Official Committee of Asbestos Personal Injury Cla v. Saint-Gobain Corporation et al

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UNITED STATES BANKRUPTCY COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
Case No. 20-30080
Chapter 11
In re:
DBMP LLC,
Debtor.
Adv. Proc. No. 22-03000
Official Committee of Asbestos Personal Injury
Claimants, and Sander L. Esserman, in his capacity as
Legal Representative for Future Asbestos Claimants, each
on behalf of the estate of DBMP LLC,
Plaintiffs,
v.
CertainTeed LLC, CertainTeed Holding
Corporation, and Saint-Gobain Corporation,
Defendants.
_____________________________
Ashley Austin Edwards
United States Bankruptcy Judge
FILED & JUDGMENT ENTERED
Christine F. Ramsey
Western District of North Carolina
September 17 2026
Clerk, U.S. Bankruptcy Court
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ORDER DENYING PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT
THIS MATTER is before the Court upon the Plaintiffs’ Motion for Partial Summary
Judgment, filed on May 14, 2026 (the “Motion”),1 seeking partial adjudication of the Plaintiffs’
Amended Complaint, filed on February 10, 2022 (the “Complaint”).2 The Defendants filed their
Memorandum of Law in Opposition (the “Objection”) on June 15, 2026.3 The Plaintiffs filed their
Reply Memorandum in Support (the “Reply”) on July 20, 2026.4 On August 6, 2026, the Court
held a hearing on the Motion (the “Hearing”).5 Kevin Maclay, Jeffrey Liesemer, and Nate Miller
appeared on behalf of the ACC, and Felton Parrish appeared on behalf of FRC. Michael Goldstein,
Gabrielle Gould, and Howard Steele appeared on behalf of the Defendants; Gregory Gordon
appeared on behalf of the Debtor.
The Plaintiffs6 in this case hold asbestos claims against the Debtor. DBMP and Defendant
CertainTeed LLC (“New CertainTeed”)7 are the two successors of Old CertainTeed created
through a Texas divisional merger (the “Restructuring”), which transferred nearly all CertainTeed
Corporation’s (“Old CertainTeed”) assets to New CertainTeed and its asbestos liabilities, certain
assets, and a Funding Agreement (as defined below) to DBMP. The Plaintiffs allege that the
1 [3:22-ap-03000, Doc. No. 376].
2 [3:22-ap-03000, Doc. No. 14]. The Plaintiffs filed their original Complaint [3:20-bk-30080, Doc. No. 1296; 3:22-
ap-03000, Doc. No. 1] on January 21, 2022. On August 5, 2022, the Defendants answered the Complaint, see
Answer [3:22-ap-03000, Doc. No. 93] (the “Answer”), by denying the Plaintiffs’ allegations underpinning all counts,
as well as asserting fourteen affirmative defenses, three of which claimed that the Restructuring provided DBMP
with value. See Answer at 35–36.
3 [3:22-ap-03000, Doc. No. 411].
4 [3:22-ap-03000, Doc. No. 459].
5 See Hr’g Transcript, Aug. 6, 2026 [3:22-ap-03000, Doc. No. 486] (the “Transcript”).
6 Particularly, the Plaintiffs constitute the Official Committee of Asbestos Personal Injury Claimants (the “ACC”)
and the legal representative for future asbestos claimants, Sander L. Esserman (the “FCR”).
7 The other Defendants are DBMP’s and New CertainTeed’s immediate successive parent entities, CertainTeed
Holding Corporation and Saint Gobain Corporation.
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Restructuring was a fraudulent transfer under federal, Delaware, North Carolina, Pennsylvania,
and Texas law. Counts III and IV of the Complaint in particular allege that the Restructuring
constituted a constructive fraudulent transfer. The Motion seeks summary judgment as to whether
the Funding Agreement legally constitutes “value” for purposes of the Complaint. Plaintiffs argue
that the Funding Agreement constitutes an “unperformed promise to furnish support to the debtor,”
which applicable law per se excludes from comprising value in a fraudulent transfer action.8 For
the reasons below, the Court denies the Motion.
