## United States Bankruptcy Appellate Panel FOR THE EIGHTH CIRCUIT

______ No. 07-6034NE No. 07-6035NE

______ In re: * * Prime Realty, Inc., * * * Debtor. * * James Killips, Chapter 11 Trustee, * * Plaintiff-Appellants, * Appeal from the United States * Bankruptcy Court for the v. * District of Nebraska * Robert C. Schropp, * RCS Sons, Inc., and Leo Dahlke * * * Defendants–Appellees. *

______ Submitted: October 24, 2007

Filed: December 27, 2007

______ Before KRESSEL, Chief Judge, SCHERM ER and McDONALD, Bankruptcy Judges.

______ McDONALD, Bankruptcy Judge1 The Honorable Timothy J. Mahoney, Chief Judge, United States Bankruptcy Court for the District of Nebraska.
-2- James Killips, the Chapter 11 Trustee of Debtor Prime Realty, appeals from the judgment of the bankruptcy court 1 in favor of Defendants on Trustee’s preference and fraudulent conveyance claims. We affirm.

I.
Debtor, Prime Realty, Inc. (“Prime”), was involved in several joint ventures with Leo Dahlke and RCS & Sons, Inc. (“ RCS”). The primary purpose of these joint ventures was to purchase and develop real property (the “Real Property”). Robert C. Schropp was the sole shareholder of RCS.
The joint ventures were primarily in th e form of limited partnership, with Prime as the general partner (collectively the “P artnerships”). The Partnerships began experiencing cash flow problems in 2000. James McCart, Prime’s President and CEO, created a plan to address the Partnershi ps’ liquidity issues (the “Plan”). Under the Plan, RCS and Dahlke agreed to obtai n loans from Nebraska State Bank totaling approximately $2,072,000.00 (collectively the “Loans”). Nebraska State Bank would provide the proceeds of the Loans directly to Prime. Prime in re turn would repay the Loans directly to Nebraska State Bank over a twelve month period and indemnify RCS and Dahlke from any liability on the Loans.
Finally, as part of the Plan, Prime ag ree to purchase the interest of both RCS and Dahlke in the Partnerships. This portion of the Plan required Prime to remit-3- $232,000.00 to both RCS and Dahlke upon receipt of the proceeds of the Loans. Prime was then to make monthly paym ents of $20,000.00 to RCS and $15,000.00 to Dahlke for a term of one year (the “Monthl y Payments”). Under th e terms of the Plan, RCS and Dahlke would transfer their inte rests in the Partnerships to Prime upon Prime’s completion of its obligation to remit the Monthly Payments.

Both RCS and Dahlke ente red into “Purchase Contracts” with Prime dated March 6, 2001 that memorialized the above outlined terms of the Plan. RCS and Dahlke then executed the promissory notes in favor of the Nebraska State Bank on April 12, 2001 pursuant to the Plan. The doc uments prepared by Nebraska State Bank confirm that it remitted approximately $2,100,000.00 in proceeds from the Loans directly to Prime. It is unclear from the evidentiary record how Prime disposed of these proceeds.
Pursuant to the terms of the Plan, Prime immediately paid the initial $232,000.00 to both RCS and Dahlke as requi red by the Purchase Contracts. Prime additionally made the Monthly Payments to both RCS and Dahlke for April, May and June. Prime transferred a total of $313,682.45 to RCS and $293,682.45 to Dahlke in April, May, June and July 2001 (c ollectively the “Transfers”).
Prime, however, failed to make any payments on the Promissory Notes to Nebraska State Bank as required by the Plan. Prime also failed to remit any additional Monthly Payments on the Purchase Contracts to either RCS or Dahlke after July 1, 2001. Therefore neither RCS nor Dahlke transferred their in terest in the Partnerships to Prime as contemplated by the Purchase Contracts.-4- The relationship between McCart and Sc hropp and Dahlke quickly deteriorated after Prime stopped making the Monthly Paymen ts. The FBI also began to investigate McCart sometime in the summer of 2001 for hi s part in a check kiting scheme. When Schropp and Dehlke learned of the FBI investigation, they refused to contribute any additional capital to the Partne rships or guaranty any add itional loans for the benefit of the Partnerships. Without the ability to obtain additional liquidity, the Partnerships defaulted on several existing loans th at were secured by the Real Property.

