Why did Trump's debt-for-equity swap allow him to avoid a big tax bill?

I understand that Trump avoided a huge tax bill from debt forgiveness by a "partnership equity-for-debt swap". But why did that work? And why, as the New York Times said, would it not have mattered if the equity was worthless? If it was a swap, with whom? I would expect it to be with the creditors. But I would think that if you owed $40 million to someone and gave them $30 million worth of stock in exchange, you'd still have $10 million of debt forgiveness to pay taxes on -- or if the stock was worthless, $40 million; why wasn't that true?

https://www.msn.com/en-au/news/world/donald-trump-...