I. 	BACKGROUND
1. 	On January 23, 2020 (the “Petition Date”), DBMP filed under Chapter 11, with the
stated goal of establishing a trust under section 524(g) of the Bankruptcy Code. DBMP is one of
two successor entities of Old CertainTeed, the other being New CertainTeed, that were formed
ninety-two days prior to the Petition Date as a result of a corporate restructuring executed by the
Defendants. The Restructuring dissolved Old CertainTeed’s existence and allocated approximately
97% of Old CertainTeed’s assets to New CertainTeed, while allocating all of Old CertainTeed’s
asbestos liabilities to DBMP. The Restructuring and DBMP’s ensuing bankruptcy filing represent
a novel two-part legal maneuver known as the “Texas Two Step,” whereby an entity seeks
bankruptcy relief while limiting the burdens of bankruptcy to only the entity holding the liabilities.
DBMP’s case is one of five Texas Two Step bankruptcy cases that have been filed to date, four of
which were originally brought in this Court and three of which, including DBMP, remain.9
8 See Motion ¶ 1. From this determination, the Motion also seeks the further determination that the Debtor therefore
did not receive reasonably equivalent value through the Restructuring. See id. ¶ 6. Consequently, the Motion seeks
striking the Defendants fourth and fifth defenses in the Answer in part, based on the first determination, as well as
the sixth in whole based on the second determination. See id. ¶ 7.
9 The other three cases originally brought in this Court are: (1) In re Bestwall LLC, Case No. 17-31795; (2) In re
Aldrich Pump LLC, Case No. 20-30608, and In re Murray Boiler, Case No. 20-30609; and (3) In re LTL
Management LLC, Case No. 21-30589. The fourth Texas Two Step bankruptcy case, brought in the Southern
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A. Pre-Petition Factual History
2. 	Old CertainTeed comprised part of a multinational building-products group—now
instead comprising New CertainTeed and DBMP—the U.S. and ultimate parents of which are the
Saint Gobain Corporation (“SGC”) and French-headquartered Compagnie de Saint-Gobain S.A
(“CSG”), respectively.10 From the 1930s until 1993, CertainTeed manufactured and sold
asbestos-containing cement pipe and other products containing asbestos.11 Because of that
business, CertainTeed has faced hundreds of thousands of asbestos-induced personal injury and
wrongful death claims since the 1970s,12 with over 60,000 asbestos lawsuits pending against
CertainTeed or DBMP as of the Petition Date.13
3. 	CertainTeed resolved these asbestos lawsuits until the Petition Date by defending
itself in various courts or by settling many such claims.14 From 2002 to 2019, Old CertainTeed
incurred approximately $2 billion in costs defending and resolving asbestos claims (of which
approximately $1.5 billion was not covered by insurance), which ranged annually from $80 million
to over $160 million, and faced more than 300,000 total asbestos claims, which approximate to
1,400 a year.15
District of Texas Bankruptcy Court, was In re Tehum Care Services, Inc., Case No. 23-90086. Tehum is the only
Texas Two Step that has been confirmed, although the operating entity that was obliged to pay the liabilities under
the confirmed plan has already defaulted.
10 See Findings of Fact and Conclusions of Law Regarding Order: (I) Declaring That the Automatic Stay Applies to
Certain Actions Against Non-Debtors, (II) Denying Motion of the Official Committee of Asbestos Personal Injury
Claimants to Lift the Stay, and Alternatively (III) Preliminarily Enjoining Such Actions ¶ 28 [Case No. 20-30080,
Doc. No. 972; Adv. Proc. No. 20-03004, Doc. No. 343] (“Injunction Order”); Objection ¶ 13, n.4 (citation omitted).
11 See Declaration of Robert J. Panaro in Support of First Day Pleadings ¶ 25 [3:20-bk-30080, Doc. No. 24] (The
“Panaro Decl.”).