Prime and McCart then filed a tortuous interference with a business expectancy action against Schropp and Dahlkein Nebraska state court (the “State Court Action”). The basis for Prime’s State Court Action was that Schropp and Dahlke intentionally and wrongfully caused the Partnerships to default on several loans with Nebraska State Bank by refusing to guaranty the Partnerships’ obligations on additional loans. Schropp and Dahlke filed an answer to the State Court Action arguing, inter alia , that McCart had deceived them about the financia l condition of the Partnerships as early as March 2001, and they had no obligation to provide further liquidity to the Partnerships. It is unclear from the recordas to the disposition of the State Court Action, but the State Court did not enter a judgment entered in the case.

Prime’s financial condition continued to deteriorate through the rest of 2001 and into 2002. Accordingly, Prime filed a petition for relief unde r Chapter 11 of the Bankruptcy Code on March 15, 2002. The United States Trustee appointed James Killips as the Chapter 11 trustee (the “T rustee”) on August 15, 2003. Apparently, James McCart passed away sometime after Prime filed its petition for relief, but before the United States Trustee appointed Killips.-5- Trustee filed two separate adversar y complaints against RCS, Schropp and Dahlke (collectively the “Defendants”) to avoid the Transfers as either preferential under §547(b) or constructively fraudulent under §548(a)(1)(B). Trustee also sought to recover the value of the Transfers, $313,682.45 from RCS and Schropp, and $293,682.45 from Dahlke, under §550(a)(1).
The bankruptcy court consolidated the two adversary complaints for trial. Concerning the preference actions, the ba nkruptcy court found that the Defendants were insiders of Prime so that th e one-year look back period contained in §547(b)(4)(B) applied. Also, because Prime did not make the Transfers within the 90 days prior to the petition date, the Tr ustee was not entitled to the statutory presumption of insolvency under §547(f).
A primary focus at trial was whether Pri me was either insolvent at the time it made the Transfers or whether it had an unreasonably small amount of capital after it made the Transfers. Trustee produced Pri me’s balance sheet dated April 1, 2001 to demonstrate that Prime was insolvent at th e time it made the Tran sfers (the “Balance Sheet”). Trustee testified that although he was not certain, he suspected that McCart prepared the Balance Sheet.

The Balance Sheet indicated th at as of April 1, 2001, the value of Prime’s assets exceeded its liabilities by approximately $165,000. 00. Trustee testified, however, that when he reviewed the condition of Prime’s a ssets in early 2003, the true market value of those assets were almost $2,000,000.00 less than the values reflected on Balance Sheet. Trustee also claimed on the liability side of the ledger that the Balance Sheet-6- failed to reflect that Prime was liable fo r a significant amount of special assessments on the Real Property. Trustee maintained th at when he compar ed the true market value of Prime’s assets with its liab ilities, Prime was insolvent by at least $2,500,000.00.
With respect to the unreasonably small capital issue, Trustee produced a group of documents that he claimed evidenced that Prime was having difficulty meeting its financial obligations at the time of the Tr ansfers. These documents include several default notices sent to Prime, RCS and Dahlke on loans executed by the Partnerships and several non-sufficient funds notices sent from Nebraska State Bank to Prime (collectively the “Default Noti ces”). The date of the Default Notices range from April 2001 through August 2001.
The bankruptcy court held that the Bal ance Sheet, on its face, indicated that Prime was solvent as of April 1, 2001. The bankruptcy court further noted that Trustee failed to introduce ev idence that as of April 2001, the true market value of Prime’s assets differed from the book value of those assets as listed on the Balance Sheet. Thus, the bankruptcy court held thatTrustee failed to demonstrate that Prime was insolvent at the time it remitted the Transfers.
Concerning the question of whether Prime was left with an unreasonably small amount of capital after it made the Transfer s, the bankruptcy court held that the Default Notices were not probative of Prime’s capital structure at the time it made the Transfers. In fact, the bankruptcy court observed that the net effect of the various transactions that constituted the Plan resulted in a $1, 600,000.00 cash infusion to-7- Prime. The bankruptcy court concluded, ther efore, that Trustee failed to prove that Prime operated with an unreasonably sm all amount of capital after it made the Transfers.
The bankruptcy court held that because Trustee failed to demonstrate that Prime was insolvent at the time it made the Transf ers, Trustee failed to meet its burden of proof on the preference actions under §547(b)(3). The bankruptcy court also held that because Trustee did not estab lish insolvency or that the Transfers left Prime with an unreasonably small amount of capital, Trustee did not meet his burden of proof on the fraudulent conveyance claims unde r §§548(a)(1)(B)(ii)(I) or (II).
The bankruptcy court, accordingly, ente red judgement in fa vor of Defendants on both adversary complaints. Trustee filed a timely notice of app eal and this appeal follows.

