reiterated that position.

"That's still the case," he said, adding that the Stone Container has "no plans and no reason" to file bankruptcy.

But Willens said a "substantial" number of potential filers remain. If a company is contemplating bankruptcy, filing before the deadline is a "positive" from a bondholder's standpoint because it shows the company is smart enough to preserve a valuable asset, he said.

In secondary trading yesterday, high-yield bonds ended unchanged, one trader said. Gainers included bonds of R.H. Macy & Co. and Revlon, while Tiphook debt lost ground. Spreads on high-grade issues finished "a little tighter across the curve," a high-grade trader said.

Student Loan Marketing Association issued $700 million of floating-rate notes due 1997 at par. Noncallable for a year, the notes pay interest quarterly and the rate floats weekly at 17 basis points above three-month Treasuries. Morgan Stanley & Co. was the lead manager.

Black & Decker Corp. sold $250 million issue of 6.625% notes due 2000 at par. The noncallable notes were priced to yield 129 basis points more than comparable Treasuries. Moody's Investors Service rates the offering Ba1. while Standard & Poor's Corp. rates it BBB-minus. Goldman, Sachs & Co. was the lead manager.

Advanta Corp. came to market with $150 million of 5.125% notes due 1996. The noncallable notes were priced at 99.897 to yield 5.162%, or 77 basis points more than comparable Treasuries. Moody's rates the offering Baa3, while Standard & Poor's and Fitch Investors Service rate it BBB-minus. CS First Boston served as the lead manager.

Chevy Chase Savings Bank issued $150 million of 9 1/4% subordinated capital notes due 2005. The notes were priced at 99.625 to yield 9.302%. They are callable after five years beginning at 104.625 and moving to 103.70, 102.775, 101.85, 100.925, and then to par. Moody's rates the offering B2, while Standard & Poor's rates it B. Merrill Lynch & Co. was the lead manager.

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