12 See Panaro Decl. ¶ 27.
13 See id. ¶ 28.
14 See Declaration of Michael T. Starczewski ¶¶ 15–16, [3:20-ap-03004, Doc. No. 238] (The “Starczewski Decl.”).
15 See Objection ¶ 15, nn.9–12 (citing Panaro Decl. ¶¶ 27, 29, 30, 32).
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4. 	Approximately two years prior to Petition Date, certain CertainTeed executives
began planning, under the codename “Project Horizon,” for evaluating mechanisms of dealing
with the asbestos liabilities.16 By later in 2019, the Project Horizon team had settled on CertainTeed
implementing the Restructuring and the Defendants’ Texas Two Step.17 During this period, Old
CertainTeed drafted an agreement that provided for payments for their asbestos liabilities to a then
undetermined entity carrying the asbestos liabilities (the “Funding Agreement”). In re DBMP LLC,
2026 Bankr. LEXIS 883, at *32–35. “These were not arm’s-length agreements, as they were
‘negotiated’ by Old CT and CT Holdings for entities that did not yet exist and were later revised
and ratified by New CT through signatories serving both entities or their parent.” Id. at 32.
5. 	On October 22 and 23, 2019, Old CertainTeed executed a series of transactions that
culminated in the Restructuring.18 On the first day, October 22, 2019, four events occurred:
(1) Old CertainTeed’s then-direct parent, Saint-Gobain Delaware Corporation, formed
CT Holding and contributed to it all the issued and outstanding stock of Old CT in
exchange for a full ownership interest in CT Holding;
(2) Old CertainTeed converted from a Delaware corporation to a Delaware limited
liability company (“LLC”);
(3) DBMP formed Millwork & Panel (“M&P”), to which it allocated certain assets
including property and a bank account containing approximately $30 million in cash;
and
(4) Old CertainTeed entered into the Funding Agreement with CertainTeed Holding
Corporation (“CT Holding”), with Old CertainTeed as payee and CT Holding as
payor.
16 In re DBMP LLC, No. 20-30080, 2026 Bankr. LEXIS 883, at *16–17 (Bankr. W.D.N.C. Mar. 16, 2026).
17 Id. at *17.
18 See Objection ¶ 17.
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The next day, on October 23, 2019, various events occurred:
(1) Old CertainTeed converted from a Delaware LLC to a Texas LLC;
(2) Old CertainTeed implemented the Plan of Divisional Merger under Texas Law, which
(a) dissolved Old CertainTeed and created as its successors, DBMP and New
CertainTeed, both Texas LLCs, and
(b) transferred from Old CertainTeed
(i) to New CertainTeed, all non-asbestos liabilities of Old CertainTeed,
(ii) to New CertainTeed, the remainder of Old CertainTeed’s assets, free and
clear of asbestos liabilities,
(iii) to DBMP, all Old CertainTeed’s asbestos liabilities (except certain
limited workers compensation claims),
(iv) to DBMP, tangible assets consisting of
(A) bank accounts containing approximately $25 million in cash, and
(B) M&P, which Defendants estimated to be worth approximately $150
million,
(v) to DBMP, Old CertainTeed’s rights and interests as payee under the
Funding Agreement;
(3) New CertainTeed converted from a Texas LLC to a Delaware LLC, whereas DBMP
converted from a Texas LLC to a North Carolina LLC;
(4) New CertainTeed assumed the obligations of payor under the Funding Agreement
from CT Holding, who was thereafter released pursuant to the Funding Agreement;
(5) DBMP entered into various other agreements with various entities related to
CertainTeed or SGC, including with New CertainTeed; and
(6) The Funding Agreement (as well as the other agreements related to the Restructuring)
was amended to reflect the new names of parties now obliged pursuant to the above.19
Old CertainTeed’s assets were worth an estimated $3 billion before Restructuring.20 Based on that
valuation, 97% of Old CertainTeed’s assets, worth around $2.8 billion, were transferred free and
