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1. Bankruptcy Code — fair valuation, reasonably equivalent value, and indubitable equivalent

2. The Uniform Fraudulent Transfer Act (UFTA) — fair valuation, reasonably equivalent value

3. The Uniform Fraudulent Conveyance Act (UFCA) — present fair saleable value, fair considera-
tion fn 4

Certain of these standards of value are discussed in general terms in the following paragraphs. Practi-
tioners are cautioned that interpretations of these standards of value vary by jurisdiction and may be in-
consistent with the following discussion. Practitioners should work closely with experienced bankruptcy
attorneys when performing valuations under any of these standards of value to understand the interpreta-
tions of the standard of value in the relevant jurisdiction.

Bankruptcy Code — Fair Valuation

Bankruptcy Code Section 101(32) defines insolvency as a ". . . financial condition such that the sum of
such entity’s debt is greater than all of such property, at a fair valuation. . ." Fair valuation in this con-
text is generally interpreted by bankruptcy case law as fair market value. fn 5

Bankruptcy Code — Reasonably Equivalent Value

Bankruptcy Code Section 548 provides the trustee with avoidance powers related to fraudulent transfers
and obligations when certain conditions are met. Among the conditions for constructively fraudulent
transfers, Section 548(a)(1)(B)(i) outlines that a debtor must have "received less than a reasonably
equivalent value in exchange for such transfer or obligation." The Bankruptcy Code does not define rea-
sonably equivalent value. Section 548(d)(2)(A) defines value to mean "property, or satisfaction or secur-
ing of a present or antecedent debt of the debtor, but does not include an unperformed promise to furnish
support to the debtor or to a relative of the debtor." Reasonably equivalent value is generally interpreted
by bankruptcy case law to be "conduct[ed] through inquiry of all relevant facts and circumstances" from
the perspective of unsecured creditors giving consideration to whether their position is worse off as a
consequence of the transfer. fn 6 Courts have historically considered fair market value exchanged and
whether a transfer was made at arm’s length when evaluating the question of whether reasonably
equivalent value has been exchanged. fn 7 However, as cited by the United States Supreme Court, rea-
sonably equivalent value is not always evaluated against a fair market value benchmark. fn 8

fn 4 The UFTA and UFCA apply only in those states that have adopted one of these acts.

fn 5 See Andrew Johnson Properties, Inc., CCD Dec. ¶ 65, 254 (D.C. Tenn. 1974); Briden v. Foley, 776 F.2d 379, 382 (1st Cir. 1985),
(noting that the insolvency definition "focuses on the fair market value of the debtor's assets and liabilities").

fn 6 See Harmon v. First American Bank of Md. (In re Jeffrey Bigelow Design Group, Inc.), 956 F.2d 479 (4th Cir. 1992) (reasonably
equivalent value determined from standpoint of creditors; court must determine net effect on debtor's estate regarding funds available
to unsecured creditors; if unsecured creditors are no worse off, then there is reasonably equivalent value).

fn 7 See Barber v. Golden Seed Co., 129 F.3d 382, 387 (7th Cir. 1997) (standard for "'[r]easonable equivalence should depend on all
the facts of each case'"; important elements are fair market value and whether there was an arm's-length transaction), quoting Bundles
v. Baker (In re Bundles), 856 F.2d 815, 824 (7th Cir. 1988).

fn 8 BFP v. Resolution Trust Corp., 511 U.S. 531, 548 (1994).

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