IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 12-20687

In the Matter of: POSITIVE HEALTH MANAGEMENT, 

 Debtor

------------------------------

RANDY W. WILLIAMS, Chapter 7 Trustee, 

 Appellant

v.

FEDERAL DEPOSIT INSURANCE CORPORATION, as Receiver for First 

National Bank, 

 Appellee

Appeal from the United States District Court

for the Southern District of Texas

Before STEWART, Chief Judge, and WIENER and COSTA, Circuit Judges.

GREGG COSTA, Circuit Judge:

The Bankruptcy Code allows a trustee to recover fraudulent transfers 

made by the debtor prior to bankruptcy. 11 U.S.C. § 548(a). An innocent 

recipient of such a fraudulent transfer is not without a defense, however. The 

Code allows a transferee that takes in good faith to retain what it received from 

the debtor in a fraudulent transfer “to the extent that such transferee . . . gave 

value to the debtor in exchange for such transfer.” 11 U.S.C. § 548(c). This 

United States Court of Appeals

Fifth Circuit

FILED

October 16, 2014

Lyle W. Cayce

Clerk

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appeal from a bankruptcy court decision that allowed the innocent recipient of 

fraudulent transfers to retain all the funds it received under the affirmative 

defense in section 548(c) turns on the meaning of “value” in this statute. We 

have already held that this value must be assessed from the perspective of 

what the transferee gave up rather than what the debtor received. Jimmy 

Swaggart Ministries v. Hayes (In re Hannover Corp.), 310 F.3d 796, 799–802

(5th Cir. 2002). The unresolved question we must now decide is what happens 

when a transferee gave less value to the debtor than it received. Is the 

transferee allowed to keep all that it received so long as it gave “reasonably

equivalent” value in exchange? Or is netting required so that the transferee 

keeps only the value that it gave to the Debtor?

I.

Ronald T. Ziegler was the president and sole shareholder of Positive 

Health Management, Inc., which operated pain management clinics in Texas. 

In 2005, First National Bank made a refinance loan to a separate corporate 

entity owned by Ziegler. The loan was secured by a building in Garland, Texas, 

which Positive Health used for office space from September 2006 to March 

2008. Despite having no direct obligations under the loan, Positive Health

made a series of payments to First National totaling $367,681.35. The

payments, which began in February 2007 and ended in March 2008, were listed 

on Positive Health’s tax returns as rent. When the payments stopped, First 

National foreclosed on the Garland property.

After Positive Health filed a bankruptcy petition, trustee Randy

Williams brought an adversary proceeding to recover the payments to First 

National as fraudulent transfers under 11 U.S.C. § 548. The bankruptcy court 

conducted a three-day trial on the claim, after which it submitted Proposed 

Findings of Fact and Conclusions of Law. 

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The bankruptcy court first addressed whether Williams could prove a 

constructive fraudulent transfer, which requires that the debtor “received less 

than a reasonably equivalent value in exchange for such transfer or 

obligation.” 11 U.S.C. § 548(a)(1)(B). The court found that Positive Health

received at least reasonably equivalent value for the $367,681.35 in transfers 

to First National on two alternative grounds. First, the court cited First 

National’s forbearance from foreclosing on the Garland property, which 

allowed Positive Health to continue “running its operations and generating 

cash flow in the millions.” Second, the court cited the “reasonable rent” for the 

office space that the payments enabled Positive Health to continuing using,

which the court determined was $253,333.33 based on an appraisal conducted 

in 2006. Because Positive Health received value at least “reasonably 

equivalent” to the amount of the transfers, the court held that Williams could 

not prevail on the constructive fraudulent transfer claim. 

