Page 90 - Bankruptcy and Reorganization Services

such transfer or obligation." As in other bankruptcy contexts, fair market value is an important standard
of value to consider and may be the governing standard when assessing reasonably equivalent value (for
example, the U.S. Court of Appeals for the Third Circuit held that "market capitalization" is a proper
means for assessing reasonably equivalent value). fn 7 However, as articulated by the U.S. Supreme
Court in BFP v. Resolution Trust Corporation, fair market value is not always the appropriate bench-
mark for establishing reasonably equivalent value. fn 8

The meaning of reasonably equivalent value is not easily discerned and differences exist between cir-
cuits. We offer three resources that may prove useful to the analyst in assessing reasonably equivalent
value in the context of avoidance actions. These resources are the following:

1. The district and bankruptcy court decisions in the TOUSA, Inc., bankruptcy matter. fn 9

2. A legal treatise entitled "‘Reasonably Equivalent Value’" in § 548 Avoidance Actions: An Ana-
lytical Framework Post-In re TOUSA, Inc." by Irina Fox. fn 10

3. BFP v. Resolution Trust Corporation. fn 11

The basic framework or guidelines set forth in these resources, which have particular relevance to ana-
lysts, indicate among other things that

1. there is no definition in the Bankruptcy Code for reasonably equivalent value.

2. given that different jurisdictions define reasonably equivalent value differently, the term is sub-
ject to a variety of interpretations. Accordingly, the assessment must be made after giving con-
sideration to prevailing case law in the relevant district.

3. although fair market value is an important factor for consideration, it is not necessarily disposi-
tive in the ultimate determination.

4. value must be assessed in "its broadest sense, including cash, all interests in property, such as
liens, and every kind of consideration including promises to act or forbear to act." fn 12 In other
words, direct, indirect, or contingent benefits, whether immediate or deferred, should be consid-
ered when assessing reasonably equivalent value.

fn 7 In re VFB LLC v. Campbell Soup Co., No. 05-4879, 2007, WL 942360 (3d Cir. March 30, 2007).

fn 8 BFP v. Resolution Trust Corp., 511 U.S. 531, 537 (1994).

fn 9 3V Capital Master Fund Ltd. v. Official Comm. Of Unsecured Creditors of TOUSA, Inc. (In re TOUSA, Inc.), 444 B.R. 613 (S.D.
Fla. 2011).

fn 10 Irina Fox, "‘Reasonably Equivalent Value’ in § 548 Avoidance Actions: An Analytical Framework Post-In Re TOUSA, Incorpo-
rated," Norton Journal of Bankruptcy Law & Practice 20, no. 4 (2011).

fn 11 BFP v. Resolution Trust Corporation, 200 U.S. 321 (1994).

fn 12 Opinion and Order on Appeals by Transeastern Lenders, Case No. 10-60017-CIV/Gold, p. 67 (citing 11 USC 548(d)(2)(A)).

88 © 2020 Association of International Certified Professional Accountants