ADVANCED ISSUES IN AVOIDANCE

By Hon. William H. Brown, Dennis J. Connolly, David A. Lander, Timothy M. Lupinacci

partnership's debt is greater than the aggregate of, at a fair valuation

(i): all of such partnership's property, exclusive of property of the kind specified in subparagraph (A)(i) . . .; and
(ii): the sum of the excess of the value of each general partner's nonpartnership property, exclusive of property of the kind specified in subparagraph (A) of this paragraph, over such partner's nonpartnership debts; and

(i): generally not paying its debts as they become due unless such debts are the subject of a bona fide dispute; or
(ii): unable to pay its debts as they become due.

This definition creates a balance sheet test. Gray v. Chace (In re Boston Publ'g Co.), 209 B.R. 157 (Bankr.

D. Mass. 1997); Gillman v. Scientific Research Prods., Inc. (In re Mama D'Angelo, Inc.), 55 F.3d 552 (10th Cir. 1995).

2. Presumption of Insolvency.

The debtor is presumed to be insolvent on or during the ninety days immediately preceding the petition date pursuant to section 547(f). If the transfer is made within one year and ninety days of the petition date, however, this presumption does not apply. Orix Credit Alliance, Inc. v. Harvey (In re Lamar Haddox Contractor, Inc.), 40 F.3d 118 (5th Cir. 1994).

A transferee may come forward with evidence to rebut this presumption. Babiker v. Citizens Contracting Co. (In re Babiker), 180 B.R. 458 (Bankr. E.D. Va. 1995). In Lids Corp. v. Marathon Inv. Partners, L.P. (In re Lids Corp.), 281 B.R. 535 (Bankr. D. Del. 2002), the Court discusses the effect of the insolvency

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