A Market Based Theory to Demonstrate Lack of Reasonably Equivalent Value for Abusive Debt Exchange Offers

Corporate restructuring team co-leader James Millar and finance and restructuring associate Andrew Page coauthored an article for the Norton Annual Survey of Bankruptcy Law, 2022 Ed. Titled “A Market Based Theory to Demonstrate Lack of Reasonably Equivalent Value for Abusive Debt Exchange Offers.”

In the article, Millar and Page explore a market-based theory to challenge “uptier exchange” public debt exchange offers as constructive fraudulent transfers when an issuer is insolvent. The authors give insight to “abusive debt exchange” and provide general rules and examples.

Millar and Page explain the importance of determining “reasonably equivalent value” in case law, and they note how courts have slowly started to define a workable framework of value — whether the amount given is reasonably equivalent to the amount received.

The authors also provide factors they believe are relevant to developing case law with respect to a debt exchange, and they conclude that with the rise of lender-on-lender violence, courts may have no choice but to address this issue soon.

Reprinted from Norton Annual Survey of Bankruptcy Law, 2022 Ed., with permission of Thomson Reuters. Copyright © 2022. Further use without the permission of Thomson Reuters is prohibited. For further information about this publication, please visit https://legal.thomsonreuters.com/en/products/law-books or call 800.328.9352.