v3.25.2
Income Taxes
 6 Months Ended
Jun. 30, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The following table displays the Company’s (loss) income from operations before income tax, income tax expense and effective tax rate (in thousands):
Successor
Three Months Ended June 30, 2025
(Loss) Income from Continuing Operations Before Income Tax$(249,828)
Income Tax (Benefit) Expense$(3,997)
Effective Rate1.60 %
SuccessorPredecessor
Period from March 13, 2025 through June 30, 2025Period from January 1, 2025 through March 12, 2025
(Loss) Income from Continuing Operations Before Income Tax$(260,867)$90,086 
Income Tax (Benefit) Expense$(4,100)$17,870 
Effective Rate1.57 %19.84 %

The income tax benefit of $4.0 million and $4.1 million for the three months ended June 30, 2025 and for the Successor Period from March 13, 2025 through June 30, 2025, respectively, is based on the Company's annualized effective rate (“AETR”). For the Successor Period, the Company estimates its AETR for continuing operations in recording its interim income tax provision for the various jurisdictions in which it operates. The tax effects of statutory rate changes, significant unusual or infrequently occurring items, and certain changes in the assessment of the realizability of deferred tax assets are excluded from the determination of the Company's estimated AETR, as such, items are recognized as discrete items in the quarter in which they occur.
The income tax expense of $17.9 million for the Predecessor Period was determined based on actual results for the Predecessor Period ended March 12, 2025, including those resulting from fresh start accounting. Any changes to its deferred tax assets and liabilities for the Predecessor Period (whether resulting from Reorganization Adjustments, Fresh Start Adjustments or otherwise) were partially offset with a corresponding adjustment to its valuation allowance.
In the Chapter 11 Cases, the cancellation of debt income (“CODI”) realized upon emergence from bankruptcy is excludable from taxable income, but results in a reduction of tax attributes in accordance with the attribute reduction and ordering rules of Section 108 of the Internal Revenue Code. The amount of the Company's CODI is estimated to be $478.1 million and will be taken completely against, and therefore will reduce, its NOL carryforwards. After taking into account the CODI, the remaining federal NOL carryforward is estimated to be approximately $1.8 billion and all federal NOL carryforwards do not expire. The reductions in NOL carryforwards for the CODI are expected to be fully offset by a corresponding decrease to the Company's valuation allowance as of December 31, 2025. Some states have similar rules for attribute reduction which will result in the reduction of certain of its state NOL carryforwards.