Thanks! It really should have occurred to me to just look this up and read the statute, it definitely makes things a lot clearer.
I’ll be interested to see what value gets ascribed to the various cryptocurrency assets.
Let’s say I’m running some business and it’s maybe going under. On behalf of the business, I create 101 finger paintings, sell one to my friend’s uncle’s golf buddy for $10,000, and book the rest as $1m in fine art assets. With my balance sheet shored up, I go on trading, but eventually things don’t work out and I file for Chapter 11.
Does the court have to accept the value I put on the paintings at the time, and regard me as solvent for that period? After all, sure, eventually it turned out I couldn’t sell the paintings. But that could just be because by then my name was in the news and that tanked the market for my art.
Nope. See 11 USC 101(32) for a statutory definition of insolvency—a “financial condition such that the sum of such entity’s debts is greater than all of such entity’s property, at a fair valuation . . . .” (emphasis mine).
Thanks! It really should have occurred to me to just look this up and read the statute, it definitely makes things a lot clearer.
I’ll be interested to see what value gets ascribed to the various cryptocurrency assets.
Let’s say I’m running some business and it’s maybe going under. On behalf of the business, I create 101 finger paintings, sell one to my friend’s uncle’s golf buddy for $10,000, and book the rest as $1m in fine art assets. With my balance sheet shored up, I go on trading, but eventually things don’t work out and I file for Chapter 11.
Does the court have to accept the value I put on the paintings at the time, and regard me as solvent for that period? After all, sure, eventually it turned out I couldn’t sell the paintings. But that could just be because by then my name was in the news and that tanked the market for my art.
Nope. See 11 USC 101(32) for a statutory definition of insolvency—a “financial condition such that the sum of such entity’s debts is greater than all of such entity’s property, at a fair valuation . . . .” (emphasis mine).