Nonetheless, for reasons not seriously challenged in this appeal,1 the

bankruptcy court concluded that Positive Health made the transfers “with 

actual intent to hinder, delay, or defraud,” and therefore that Williams had 

established actual fraud. 11 U.S.C. § 548(a)(1)(A). The court made this finding 

pursuant to the multifactor test identified in Soza v. Hill (In re Soza), 542 F.3d 

1060, 1067 (5th Cir. 2008), and noted Positive Health’s deteriorating financial 

1 First National argues that “the payments from Positive Health to First National

could not constitute fraudulent transfers at all.” But it does not challenge the court’s finding 

of fraudulent transfer beyond an unsupported assertion that Williams offered “no proof 

whatsoever.” We therefore conclude that any challenge to the fraudulent transfer finding is 

waived. See Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256, 260 n.9 (5th Cir. 1995)

(“[T]he failure to provide any legal or factual analysis of an issue results in waiver of that 

issue.”). In any event, the reasons cited by the bankruptcy court were sufficient to support 

its finding of fraud.

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condition and the fact that it faced lawsuits and judgments around the time of 

the transfers.

The bankruptcy court then analyzed whether First National could 

establish the affirmative defense that it took the payments in good faith and 

gave value in return. 11 U.S.C. § 548(c). Relying on its discussion of 

“reasonably equivalent value” under the constructive fraudulent transfer 

analysis, the court determined that First National “gave value in exchange for 

the transfers” and acted in good faith. It therefore found that First National

was entitled to the defense and could keep the funds.

After the district court adopted the bankruptcy court’s proposed order, 

Williams filed a motion to amend the judgment, arguing that the affirmative 

defense had not been adequately pleaded and that the testimony concerning 

the market value of the rent was unreliable. The district court referred the 

motion back to the bankruptcy court, which held an additional hearing on First 

National’s section 548(c) affirmative defense. At the hearing, Williams called 

his own expert witness, who testified that the testimony of First National’s 

witness was not reliable for the purposes of determining rent in 2007 and 2008. 

The bankruptcy court noted in response that Williams “offered no evidence on 

the rental value of the Garland Property,” so its initial finding of market rent 

was uncontroverted. The district court again adopted the bankruptcy court’s 

recommendation, noting that First National “‘gave value’ to the debtor beyond 

the rental value of the property.” This appeal followed.2 

2 The Federal Deposit Insurance Corporation was appointed receiver of First National

in September 2013, and was substituted as the defendant in this appeal. For clarity, and 

because First National was the defendant at the time of briefing and the trial court 

proceedings, this opinion will refer to the defendant as First National.

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II.

“In reviewing the rulings of the bankruptcy court on direct appeal and 

the district court sitting in bankruptcy, we review findings of fact for clear error 

and conclusions of law de novo. We review mixed questions of law and fact de 

novo.” TMT Procurement Corp. v. Vantage Drilling Co. (In re TMT 

Procurement Corp.), 764 F.3d 512, 519 (5th Cir. 2014) (per curiam) (internal 

citations omitted); see also Hannover, 310 F.3d at 799–800. A bankruptcy 

court’s valuation “is largely a question of fact, as to which considerable latitude 

must be allowed to the trier of the facts.” Hannover, 310 F.3d at 801 (internal 

quotation marks omitted). However, “we review de novo the methodology 

employed by the bankruptcy court in assigning values to the property 

transferred and the consideration received.” Id. (internal quotation marks and 

citation omitted).

III.

Under 11 U.S.C. § 548(a), the trustee of a bankruptcy estate may avoid 

certain transfers made by the debtor before bankruptcy proceedings if the 

transfer was made with actual or constructive fraudulent intent. But even 

when a debtor has made a fraudulent transfer under that provision, an 

innocent recipient of that transfer is able to retain what it received if the

conditions set out in section 548(c) are met:

[A] transferee or obligee of such a transfer or obligation that takes 

for value and in good faith has a lien on or may retain any interest 

transferred or may enforce any obligation incurred, as the case 

may be, to the extent that such transferee or obligee gave value to 

the debtor in exchange for such transfer or obligation.

