Fraudulent Transfers By The Numbers – Revisited

Fraudulent Transfers By The Numbers – Revisited

Back in May, this blog featured a post on some preliminary research addressing the idea of “probability-based” fraudulent transfer analysis.  PBGC lawyer (and Cadwalader alum) John Ginsburg  has argued that rather than merely asking whether insolvency is “reasonably foreseeable,” courts ought to clarify “reasonable foreseeability” in probabalistic terms.  The basic idea underlying this argument is that it should be easier to attack (or to defend) a fraudulent transfer if it can be shown, for example, that the “probability” of insolvency at the time of an LBO was 50% – or 60%, or 75%.

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Mr. Ginsberg argues further that courts ought to articulate what, for them, constitutes an acceptable margin of error (say, 40% risk of insolvency with a margin of error of +/- 15%).

Following comments offered here and elsewhere, Mr. Ginsberg – and colleagues Zachary Caldwell, Daniel Czerwonka, and Mary Burgess – have gone through a number of revisions and have a final draft version of the article available for review prior to going to publication with ABI Law Review in March.

A discussion is hosted at, where anyone can critique and debate the paper, upload a rebuttal from a word-processor, or upload a handwritten mark-up in PDF.  In written comments to South Bay Law Firm, Mr. Ginsberg notes that the authors are particularly “interested in hearing from private equity fund managers, from the investment bankers who finance their deals, and from the lawyers, financial analysts and others who earn fees helping put those deals together.  The paper has significant implications for them.”

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