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230 (Bankr. E.D. La. 2002), the court found that it was necessary to value debtor's liabilities to future asbestos claims in order to determine solvency. In WRT Creditors Liquidation Trust v. WRT Bankruptcy Litigation Master File Defendants (In re WRT Energy Corp.), 282 B.R. 343 (Bankr. W.D. La. 2001), a 79-page opinion considering solvency questions in a fraudulent conveyance context, the court consolidated all fraud actions for the purpose of determining the issue of the debtors insolvency at various points in time and preference defendants were required to "opt in" to a combined solvency hearing or lose their right to assert the solvency. No evidence was submitted indicating that debtor was not insolvent during the ninety day period before the bankruptcy and therefore the courts recognized that the presumption of insolvency which arises under 547(f) was not rebutted by any of the preference defendants. The main focus was the valuation of several oil and gas properties acquired by debtor from certain of the defendants. Valuation of ail and gas property is a two step process. First the amount of oil and gas in place must be determined; then a price must be ascertained. In a fraudulent conveyance action the plaintiff has the burden of proof by a preponderance of evidence. The courts must utilize the balance sheet test under section 101 (32) evaluating whether the entity's financial condition is such that the sum of its debts is greater than all of its property at a fair valuation, exclusive of the property fraudulently transferred.
The better approach; when possible, is to base the determination of insolvency on some form of seasonal appraisal of the assets. Zeta Consumer Prods. Corp. v. Equistar Chem., LP (In re Zeta Consumer Prods. Corp.), 291 B.R. 336 (Bankr. D.N.J. 2003). In this Chapter 22 case, the difference between solvency and insolvency turns on whether the debtor's inventory is valued at going concern or liquidation value. Court finds that debtor was a going concern as long as it sold inventory at a rate to cover the cost of those sales. The court determines that the coalescence of four factors, tightened credit, insufficient inventory, no DIP facility and unavailable trade credit, put debtor to bed and there was no realistic hope for recovery. The court found the date on which these four factors coalesced to be May 13, 2001 and determined that debtor was a going concern until that date. Silverman Consulting, Inc. v. Hitachi Power Tools, U.S.A., Ltd. (In re