The provision is “perfectly complementary” with section 548(a), which allows

trustees to claw back fraudulent transfers. Hannover, 310 F.3d at 802. Section 

548(a) “affords creditors a remedy for the debtor’s fraudulence or, as the case 

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might be, mere improvidence,” whereas section 548(c) “protects the transferee 

from his unfortunate selection of business partners.” Id. 

To establish its entitlement to the section 548(c) defense, a transferee 

must prove that it “provided value in good faith” for the transfer. In re Am. 

Hous. Found., 544 F. App’x 516, 520 (5th Cir. 2013) (per curiam). A transferee 

provides value when it receives the transfer in question in exchange for 

“property, or satisfaction or securing of a present or antecedent debt of the 

debtor.” 11 U.S.C. § 548(d)(2)(A). Williams does not dispute that First 

National acted in good faith when it accepted funds from Positive Health as 

payments on a loan made to another Ziegler entity, but contends that First 

National failed to prove that it provided value. He attacks both grounds upon 

which the bankruptcy court found value. First, he contends that finding value

based on the benefit to Positive Health of its extended ability to use the 

Garland property did not assess value from the perspective of First National

as transferee. Second, Williams questions the evidence presented on the 

reasonable rental value of the property: he agrees that the court properly 

evaluated this “value” from the transferee’s perspective, but he challenges its 

reliability.

This court’s decision in Jimmy Swaggart Ministries v. Hayes (In re

Hannover Corp.), 310 F.3d 796 (5th Cir. 2002), clarified the meaning of “value” 

under section 548(c). In that case, prior to the bankruptcy proceedings, Sam 

J. Recile was found in violation of the securities laws for operating a Ponzi 

scheme. Id. at 798, 802. The trustee brought an action to recover funds from 

Jimmy Swaggart Ministries, which received them from Recile’s enterprise in 

exchange for short-term call options for the purchase of a tract of land. Id. at 

798–99. In response, Jimmy Swaggart Ministries asserted the section 548(c) 

defense. Id. at 799. The trustee argued that the options were valueless 

because the fraudulent nature of Recile’s enterprise meant that it lacked the 

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resources to pay anything close to the land’s $11.25 million purchase price set 

forth in the option agreement, and thus that Jimmy Swaggart Ministries did 

not “give value” in exchange for the transfers it received. Id. at 801–02. 

This court rejected that argument, holding that “value” under 

section 548(c) is measured from the transferee’s perspective, and therefore that

whether the options had any actual value to Recile’s enterprise was irrelevant:

Instead of inquiring into the possibility and extent of the debtor’s 

loss, [section 548(c)] provides a means by which the unwitting 

trading partner can protect himself. Received property can be 

retained “to the extent” that the “transferee . . . gave value to the 

debtor.” The provision looks at value from the perspective of the 

transferee: How much did the transferee “give”? The concern here, 

quite properly, is for the transferee’s side of the exchange, not the 

transferor’s gain.

Id. at 802. The court thus found that the option to buy the property was “a 

very valuable asset” from the perspective of Jimmy Swaggart Ministries, the 

transferee, because it tied up its ability to sell to other willing buyers. Id. at 

803–04.

In measuring “value” under section 548(c), therefore, this court looks not 

to “the transferor’s gain,” but rather to the value that the transferee gave up 

as its side of the bargain.3 In this case, First National as transferee argues 

3 In cases brought under state fraudulent transfer law, we have focused instead on 

the value of the consideration to the transferor. In Janvey v. Brown, --- F.3d ----, 2014 WL 

4627972, at *7–8 (5th Cir. Sept. 11, 2014), for example, we held that the trustee of a bankrupt 

Ponzi scheme could claw back interest payments to innocent investors. Janvey rejected the 

investor-defendants’ argument that the debtor’s use of their money established that they 

gave value in exchange for the interest payments. Id. at *7. The court noted that “[t]he 

primary consideration in analyzing the exchange for value for any transfer is the degree to 

which the transferor’s net worth is preserved” because “creditors are not . . . defrauded if all 

that happens is the exchange of an existing asset of the debtor for a different asset of equal 

value.” Id. at *8 (alterations in original) (quoting Warfield v. Byron, 436 F.3d 551, 560 (5th 

