Solvency Opinions Service Sheet

A common myth is that when two parties are dealing at arm’s length there is no such thing as “too good of a deal”. This view ignores the laws relating to solvency. In fact, if a transaction is done while the seller is insolvent or the seller becomes insolvent as a result of the transaction, then there can be “too good a deal” and that deal can be undone – even years after it closes. The law which explains this rule, some of which is captured in Section 548 of the Bankruptcy Code, is the law of fraudulent transfer.