19 See Panaro Decl. ¶¶ 17–19; see also Objection ¶¶ 16–18 (citing id. ¶¶ 16–20).
20 Injunction Order ¶ 57. Apart from its ownership of M&P, DBMP did not receive an interest in any other operating
business. See Motion ¶ 14. The parties use different measures to value DBMP’s interest in M&P. DBMP’s balance
sheet from October 23, 2019, reported a book value of approximately $62 million. See DBMP LLC Balance Sheet
(MSJ Ex. H). As of the Petition Date, DBMP estimated the interest’s fair market value at approximately $150
million and projected that M&P would generate $16 million in EBITDA in 2020 and approximately $15 million
annually over the following five years. See Panaro Decl. ¶ 20. M&P reported EBITDA totaling $47.585 million for
calendar year 2025. See Periodic Report Regarding Value, Operations, and Profitability of Entities in Which the
Estate of DBMP LCC Holds a Substantial or Controlling Interest [Doc. No. 3253]; Periodic Report Regarding
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clear of the Plaintiffs’ asbestos claims to New CertainTeed, whereas 3% of assets were transferred
to DBMP. DBMP’s balance sheet from October 23, 2019, reported almost $584 million in
liabilities, including approximately $576 million in estimated uninsured asbestos liabilities.21 The
amount of DBMP’s current and future asbestos liabilities has not yet been estimated by the Court.22
B. The Funding Agreement, Its Related Accounting, and Subsequent Financial
Information
6. 	As part of the Restructuring, DBMP and New CertainTeed entered into an amended
and restated Funding Agreement.23 The Funding Agreement requires New CertainTeed to fund
DBMP’s asbestos-related liabilities to the extent distributions from M&P were insufficient.24 In a
Chapter 11 case, the agreement provided funding for a § 524(g) trust to the extent DBMP’s assets
were insufficient to fund such a trust.25 The Funding Agreement did not provide for fixed
installment payments to DBMP but provided funding based on DBMP’s requests.26 Accordingly,
the Funding Agreement did not require a payment—and no payment was actually made—to
DBMP when the Restructuring closed on October 23, 2019. DBMP made its first funding request
to New CertainTeed on or after November 27, 2019.27 New CertainTeed’s obligations under the
Funding Agreement were not secured by its assets.28 The Funding Agreement charged no interest
Value, Operations, and Profitability of Entities in Which the Estate of DBMP LCC Holds a Substantial or
Controlling Interest [Doc. No. 3385] (together “Periodic Reports”).
21 See DBMP LLC Balance Sheet; CertainTeed LLC Consolidated Balance Sheets; Hr’g Tr. 155:16-156:5, Mar. 1,
2021 (Diaz Direct).
22 See Objection ¶ 23.
23 Injunction Order ¶¶ 64–65; ACC-FCR Ex. 2 (MSJ Ex. K).
24 Funding Agr. § 2 (MSJ Ex. K).
25 Injunction Order ¶ 66; Funding Agr. at 5–6. The Court notes that a § 524(g) trust could only be confirmed by the
Court with support from the Plaintiffs.
26 Reply ¶ 16.
27 ACC-FCR Ex. 18; DiNenna Dep. 117:14-118:9, 118:21-25, Sept. 24, 2020.
28 Injunction Order ¶ 75.
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and was not a loan in the sense that it did not require repayment of amounts funded. Additionally,
New CertainTeed’s funding obligations were uncapped.29 The Funding Agreement bars assignment
by DBMP to another entity without New CertainTeed’s consent.30
7. 	On October 23, 2019, New CertainTeed’s balance sheet reported an approximately
$496 million “long-term funding obligation due to related party,” and DBMP’s balance sheet
reported an approximately $494 million “Funding Agreement Receivable.”31 This accounting
entry was calculated generally as the estimated asbestos liability less the value of DBMP’s cash
and M&P’s book value.32 DBMP’s first day declarations identified as an acquired asset Old
CertainTeed’s rights and interests as payee under the Funding Agreement and estimated the value
of DBMP’s other assets at approximately $175 million.33
8. 	Following the Petition Date, New CertainTeed has consistently funded requests
made by DBMP under the Funding Agreement after the Restructuring. As of February 18, 2021,
DBMP had requested an aggregate of $64.5 million, principally for administrative costs of the
bankruptcy case, and New CertainTeed had funded all such requests.34 New CertainTeed’s reported
29 Panaro Dep. 94:4-17, Oct. 6, 2020. Witnesses described its intended function as giving DBMP access to the same
paying capacity Old CertainTeed had before the restructuring. Starczewski Dep. 225:18-226:3, Oct. 1, 2020; Panaro
Dep. 94:4-17; Rayfield Dep. 97:3-8, Oct. 7, 2020.
