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5. the assessment of reasonably equivalent value is a fact-intensive assessment that must be made
after giving consideration to the totality of circumstances existing at the time of the transfer. Two
important elements for consideration are set forth in the previous sentence. First, a "totality of
circumstances" analysis contemplates assessing the specific circumstances of the debtor. As a re-
sult, the question is not, Did the consideration received by the debtor represent a going rate for
the goods and services in the marketplace? so much as it is, Did the consideration received pro-
vide reasonably equivalent value to the particular debtor, in its given circumstances, from the
standpoint of its creditors? Second, the assessment of reasonably equivalent value should be
made based on what was known or knowable as of the transfer date. An inappropriate use of
hindsight information in the context of avoidance actions would shift the court’s focus from
"combat[ing] fraud, whether actual or constructive . . . to serving as insurance against financial
failure." fn 13

6. "because fraudulent conveyance laws exist to protect creditors, ‘the question whether the debtor
received reasonable value must be determined from the standpoint of the creditors.’" fn 14 Ac-
cordingly, the question is not, Did the transfer constitute a benefit that provided adequate enjoy-
ment to the debtor? so much as it is, Did the debtor receive value that might ultimately inure to
the benefit of its creditors?

It should be noted that although the aforementioned resources offer important insights on the issue of as-
sessing reasonably equivalent value, they are written by legal, and not financial, authors. As a result, the
principles set forth in such resources must be vetted against fundamental principles of finance and valua-
tion to ensure that what is being offered by the authors is consistent with modern financial theory and
valuation practice. For example, some of the court decisions and commentary offered confuse the con-
cepts and application of standard of value and premise of value. In addition, discussions regarding the
assessment of indirect benefits received by debtors in the context of a transaction don’t fully recognize
the use of probabilistic methods and expected value calculations that may offer a basis for establishing at
least some quantitative structure that is otherwise considered by the courts on a qualitative basis. Finally,
widely accepted valuation practice sets forth the standard for the use of hindsight information as infor-
mation that was known or knowable as of the valuation date. Accordingly, if the post-valuation-date in-
formation merely manifests information that was known or knowable as of the valuation date, then it is
appropriate to consider such information. Otherwise, the information should not be used. This valuation
principle is not fully discussed or recognized in the aforementioned literature.

Application of SSVS No. 1 to Solvency Analyses

In August 2008, the Valuation Standards Subcommittee (VSS) reviewed the issue of whether Statement
on Standards for Valuation Services (SSVS) No. 1 applied to valuation analysts performing bankruptcy-
related solvency analyses and solvency opinions. The governing document, entitled Solvency Analysis
and SSVS No. 1, fn 15 was a response to a member-posed question. In this document, the VSS distin-
guished between two potential user situations: (1) performance of a "complete solvency analysis" in a

fn 13 Fox, "‘Reasonably Equivalent Value' in § 548 Avoidance Actions," 44.

fn 14 Fox, "'Reasonably Equivalent Value' in § 548 Avoidance Actions," 16.

fn 15 www.aicpa.org/interestareas/forensicandvaluation/resources/standards/downloadabledocuments/solvency.pdf.

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