BFP v. Resolution Trust Co.
United States Supreme Court
511 U.S. 531 (1994)
BFP (plaintiff/debtor) defaulted on a loan secured by its home, and Imperial Savings (defendant) foreclosed under California law; the home sold at the foreclosure sale to Osborne (defendant) for $433,000, though BFP claimed it was worth $725,000. After filing for bankruptcy, BFP sued to void the sale as a constructively fraudulent transfer, arguing it received less than "reasonably equivalent value." The bankruptcy court, district court, and Ninth Circuit all ruled against BFP, and the Supreme Court granted certiorari to resolve a split among the circuits over how to measure reasonably equivalent value in the foreclosure context.
Whether a noncollusive foreclosure sale of real estate, conducted in accordance with applicable state law, may be challenged as a fraudulent transfer under the Bankruptcy Code based on the sale price falling below fair market value.