Cir. 2006), and Scholes v. Lehmann, 56 F.3d 750, 753 (7th Cir. 1995)) Because the Ponzi 

scheme’s financial condition was only worsened by the interest payments, the investors had 

not given value in exchange for the interest payments. Id. As the Hannover decision makes 

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that the estate cannot recover the payments because the value of First 

National’s forbearance—which the bankruptcy court noted was the potential 

for Positive Health to generate cash flow from ongoing operations that 

ultimately earned the company over $4 million in revenue—exceeds the 

$367,681.35 that First National received. But just as it was irrelevant in 

Hannover whether Recile’s operation received any real value from options it 

could not exercise, it is irrelevant that Positive Health received outsized 

benefits from First National’s forbearance. Both examples fail to follow 

Hannover’s instruction that value given up should be measured from the 

transferee’s perspective—instead, they measure the value of the transferee’s 

consideration as the transferor would.4 

The alternative form of value found by the bankruptcy court, market 

rent, does analyze value from the correct perspective. Just as tying up land 

was costly to the transferee in Hannover, allowing Positive Health to stay in 

the Garland property was costly to First National. By giving up the chance to 

foreclose and find a new tenant, First National incurred an opportunity cost in 

the form of foregone market rent.5

Because First National received the loan payments in lieu of rent it could

have otherwise earned, it gave value within the meaning of section 548(c). 

clear, however, we focus on the value of the exchange to the transferee for the purposes of 

section 548(c) of the federal Bankruptcy Code. 

4 In fact, the bankruptcy court’s finding of value under section 548(c) simply 

incorporated its finding of value under section 548(a)(1)(B). Under the latter provision, 

unlike the former, value is properly determined from the transferor’s perspective. See Butler 

Aviation Int’l Inc. v. Whyte (In re Fairchild Aircraft Corp.), 6 F.3d 1119, 1127 (5th Cir. 1993)

(“[T]he recognized test is whether the investment conferred an economic benefit on the 

debtor.”).

5 Contrary to First National’s argument, the two valuations offered by the bankruptcy 

court are not two independent forms of value that the bank gave to Positive Health. Rather, 

they are two different ways of analyzing the value of First National’s forbearance. Because

only the rental value of the property measures value from First National’s own perspective, 

it is the appropriate measure in this case. 

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Although the rent measure properly assesses value from the standpoint of the 

transferee, Williams contends that the bankruptcy court erroneously 

calculated the market rent because it relied on an appraisal of the Garland 

building from January 2006 when the transfers occurred in 2007 and 2008. It 

is true that “for purposes of § 548 the value of an investment . . . is to be 

determined at the time of purchase.” Hannover, 310 F.3d at 802. The 

bankruptcy court, however, did determine that “the reasonable rental rate 

from September 2006 to March 2008”—which includes the entire period in 

question—“was $253,333.33.” It was not clearly erroneous based on the record 

in this case to use the January 2006 appraisal—the only evidence offered for 

market value—to assess rental value for the 27 months that followed the 

appraisal. To hold otherwise would present significant practical problems for 

trial judges who often must make findings of fact based on imperfect evidence. 

There is no reason to question the bankruptcy court’s finding, particularly 

given the “considerable latitude” we must give it in this situation. See

Hannover, 310 F.3d at 801. We therefore affirm the finding that First National 

was entitled to the section 548(c) defense because it acted in good faith and 

provided value in return.

IV.

