Opinion ID: 3171011
Heading Depth: 1
Heading Rank: 4

Heading: Ill 2014), quoting BFP, 511 U.S. at 539–40.

Text: Accordingly, we apply to Illinois tax sales the same factors used to determine reasonably equivalent value in other § 548 cases, including the fair market value of what was transferred and received, whether the transaction took place at arm’s length, and the good faith of the transferee. Barber v. Golden Seed Co., 129 F.3d 382, 387 (7th Cir. 1997); see also In re Williams, 473 B.R. 307, 313 (Bankr. E.D. Wis. 2012) (holding, in applying Barber factors, that a transfer was not for reasonably equivalent value), vacated on other grounds by City of Mil14 No. 15-1166 waukee v. Gillespie, 487 B.R. 916, 920–21 (E.D. Wis. 2013) (agreeing with application of Barber factors); In re Eckert, 388 B.R. 813, 835 (Bankr. N.D. Ill. 2008). The bankruptcy court correctly applied this approach, and we therefore affirm its holding that the transfer of the Smiths’ property to SIPI for approximately $5,000 was not for reasonably equivalent value. D. Other Circuits’ Approaches In reaching our decision, we note the different approaches taken by the Fifth and Tenth Circuits in other tax sale cases that differ from this one because of the different bidding systems used. Both circuits have held that BFP applies to the issue of reasonably equivalent value in Oklahoma and Colorado tax sales using the overbid method. In re Grandote Country Club Co., 252 F.3d 1146, 1152 (10th Cir. 2001); T.F. Stone Co. v. Harper, 72 F.3d 466, 471 (5th Cir. 1995). Both decisions were based on the particular state systems at issue, just as ours is here. The overbid systems in both Oklahoma and Colorado use competitive bidding won by the highest bidder, similar to the bidding used in the foreclosure sale in BFP. Delinquent property is sold at an auction in which the sale price may rise well above the amount of the tax lien, toward the fair market value of the property subject to the forced sale. Accordingly, “deference to state regulatory interests” may warrant the application of BFP to those systems, as those courts held. See T.F. Stone, 72 F.3d at 472. Sale prices, by the very design of the overbid method, are likely to generate bids more reasonably equivalent to the value of the underlying property. The Tenth Circuit took care to explain the narrow scope of its holding. It noted that “courts have not been unanimous in No. 15-1166 15 extending BFP to the tax sale context.” Grandote, 252 F.3d at 1152. Critically, “the decisive factor in determining whether a transfer pursuant to a tax sale constitutes ‘reasonably equivalent value’ is a state’s procedure for tax sales, in particular, statutes requiring that tax sales take place publicly under a competitive bidding procedure.” Id. We have already explained why the Illinois interest rate method for tax sales is not similarly designed to produce higher bids approaching the value of the underlying property. To make the point clear, Grandote went on to distinguish its ruling based on the Colorado “competitive bidding procedure,” from a similar case from Wyoming, which did not require a public auction or competitive bidding. Id., citing Sherman v. Rose, 223 B.R. 555, 558–59 (B.A.P. 10th Cir. 1998), citing Wyo. Stat. Ann. § 39-3-105 (1998) (before relevant provision was repealed by statute, Wyoming property subject to tax lien was sold by random lottery for amount of delinquent taxes). The Tenth Circuit therefore limited its holding to Colorado’s particular overbid system. Grandote, 252 F.3d at 1152. And it left in place the earlier holding of a bankruptcy appellate panel in Sherman that a property sold for one percent of its appraised value under Wyoming’s old lottery tax sale system had not been sold for reasonably equivalent value. Id., citing Sherman, 223 B.R. at 559. Our decision is similarly based on the differences between various state tax sale procedures and therefore applies only to the interest-rate bidding system under Illinois law.