II.
The bankruptcy court’s determination that Trustee failed to establish that Prime was insolvent or was operating with an unreasonably small amount of capital when it made the Transfers are questions of f act that we review for clear error. Onix Credit Alliance v. Harvey (In re Haddox Contractor, Inc. ), 40 F.3d 118, 120 (5th Cir. 1994) (insolvency); F.P.P Enter. v. United States , 830 F.2d 114, 117 (8th Cir. 1987) (small amount of capital). A finding is clearly erroneous when “although there is evidence to support it ... the reviewing court is left w ith the definite and firm conviction that a mistake has been committed.” In re Kaelin , 308 F.3d 885, 889 (8th Cir. 2002).-8- III.
A. The bankruptcy court did not error in finding that Trustee failed to establish his preference claims.
Because the statutory presumption of in solvency does not apply, Trustee is required to prove by a preponderance of the evidence that Prime was insolvent at the time it remitted the Transfers to Defendant s in order to prevail on the preference claims. 11 US.C. §547(g). Section 101(32)(A) of the Code defines insolvency as a state when an entity’s debts are greater th an the fair value of the entity’s property. Thus, in determining whether the debtor wa s insolvent, the court should examine the debtor’s balance sheet to determine whether the value of its assets were greater than its liabilities at the time of the transfer in question. Silverman Consulting, Inc. v. Hitachi Power Tools, U.S.A., Ltd. (In re Payless Cashways, Inc. ), 209 B.R. 689, 699 (W.D. Mo. 2003).
Here, Trustee argues that the Bal ance Sheet and the Default Notices conclusively demonstrate that Prime was inso lvent at all times relevant to the dispute in question. We disagree.
As the bankruptcy court properly observed, the Default Notices simply have no bearing on the value of Prime’s assets or liab ilities as of the date of the Transfers. The Default Notices, therefore, are irrelevantto the question of whether Prime was insolvent at the time it made the Transfers.-9- The Balance Sheet reflects that the book value of Prime’s assets exceeded its liabilities by $164,000.00 as of Ap ril 1, 2001. The Balance Sh eet, therefore, reflects that Prime was solvent as of April 1, 2001.
Trustee argues, however, that his testim ony at trial established that Prime was insolvent at the time it remitte d the Transfers. The bankrupt cy court correctly rejected this argument for two reasons. First, Trustee undertook his analysis of the condition of Prime’s assets and liabilities in early 2003, approximately two years after Prime remitted the Transfers in question. Thus , the bankruptcy court correctly concluded that Trustee’s testimony was simply not probative to the question of whether Prime was insolvent in early 2001, the relevant time frame at issue here.
The second reason why Trustee’s testimony fails to establish that Prime was insolvent is that Trustee is nota financial expert. The plai ntiff, in order to establish insolvency, must generally produce expe rt testimony of an accountant or other financial expert that the “book” value of the property listed on the balance sheet is not the property’s fair value. Harvey v. Orix Credit Alliance, Inc. (In re Lamar Haddix Contractor) , 40 F.3d 118, 121 (5th Cir. 1994).

Trustee is not an accountant, real estate appraiser or otherwise qualified to proffer an opinion as to the true value of Prime ’s assets in early 200 1. In fact, as the bankruptcy court noted, Trustee did not prof fer any testimony as to what valuation method Prime utilized in calculating the valu e of its assets reflected in the Balance Sheet. Given this record, the bankruptcy c ourt correctly concluded that Trustee was-10- not competent to offer testimony as to the true market value of Prime’s assets as of early 2001.
Trustee additionally maintains on appeal that because he offered evidence that Prime was insolvent at some point in time after it remitted the Transfers, the bankruptcy court should have found that Prime was also insolvent at the time that it made the Transfers. Some courts have a llowed a plaintiff to establish that a debtor was insolvent by a method called retrojection. Under this method, a plaintiff may establish that the debtor was insolvent when it made the transfers in question if the plaintiff can establish both that the debt or was insolvent shortly after making the transfers and that the debtor’s financial c ondition did not substantially changed in the interim. See e.g. Parlon v. Clairborne (In re Kaylor Equip. & Rental, Inc.) , 56 B.R. 58, 62 (Bankr. E.D. Tenn. 1985).