This brings us to the “netting” question identified at the outset. Williams 

contends that even if the affirmative defense applies, section 548(c) requires 

this court to reduce the value of the fraudulent transfers ($367,681.35) by the 

value of the market rent ($253,333.33), and to award the estate the 

$114,348.02 difference. This argument is based on the text of section 548(c), 

which provides that if a transferee shows it has taken in good faith and for 

value, then it “may retain any interest transferred . . . to the extent that such 

transferee . . . gave value to the debtor in exchange for such transfer or 

obligation.” 11 U.S.C. § 548(c) (emphasis added). The bankruptcy court took 

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a looser approach, finding (in the alternative) that First National was entitled 

to keep the entirety of the transfers because the rental value was “reasonably 

equivalent” to the amount of the transfer. Although the district court appeared 

to recognize that netting may be appropriate in some situations, emphasizing 

section 548(c)’s “to the extent” language, it found that First National “‘gave 

value’ to the debtor beyond the rental value of the property,” and therefore that 

netting was not necessary in this case. It reached this conclusion based on the 

value that Positive Health received from continuing operations in the Garland 

office, an assessment that we have already concluded is at odds with Hannover.

First National rejects what it terms a “rigid ‘netting’ approach,” arguing 

instead that a transferee is allowed to keep all of the fraudulent transfers when 

it establishes the section 548(c) defense so long as the values exchanged are 

“reasonably equivalent.” The term “reasonably equivalent value” appears in 

section 548(a)(1)(B)(i) as a factor in the determination of constructive 

fraudulent transfer. It does not appear in section 548(c). Nonetheless, the 

bankruptcy court equated the two terms, citing Hannover: “In analyzing 

whether a transferee gave value, the Fifth Circuit adopted the analysis of 

reasonably equivalent value under § 548.” Although a number of bankruptcy 

courts have similarly cited Hannover for the proposition that “value” under 

section 548(c) means “reasonably equivalent value,”6 this reading is mistaken.

Hannover only held that “the standard for appellate review of trial court 

determinations of ‘value’ under § 548(c)” is the same as “this court’s approach 

to the review of trial court determinations of ‘reasonably equivalent value’”

under section 548(a). 310 F.3d at 801 (emphasis added). Nonetheless, even 

some courts that do not rely on this “standard of review” language from

6 See Dobin v. Hill (In re Hill), 342 B.R. 183, 203 (Bankr. D.N.J. 2006); Satriale v. Key 

Bank USA, N.A. (In re Burry), 309 B.R. 130, 136 (Bankr. E.D. Pa. 2004).

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Hannover have held that section 548(c) “value” means “reasonably equivalent 

value.” See, e.g., Balaber-Strauss v. Sixty-Five Brokers (In re Churchill Mortg. 

Inv. Corp.), 256 B.R. 664, 677 (Bankr. S.D.N.Y. 2000), aff’d sub nom. BalaberStrauss v. Lawrence, 264 B.R. 303 (S.D.N.Y. 2001).

This is not, however, the only conclusion reached by courts that have 

considered the issue. Others have treated “value” and “reasonably equivalent 

value” as having distinct meanings. See Leonard v. Coolidge (In re Nat’l Audit 

Def. Network), 367 B.R. 207, 223 (Bankr. D. Nev. 2007); cf. Salven v. Munday 

(In re Kemmer), 265 B.R. 224, 234–35 (Bankr. E.D. Cal. 2001) (noting, in the 

context of 11 U.S.C. § 550(a), which sets out a trustee’s right of recovery from 

an avoided fraudulent transfer, that “value” “is not necessarily synonymous 

with either ‘reasonably equivalent value’ [under section 548(a)(1)(B)] or ‘fair 

market value’”). The Collier treatise also takes the view that “value” in section 

548(c) is different than “reasonably equivalent value.” In comparing section 

548(c) with the corresponding provision of the Uniform Fraudulent Transfer 

Act, the treatise provides a helpful comparison:

[A]ssume that a debtor [sold his brother a car worth $12,000 for 

$11,000] to put the car out of the reach of the debtor’s creditors, 

but the brother did not know of the fraud or of his brother’s 

financial condition. . . . Under [section 548(c)], the transaction is 

. . . set aside, but the brother has a lien on the car to the extent of 

$11,000; under state law, assuming that $11,000 is reasonably 

equivalent value for a $12,000 car, the brother has a complete 

defense to avoidance.