30 See DBMP LLC v. Those Parties Listed on Appendix A to Complaint (In re DBMP LLC), Adv. Pro. No. 20-30080,
2021 Bankr. LEXIS 2194, at *33 (Bankr. W.D.N.C. Aug. 11, 2021) (hearing transcript citation omitted); see also
Funding Agr. § 4(b).
31 CertainTeed LLC Consolidated Balance Sheet, MSJ Ex. G; DBMP LLC Balance Sheet, MSJ Ex. H.
32 Starczewski Dep. 170:19-171:3.
33 Panaro Decl. ¶ 18. The parties disagree whether the approximately $494 million receivable should be treated as a
distinct asset in addition to the Funding Agreement or as the accounting value associated with the Funding
Agreement. Joseph Bondi testified that the receivable was part of the Funding Agreement’s value and described the
Funding Agreement as covering additional amounts that might be needed beyond DBMP’s existing asset base.
Bondi Dep. 300:25-301:11, Oct. 9, 2020. Sean Knapp testified that a long-term receivable due from New
CertainTeed was contributed when DBMP was created. Knapp Dep. 265:20-23, Sept. 30, 2020.
34 In re DBMP LLC, 2021 Bankr. LEXIS 2194, at *17.
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long-term funding obligation declined from approximately $496.3 million on October 23, 2019, to
approximately $402.3 million on December 31, 2025.35
9. 	CSG’s 2025 consolidated financial statements reported a $402 million provision
associated with the Funding Agreement, compared with $405 million at year-end 2024.36
10. 	On September 15, 2021, DBMP and New CertainTeed entered into an amended and
restated Funding Agreement.37 On January 5, 2022, they entered into a stipulation providing that
the Funding Agreement is a valid contract enforceable according to its terms.38 The stipulation also
provides that funding for a § 524(g) plan is available regardless of whether New CertainTeed
receives § 524(g) protection or supports the plan, and it covers DBMP’s costs and expenses in
enforcing New CertainTeed’s performance.39 Additionally, the stipulation purports to subject
DBMP’s indemnification obligations to the automatic stay during the Chapter 11 case,40 and to
restrict New CertainTeed from issuing dividends, forgiving intercompany debt, or entering
agreements that prohibit payments under the agreement.41
C. Subsequent Financial Information, Fraudulent Transfer Proceeding, and Estimation
Proceeding
11. 	In relation to an injunction proceeding initiated on the Petition Date, this Court
expressed various concerns as to the Funding Agreement and its conditionality on August 11, 2021.
See DBMP, 2021 Bankr. LEXIS 2194, at *31–*34 (canvassing how the Funding Agreement was
35 CertainTeed LLC Consolidated Balance Sheets, MSJ Exs. G, C.
36 Objection ¶ 47.
37 Motion of the Debtor for an Order Authorizing It to Enter into Second Amended and Restated Funding Agreement
¶ 11 [Doc. No. 1051].
38 Stipulation Between the Debtor and CertainTeed LLC Regarding Second Amended Funding Agreement ¶ 2 [Doc.
No. 1279] (“Funding Agr. Stipulation”).
39 Second Amended and Restated Funding Agreement § 1 at 6 (Funding Agr. Stipulation Ex. A).
40 Id. § 5.
41 Id. §§ 4(c)-(d).
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(1) contingent on insufficiency of M&P’s cash distributions’ and DBMP’s assets, (2) dependent on
enforcement by and against entities, DBMP and New CertainTeed, that have essentially the same
executives, (3) utilizing a vague standard for payments of costs that are “necessary or appropriate,”
with no specified categories and no dispute-resolution mechanism if New CertainTeed denies a
request from DBMP, (4) nonassignable without New CertainTeed’s consent, and (5) dependent on
New CertainTeed’s continued financial health, since the obligations are unsecured, not guaranteed
by SGC or CSG, with New CertainTeed remaining free to incur senior debt, forgive material
intercompany receivables (including from SGC and CSG), merge or consolidate, transfer
substantially all assets, or pay dividends to its parent, CT Holding).