Here, Trustee failed to offer evidence as to exactly when, or even if, Prime became insolvent. Also, Trus tee did not establish that Pri me’s financial condition had not substantially changed be tween the time of the Tran sfers and when it may have become insolvent. Thus, th e bankruptcy court correctly refused to apply the doctrine of retrojection here.
Trustee additionally argues on appeal th at the Defendants judicially admitted that Prime was insolvent in their answer to the State Court Action. This argument fails for two reasons. First, the specific portion of the answer that Trustee relies on alleges that as early as March 2001, M cCart and Prime deceived Schropp and Dahlke about the ability of the Partnerships to se rvice its debts secured by the Real Property.-11- Although this contention does relate to the ability of the Partnerships to meet its financial obligations as they came due, it is not evidence of whether Prime’s assets exceeded its liabilities in Marc h 2001. Thus, Schropp and Dahkle’s statement in their answer cannot be construed as a judicial admission that Prime was statutorily insolvent at the time it remitted the Transfers.
Second, and more fundamentally, a party’ s statement made in a pleading in a prior case does not rise to the le vel of a judicial admission. Bank One v. Prudential Ins. Co. , 939 F.Supp. 533, 541 (N.D. Tex.1996). Rather, such a statement can only be used by the declarant’s oppone nt as a statement against interest in the subsequent proceeding, which the trial court s hould weigh as any other admission. First Bank of Marietta v. Hogge , 161 F.3d 506, 510 (8th Cir. 1998).
Here, the bankruptcy court properly ad mitted Schropp and Dahlke’s answer to the State Court Action into ev idence. Also, as described above, the specific statement that Trustee relied on in the answer to the State Court Action did not relate to the value of Prime’s assets or liabilities at th e time it made the Tr ansfers. Thus, that statement had little, if any, probative value to the insolvency analysis in the instant

