Ralph S. Janvey, in His Capacity as Court-Appointed Receiver for the Stanford International Bank, Limited, et al.; Official Stanford Investors Committee v. The Golf Channel, Incorporated; TGC, L.L.C., Doing Business as Golf Channel

Summary

The Supreme Court of Texas answers a certified question concerning the meaning of "value" and "reasonably equivalent value" under the Texas Uniform Fraudulent Transfer Act. The court holds that a transferee may satisfy the reasonably equivalent value requirement by showing that it fully performed a lawful, arm’s-length contract for fair market value, provided objectively valuable consideration at the time of the transaction, and acted in the ordinary course of business. The case involved payments made by the Stanford Ponzi scheme to the Golf Channel for media-advertising services.

Holdings

1. Value exists when the debtor receives consideration with objective economic value at the time of the transfer, viewed from a reasonable creditor's perspective. The consideration need not preserve the debtor's estate or create a tangible or leviable asset, and services or consumable goods are not rendered valueless merely because they deplete estate assets.
2. The reasonably equivalent value requirement in TUFTA section 24.009(a) is satisfied when a transferee fully performs an arm's-length transaction in the ordinary course of its business at market rates.
3. TUFTA does not contain separate standards for assessing value or reasonably equivalent value based on whether the debtor operated a Ponzi scheme.

Questions Presented

1. What showing of value under the Texas Uniform Fraudulent Transfer Act is sufficient for a transferee to establish the reasonably equivalent value element of the good-faith affirmative defense under section 24.009(a)?
2. Whether TUFTA applies a different value or reasonably equivalent value standard when the debtor operates a Ponzi scheme.
3. Whether objectively valuable services and consumable goods can constitute value even though the transaction does not leave a tangible or leviable asset in the debtor's estate.

Disposition

other