Fraudulent Transfer: What Does “Reasonably Equivalent Value” Mean? (In re White)

By: Donald L Swanson

The opinion is Bird v. Wardley (In re White), Case No. 24-4033 (10th Cir., decided July 22, 2025).

It addresses the meaning of the phrase “reasonably equivalent value” in the Uniform Fraudulent Transfer Act.

Facts

The In re White Debtor creates a start-up business within a Corporation.

Investor loans $750,000 to Corporation, with Debtor’s personal guaranty.

The loan goes into default, and Debtor as guarantor repays the loan in full.

Bankruptcy and Avoidance Litigation

Three years later, Debtor files Chapter 7 bankruptcy, and the Chapter 7 Trustee sues Investor to avoid and recover the guaranty payment under § 544(b)(1) and Utah’s Uniform Fraudulent Transfer Act.

Investor defends with the argument that the personal guaranty and the repayment thereon were supported by an exchange of “reasonably equivalent value.”

The Bankruptcy Court dismisses the Complaint against Investor on summary judgment, based upon a conclusion that Debtor received a “reasonably equivalent value” in exchange for providing the guaranty.

The Chapter 7 Trustee appeals to the Tenth Circuit Bankruptcy Appellate Panel, which affirms, and then on to the Tenth Circuit Court of Appeals, which also affirms (see the opinion linked above).

What follows is a summary of the legal standards for determining a “reasonably equivalent value” under the Uniform Fraudulent Transfer Act (“UFTA”), as identified and applied in the Tenth Circuit Court’s opinion.

Legal Standards—Identified

The Bankruptcy Code allowed a trustee to step into the shoes of unsecured creditors and bring state-law claims to recover fraudulently transferred assets. Here, the Chapter 7 Trustee invokes Utah’s UFTA.

This case turns on § 25-6-203(1)(a) of Utah’s UFTA, which asks whether the debtor received “reasonably equivalent value in exchange for” making a transfer or incurring an obligation:

• in cases where the debtor does receive reasonably equivalent value, the transfer or obligation puts one asset beyond the reach of the creditors but replaces the asset with one of equivalent value, thus avoiding any harm to creditors; and
• so, the degree to which the transferor’s or obligor’s net worth is preserved is of central importance for the reasonable-equivalence inquiry.

Neither the UFTA nor the Bankruptcy Code defines the phrase “reasonably equivalent value”—the Utah Supreme Court has expounded little on its UFTA, and this Court of Appeals has scarcely analyzed reasonable equivalence. 

We recognize the concept of “reasonably equivalent value” is not susceptible to simple formulation, but here are several principles that guide our analysis:

• three inquiries are involved, (1) whether value was given; (2) if value was given, whether it was given in exchange for the transfer or obligation; and (3) whether what was transferred or promised was reasonably equivalent to what was received;
• on whether value was given in exchange, we assess value as of the date of the transfer or obligation and without the benefit of hindsight—
  • no value is to be assigned to investments that, when made, have zero probability of success—by contrast, risks that, if successful, could generate significant value as of the date the risk is taken can confer substantial value at the time, even if the risk ultimately does not pay off;
  • this approach protects creditors from irresponsible debtors who invest in a venture that is obviously doomed from the outset—whereas, legitimate transactions that confer real value at the time are encouraged, even if the risk does not pay off later;
• the U.S. Supreme Court teaches that “reasonably equivalent” means “approximately equivalent,” or “roughly equivalent”—there is no minimum percentage or amount necessary to constitute reasonably equivalent value, and the exchange of value need not be dollar-for-dollar; and
• other factors include the good faith of the parties and whether the transaction was at arm’s length—this attention to context makes sense in the fact-intensive nature of the inquiry and the concerns animating fraudulent-transfer doctrine (such as protecting the estate from being depleted to the prejudice of unsecured creditors).

 Legal Standards—Applied

Here is how the Tenth Circuit Court of Appeals applies the legal standards discussed above.

–Whether Value was Given?

In exchange for providing the personal guaranty, Debtor received: (i) promised employment by Corporation for a $20,000 monthly salary, (ii) a 15% ownership interest in Corporation, (iii) a cash incentive worth up to $500,000 and a 5% to 10% equity incentive for selling enough product by certain dates, (iv) a business opportunity that Debtor sought.

–Whether the Value Given was “In Exchange”?

Here, the value was given “in exchange” for Debtor incurring the personal guaranty obligation—there was, undoubtedly, a but-for cause between the value given and incurring the obligation, in each of the four categories of value identified in the preceding paragraph.

1. Employment.  Debtor’s employment by and salary from Corporation being owed to the guaranty is beyond debate because, (i) contractual language declares as much, (ii) Investor’s loan was the source of money for paying Debtor’s salary, and (iii) it is undisputed that Investor would not have made the loan without Debtor’s guaranty.
2. 15% stake. Like the employment analysis, contractual language declares that Debtor is receiving a 15% ownership interest in the Corporation as a “personal benefit” from guarantying Investor’s loan—meaning that the guaranty was undoubtedly a but-for cause of Debtor’s 15% stake.
3. Incentives. Debtor’s employment agreement with Corporation provides Debtor with performance incentives in the form of additional cash and additional equity interests—and the Bankruptcy Court correctly attributed all those incentives as part of the exchange, in the deal struck between Investor and Debtor, that included Debtor’s guaranty.
4. Business opportunity.  But for Investor’s loan, Debtor would not have had the opportunity to play his hand at this startup business—the guaranty enabled the loans that enabled the business opportunity (even the Trustee does not argue otherwise).

On this point, the Tenth Circuit concludes: “all four of these benefit categories ‘was given in exchange for’ the guaranty obligation.”

–Whether What Debtor Lost and Received were “Reasonably Equivalent”?

What Debtor lost for providing the guaranty “was reasonably equivalent to” the benefits Debtor received in exchange—they “approximately” or “roughly” offset.

There are no allegations or facts to suggest that, at the time of its formation, Corporation had “zero probability of success,” was “obviously doomed from the outset,” or was “a sham or unreasonable investment.”

So, the Bankruptcy Court concludes that the value Debor received in exchange for providing the guaranty was at least equal to Debtor’s liability thereunder, thereby constituting reasonably equivalent value.

The BAP reaches the same conclusion.

And the Tenth Circuit Court of Appeals agrees.  Here’s why:

1. the record confirms that Debtor and Investor, (i) acted in good faith and negotiated at arm’s length (nobody suggests otherwise), and (ii) viewed the potential financial rewards of the startup venture to be far greater than the accompanying risks of their investments—which views were reasonable; and
2. the likelihood of the startup business’s success, when Debtor provided the guaranty, meant that Debtor gained about as much as—perhaps even more than—the guaranty liability was worth.

Accordingly, no genuine issue of material fact exists over whether Debtor received reasonably equivalent value for providing the guaranty.

Conclusion

Here is a “Thank you” to the Tenth Circuit Court of Appeals for its In re White analysis of what the phrase “reasonably equivalent value” means in fraudulent transfer cases.

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