case.
After reviewing this evidentiary record, we are not left with a definite and firm conviction that the bankruptcy court erred in finding that Trustee failed to establish that Prime’s liabilities exceed the value of its assets at the time it made the Transfers. The bankruptcy court’s finding on insolvency, therefore, is not clearly erroneous.-12- Accordingly, the bankruptcy court did not err in finding that Trustee failed to meet his burden of proof on the preference actions under 11 U.S.C. §547(b)(3).
B. The bankruptcy court did not err in finding that Trustee failed to establish his fraudulent conveyance claims.
The bankruptcy court also found that Trus tee failed to meet his burden of proof in his fraudulent conveyance claims. In or der to prevail in a fraudulent conveyance action, a plaintiff must establish by a pre ponderance of the evidence either one of the following: (1) that the debtor made the tran sfer in question while it was insolvent, or become insolvent because of the transfer; or (2) that the debtor was operating its business after the transfer with an unreas onably small amount of capital. 11 U.S.C. §548(a)(1)(B)(ii)(I) and (II). Here, the ev identiary record supports the bankruptcy court’s conclusion that Trustee failed to prove either requireme nt by a preponderance of the evidence.
As discussed above, the bankruptcy cour t’s factual determination that Prime was not insolvent at the time it remitted th e Transfers is not clearly erroneous for purposes of §547(b)(3). The fraudulent conveyance statute, however, is slightly different than the preference statute in that the former allows the plaintiff to avoid not only a transfer made when the debtor was insolvent, but also a transfer that makes the debtor insolvent.
Here, the Balance Sheet reflects that Prime was solvent by $165,000.00 as of April 1, 2001. As noted above, after the Tran sfers, the net effect of the Plan provided2 The Court also notes that Prime’s long term obligation to RCS and Dahlke pursuant to the Purchase Contracts are notconsidered liabilities on Prime’s balance sheet in the insolvency analysis. See Official Comm. of Former Partners v. Brennan (In re Labrum & Doak, LL.P.) , 227 B.R. 383, 389-90 (Bankr. E.D. Pa. 1998)
-13- approximately $1,600,000.00 of cash to Prime. Thus, the only evidence in the record as to a change in Prime’s balance sh eet after April 1, 2001 was the $1,600,000.00 in cash provided by the net effect of the Plan. 2 The evidence, ther efore, supports the bankruptcy court’s conclusion that Prime did not become insolvent because of the Transfers.
The record also supports the bankruptcy court’s conclusion that Prime was not operating with an unreasonably small amount of capital after it made the Transfers as provided in §548(a)(1)(B)(ii)(II). The dete rmination of whether the debtor was operating with an unreasonable small amount of capital should focus on the debtor’s ability to generate enough cash fro m operations or the sale of assets to pay its debts as they become due and remain a financially viable going concern. Dahar v. Jackson (In re Jackson) , 459 F.3d 117, 123-24 (1st Cir. 2006).
Here, Trustee relied exclusively on the De fault Notices to establish that Prime was operating with an unrea sonably small amount of capital after it remitted the Transfers. It is true that when a debtor has insufficient cash in its checking account to pay the checks it remits to its creditors , a court may conclude that it is operating with an unreasonably small amount of capital for purposes of §548(a)(1)(B)(ii)(II). W.E. Tucker Oil Co. v. First State Bank of Crossett (In re W.E. Tucker Oil Co.) , 55 B.R. 78, 82 (Bankr. W.D. Ark. 1985). The De fault Notices reflect that Prime did not-14- have sufficient cash in its checking account to cover several ch ecks it had presented to its creditors for payment from April thr ough July of 2001. Thus, there is evidence in the record that supports Trustee’s position on this issue.
But there is also evidence that supports the bankruptcy court’s finding. Prime continued to operate as a going concern for almost a year after it remitted the Transfers. Additionally, and more impor tantly, Trustee failed to introduce any evidence as to Prime’s actual capital structure after it remitted the Transfers. There is no evidence in the record concerning Prime’s cash flow or statement of cash during the relevant time frame. In fact, as th e bankruptcy court noted, the only evidence in the record as to Prime’s capital structure af ter it made the Transfers is that it netted nearly $1,600,000.00 in cash from the Plan.
Given this record, although there is some evidence to support Trustee’s position, we are not left with a definite a nd firm conviction that Trustee established that Prime was operating with an unreasona bly small amount of capital after it made the Transfers. We, therefore, conclude th at the bankruptcy court’s finding that Trustee failed to establish that Prime was operating with an unreasonably small amount of capital was not clearly erroneous.
C. The bankruptcy court’s prior order does not collaterally estop Defendants from denying that Prime was either insolvent or operating with an unreasonably small amount of capital.-15- Trustee finally argues that a prior order of the bankruptcy court entered in an another adversary proceeding involving Schr opp and Dahlke collaterally estops them from denying that Prime was either insolven t or operating with an unreasonably small amount of capital (the “Prior Order”). Trustee specifically argues that the bankruptcy court’s following finding of fact in the Pri or Order collaterally estops Schropp and Dahlke: “[d]uring 2001 and 2002, there were many forecl oses and substantial sums of money were lost by the partners and their lenders.”
The elements of collateral estoppel unde r federal law are: 1) the party sought to be precluded in the second suit must have been a party, or in privity with a party, to the original lawsuit; 2) the issue sought to be precluded must be the same as that involved in the prior action; 3) the issue mu st have been litigated in the prior action; 4) the issue must have been determined by a valid and final judgment; and 5) the determination must have been e ssential to the prior judgment. Sells v. Porter (In re Porter), 375 B.R. 822, 826 -827 (B.A.P . 8th Cir.2007). We find that the Prior Order did not adjudicate the issue of Prime’s inso lvency or whether it was operating with an unreasonably small amount of capital.

Here, the factual determina tion made by the bankruptcy court in its Prior Order relates directly to the Partnerships’ ab ility to service the debt secured by the Real Property. The only comment in the Pri or Order concerning Prime’s financial condition is that “substantial sums of mone y were lost by the partners.” This finding simply does not conclusively determine whether Prime was insolvent or operating with an unreasonably small amount when it made the Transfers,. Thus, the Prior-16- Order does not collaterally estop Schropp or Dahlke from denying that Prime was either insolvent or operating with an unreasonabl y small amount of capital.

IV.
After reviewing the evidentiary record befo re us, we are not left with a definite and firm conviction that Trustee met his burden of proof in establishing that Prime was insolvent at the time it remitted the Transf ers. We also find that the record does not leave us with a definite and firm convic tion that Trustee established either that the Transfers made Prime insolvent or that Pri me operated its business after the Transfers with an unreasonably small amount of capital. Accordingly, the bankruptcy court’s conclusion that Trustee failed to meet hi s burden of proof on both his preference and fraudulent conveyance causes of action is not clearly erroneous.
The bankruptcy court also did not err in finding that Defendants’ answer in the State Court Action was not a binding judicial admission that Prime was either insolvent or operating its business with an unreasonably small amount of capital after it made the Transfers. Additionally, the bankruptcy court correctly concluded that its Prior Order did not collaterally estop Schr opp or Dahlke from denying that Prime was either insolvent or operati ng with an unreasonably small amount of capital in the instant cases.
Accordingly, we affirm the two judgmen ts of the bankruptcy court in favor of Defendants.