In a Texas case, a Debtor received full value for prepetition payments made to a creditor for purposes of defense under Code § 548(c) to avoid an alleged fraudulent transfers.
The bankruptcy court did not err in concluding that, under Code § 548(c), a creditor holding a security interest in the building in which the Chapter 7 debtor conducted its business “gave value” to the debtor for the full $367,681 the creditor received from the debtor in the two-year lookback period under § 548, although the rental value of that period was only $253,333. In In re Hannover Corp., 310 F.3d 796 (5th Cir. 2002), the Fifth Circuit recognized that “value” for purposes of § 548(c) is viewed from the perspective of the transferee (here the creditor), rather than the perspective of the debtor. The bankruptcy court properly concluded that the creditor received the transfers from the debtor in exchange for the use of the building (rental value) and additional value in the form of the creditor’s forbearance from foreclosing on the property, thereby allowing the debtor to engage in ongoing business operations to generate continued cash flow.
To read the case in its entirety see: In re Positive Health Management, Inc., 2012 WL 3929900 (S.D. Tex., Sept. 7, 2012),appeal filed, Case No. 12-20687 (5th Cir., filed Oct. 15, 2012)