You are correct to use the FMV.
Question
From: Sheinberg, Samuel I.
Sent: Friday, January 19, 2018 4:58:00 PM
To: [Redacted]
Cc: HSRHelp
Subject: RE: Valuing non-exempt equity received for debt in a reorganization
[Redacted]
You are correct to use the FMV.
Sam
From: [Redacted]
Sent: Thursday, January 18, 2018 4:44:45 PM
To: [Redacted]
Subject: Valuing non-exempt equity received for debt in a reorganization
Hello all,
This seems like it should be a very basic question, but I’m not sure of the answer and I can’t find any informal interpretations on the subject.
When an entity has acquired debt after the announcement of bankruptcy so that § 802.63 does not apply, how is the value of the equity it acquires in the reorganization calculated under § 801.10? Is the amount of debt being exchanged/extinguished in the reorganization considered the “acquisition price” or is the acquisition price deemed not determined, so that the fair market value of the equity in the reorganized company is used. In the later case, it would seem that the good faith basis for the calculation of the fair market value is the value of the equity in the reorganized company.
Thank you very much.
[Redacted]