5 COLLIER ON BANKRUPTCY ¶ 548.09[5] (16th ed. 2014) (quoting Nat’l Audit 

Def. Network, 367 B.R. at 233).

We agree with Collier’s reading of section 548(c). It is unlikely that the 

drafters of the Bankruptcy Code intended “value” under section 548(c) to mean 

“reasonably equivalent value” when the latter term is explicitly used in 

another subsection of the same statute (section 548(a)’s provision for 

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constructive fraudulent transfers). See Sosa v. Alvarez-Machain, 542 U.S. 692, 

711 n.9 (2004) (“[W]hen the legislature uses certain language in one part of the 

statute and different language in another, the court assumes different 

meanings were intended.”). And the exclusion of these words is particularly 

telling in light of the Uniform Fraudulent Transfer Act’s use of “reasonably 

equivalent value” in its corresponding affirmative defense to avoidance of a 

fraudulent transfer.7 See 5 COLLIER, supra, ¶ 548.09[5] (comparing the 

Bankruptcy Code and UFTA, and noting that only the latter gives the 

transferee “a complete defense” if it “gave reasonably equivalent value for the 

exchange” (emphasis added)); In re Nat’l Audit Def. Network, 367 B.R. at 223

(same); Jack F. Williams, Revisiting the Proper Limits of Fraudulent Transfer 

Law, 8 BANKR. DEV. J. 55, 111 (1991) (noting that when a transferee gives 

“reasonably equivalent value” that is less than actual value, the transferee “is 

afforded additional protection under Section 8(a) of the UFTA beyond that 

provided under Section 548(c) of the Code”).

Apart from the need to give different meanings to different terms used 

in the same statute, even viewed on its own the text of section 548(c) supports 

the netting approach. The last clause of the statute, beginning with “to the 

extent,” makes clear that a transferee is entitled to keep only the amount of a 

fraudulent transfer that equals the amount it gave up in exchange. See 

Hannover, 310 F.3d at 802 (noting that “[r]eceived property can be retained ‘to 

the extent’ that the ‘transferee . . . gave value to the debtor’”). And if, as the 

bankruptcy court implicitly found, netting is not appropriate because “value” 

means “reasonably equivalent value,” this reads the “to the extent” clause out 

of section 548(c) as establishing reasonably equivalent value under the first 

7 See UNIF. FRAUDULENT TRANSFER ACT § 8(a) (“A transfer or obligation is not voidable 

. . . against a person who took in good faith and for a reasonably equivalent value.”).

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clause would be all that a transferee needs to show. See 11 U.S.C. § 548(c) (“[A]

transferee . . . that takes for value and in good faith . . . may retain any interest 

transferred . . . to the extent that such transferee . . . gave value.” (emphasis 

added)). 

First National argues that a “rigid netting approach” is not appropriate 

because “for more than four hundred years, the good faith and ‘value’ defense 

merely required ‘good consideration’ rather than some precise mathematical 

equivalence of value.” But it is because transferees who merely give “good 

consideration” in exchange for fraudulent transfers are entitled to the defense 

that netting is necessary. Consideration need not be “reasonably equivalent” 

to be valid. See Scholes v. Lehmann, 56 F.3d 750, 756 (7th Cir. 1995)

(“[O]rdinarily a court will not even permit inquiry into the adequacy of the 

consideration for a promise or a transfer.”). And because consideration may be 

disproportionately small, to hold that a transferee who merely gives “good 

consideration” in exchange for a fraudulent transfer may keep the entire 

amount would allow it to benefit at the expense of the debtor’s creditors based 

on the fortuity that it received a fraudulent transfer.8 

Courts have thus netted the amounts received in a fraudulent transfer 

against the value given to the debtor. See, e.g., Clark v. Sec. Pac. Bus. Credit, 

Inc. (In re Wes Dor, Inc.), 996 F.2d 237, 243 (10th Cir. 1993) (“[T]he Bank was 

the transferee of a fraudulent transfer from the Debtor. As such, it became 

liable to the bankruptcy estate for the amount of the transfer less any value it 

extended to the Debtor in exchange for that transfer.”); In re Telesphere 

Comm’ns, Inc., 179 B.R. 544, 559 (Bankr. N.D. Ill. 1994) (for the purposes of 

8 In trying to defend the equity of retaining the full transfer, First National claims 

that it was “entitled” to repayment of the loan it made. That is true, but beside the point. 

