BANKRUPTCY VALUATION

The BVA Group performs valuations for bankruptcy and restructuring proceedings.  Bankruptcy is a legal declaration, under Title 11 of the United State Code, of the inability or impairment of a debtor's ability to meet and pay its liabilities.  Business bankruptcies are granted pursuant to either a Chapter 7 or Chapter 11 bankruptcy.

Creditors, bankruptcy trustees, or management of a distressed company often require an estimate of fair value for the business enterprise, including the intangible assets.  The BVA Group has extensive experience with these types of valuation assignments.

In bankruptcy context, case law generally interprets fair value, as referenced in section 101(32) of the Bankruptcy Code, to mean fair market value.  Generally, courts under the Bankruptcy Act have held that "fair value" was the fair market value of the property between willing buyers and sellers or the value that can be made available to creditors within a reasonable period of time.

In conjunction with fraudulent conveyance actions, where the debtor is alleged to have transferred assets prior to filing to avoid collection by creditors, BVA is available to assist in the determination of whether reasonably equivalent value was received in a particular transaction and in performing solvency analyses for various parties who wish to assert or rebut a solvency or insolvency conclusion.

Under the Bankruptcy Code, the Uniform Fraudulent Transfers Act, and the Uniform Fraudulent Conveyance Act, an asset transfer is deemed to have been constructively fraudulent  and may be voided by the trustee if, within one year prior to the filing of the bankruptcy petition, the creditor receives less than reasonably equivalent value in a transaction and the transaction does not meet any one of the following requirements: (1) the transferor was insolvent at the time of the transfer or was rendered insolvent as the result of the transfer (the balance sheet test), (2) the transferor was undercapitalized at the time of the transfer or became undercapitalized as the result of the transfer (the adequate capital test), or (3) the transferor was unable or rendered unable by the transfer to pay its debts as they became due (the cash flow test).  These three tests are often collectively referred to as the solvency tests.

In addition, The BVA Group offers forensic accounting services. These capabilities may be relevant in a bankruptcy context for matters, such as:

• Investigating preference payments (paying favored creditors prior to filing);
• Asset investigation and recovery;
• Management fraud (misappropriation or misuse of company resources); and
• Assessing accounting issues in financial reporting prior to a bankruptcy filing.