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presumption. The transferee must present sufficient evidence that debtor was solvent to rebut the statutory presumption; if not then the debtor is entitled to rely on the presumption; if so, then the burden of persuasion shifts to debtor to convince court that it was insolvent on relevant date. A statement in a Debtor's 8K filed with Securities and Exchange Commission is not sufficient to shift the burden to defendant. Peltz v. Worldnet Corp. (In re USN Commc'ns, Inc.), 280 B.R. 573 (Bankr. D. Del. 2002). The determination of solvency is different in a fraudulent conveyance action from a preference action because of the existence of the presumption.
Given the state of the debtor's financial condition at the time of the alleged avoidable transfer. Gillman v. Scientific Research Prods. Inc. (In re Mama D'Angelo, Inc.), 55 F.3d 552 (10th Cir. 1995).
4. Fair Valuation.
A fair valuation is best achieved by a hypothetical sale of 12-18 months which is the "reasonable time period." The reasonable time should be an estimate of the time that a typical creditor would find optimal not so short a period that the value of the goods is substantially impaired via a forced sale, but not so long a time that a typical creditor would receive less satisfaction of its claim, as a result of the time value of money and typical business needs, by waiting for the possibility of a higher price. Moreover, the court must consider the face value of the debtor's publicly traded debt rather than the market value of that debt. Travellers Int'l AG v. TransWorld Airlines, Inc. (In re Trans World Airlines, Inc.), 134 F.3d 188 (3d Cir. 1998).
During 1999 there were several cases interpreting the insolvency requirement, including a Court of Appeals case. In Wolkowitz v. American Research Corp. (In re DAK Industries, Inc.), 170 F.3d 1197 (9th Cir. 1999), the Court of Appeals for the Ninth Circuit affirmed a decision of Judge Marlar in which he