Positive Health’s other creditors were also entitled to compensation—that is what makes 

them creditors—and allowing First National to keep the full amount of the transfers reduces 

their potential recovery. 

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comparing a settlement to the likely outcome of litigation, netting a $92.7 

million fraudulent transfer with the $38.9 million value given by the 

transferee). The netting issue often arises in Ponzi scheme cases. The trustee 

of a bankrupt Ponzi scheme typically files fraudulent transfer claims against 

“net winner” investors to claw back profits they have received. The “general 

rule” is that while transfers to innocent investors are fraudulent, the 

“defrauded investor gives ‘value’ to the Debtor in exchange for a return of the 

principal amount of the investment, but not as to any payments in excess of 

principal.”9 Perkins v. Haines, 661 F.3d 623, 627 (11th Cir. 2011); see also 

Janvey, 2014 WL 4627972, at *6–8; Donell v. Kowell, 533 F.3d 762, 770 (9th 

Cir. 2008); Scholes, 56 F.3d at 757–58. 

The language of the Bankruptcy Code and the policies it embodies 

therefore lead us to the following conclusion: A good faith transferee is entitled 

to the protections of section 548(c) when it gives any value in return, but only 

to the extent of that value. When a transferee receives a fraudulent transfer 

the value of which exceeds the consideration it gave up in return, section 548(c) 

requires netting.

We recognize that not all cases will lend themselves to valuation at a 

precise dollar amount, such as the rental value determined by the bankruptcy 

court in this case. But this presents less of a problem than First National 

suggests. Many section 548 transfers to which the good faith defense applies 

9 The defrauded investor will be found to have given value to the enterprise in the 

form of the surrender of her fraud claim against the debtor. Janvey, 2014 WL 4627972, at *8 

(“[T]he principal payments were payments of an antecedent debt, namely fraud claims that 

the investor-defendants have as victims of the Stanford Ponzi scheme.”). Anything above 

that (or in some cases, above the principal plus interest payments, see In re Carrozzella & 

Richardson, 286 B.R. 480, 492 (D. Conn. 2002)), “exceed[s] the scope of the investors’ fraud 

claim and may be subject to recovery by a plan trustee.” Perkins, 661 F.3d at 627. 

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involve the purchase of an asset at its fair market price.10 This is the reason 

Hannover did not present the netting issue; there was no reason to doubt that 

the option to purchase the land was acquired at a market price that accurately 

reflected the value of that option. But in more unusual transfers, such as the 

one in this case and as in the Ponzi context, dollar-for-dollar netting is both 

practicable and important in balancing the interests of creditors with the 

interests of transferees. Bankruptcy courts may simply continue applying the 

tools they use to determine the value of assets in many contexts to determine 

value under section 548(c).

We therefore hold that Williams, as trustee of the bankruptcy estate, is 

entitled to recover the $114,348.02 difference between the payments First 

National received and the value it gave in return.

* * *

For these reasons, we AFFIRM the district court’s finding of fraudulent 

transfer under section 548(a)(1)(A) to the extent First National challenges it 

on appeal. We also AFFIRM the district court’s conclusion that First National 

is entitled to the section 548(c) defense, but REVERSE its take-nothing 

judgment in favor of First National. Instead, judgment is RENDERED in favor 

of Williams in the amount of $114,348.02.

10 When there is a vast imbalance in the values exchanged that would be apparent to 

the transferee, it may be difficult to establish the good faith requirement.

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