12. 	The Court also expressed concerns with the effect that the Restructuring had on the
Plaintiffs’ rights as creditors. See id. at *66–67 (finding based on the evidence from the Preliminary
Injunction Proceeding that “it appears that the [Restructuring] had a material, negative effect on
the [Plaintiffs’] ability to recover on their claims” given that pre-Restructuring, they had “the same
ability and rights to access Old CertainTeed’s considerable assets as did its other unsecured (non-
asbestos) creditors,” whereas post-Restructuring, they “were placed one step beyond those assets
and made dependent on the DBMP’s willingness to press its rights under the Funding Agreement,”
which the Court had found was “conditional, unsecured, and can be enforced only by DBMP acting
through seconded SGC employees, not by the asbestos claimants”).
13. 	Following the conclusion of the injunction proceeding, the Plaintiffs brought this
fraudulent transfer adversary proceeding. On May 6, 2022, the Defendants moved to dismiss the
proceeding,42 to which the Plaintiffs objected on June 3, 2022,43 and for which the Defendants
42 See Motion to Dismiss Adversary Proceeding [Adv. Pro. No. 20-30080, Doc. No. 38].
43 See Response [Doc. No. 58].
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filed a reply on June 14, 2022.44 On June 22, 2022, the Court denied the Defendants’ motion to
dismiss the Fraudulent Transfer Proceeding.45 On August 5, 2022, the Defendants filed their
Answer.46
14. 	Counts III and IV of the Amended Complaint seek avoidance of the Restructuring
as a constructive fraudulent transfer.47 Portions of Defendants’ Fourth and Fifth affirmative
defenses, and the entirety of their sixth affirmative defense, assert that value or reasonably
equivalent value was exchanged in or in connection with the restructuring.48
15. 	DBMP has sought estimation of its current and future mesothelioma liabilities for
purposes of developing a Chapter 11 plan.49 Discovery remains ongoing, and the current case-
management order provides for an evidentiary hearing to begin no earlier than September 18, 2028,
and conclude no later than November 17, 2028.50
II. 	DISCUSSION
16. 	The Motion requests the Court grant partial summary judgment declaring that the
Funding Agreement does not satisfy the definition of “value” for a fraudulent transfer action in the
Bankruptcy Code—namely, 11 U.S.C. § 548(d)(2)(A)—and the corresponding provisions of
Delaware, North Carolina, Pennsylvania, and Texas law—namely, 6 DEL. CODE § 1303(a), N.C.
GEN. STAT. § 39-23.3(a), 12 PA. CONS. STAT. § 5103(a), and TEX. BUS. & COM. CODE § 24.004(a)
44 See Defendants’ Reply [Doc. No. 67].
45 See Order Denying Motion to Dismiss Amended Complaint [Doc. No. 89].
46 See Answer to Amended Complaint [Doc. No. 93].
47 See Amended Complaint ¶¶ 143–52.
48 See Answer at 35–36.
49 See Motion for Estimation of Current and Future Mesothelioma Claims [Doc. No. 948].
50 See Amended Agreed Case Management Order for Estimation [Doc. No. 3417].
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(collectively, including the federal version, the ‘value statutes’).51 Specifically, the Plaintiffs move
under the second part of the value statutes, which all exclude “an unperformed promise” “to furnish
support to the debtor” from constituting “value” in a fraudulent transfer action (the ‘excluded
promise clause’), with the state excluded promise clauses adding the requirement that such promise
must be “made otherwise in the ordinary course of the promisor’s business.” 11 U.S.C.
§ 548(d)(2)(A).
17. 	First, for the ease of the reader, the federal value statutes provide that:
In this section—“value” means property, or satisfaction or securing of a present or
antecedent debt of the debtor, but does not include an unperformed promise to
furnish support to the debtor or to a relative of the debtor.
11 U.S.C. § 548(d)(2)(A). The state value statutes all provide:
Value is given for a transfer or an obligation if, in exchange for the transfer or
obligation, property is transferred or an antecedent debt is secured or satisfied, but
value does not include an unperformed promise made otherwise than in the ordinary
course of the promisor’s business to furnish support to the debtor or another person.
6 DEL. CODE § 1303(a); N.C. GEN. STAT. § 39-23.3(a); 12 PA. CONS. STAT. § 5103(a); TEX. BUS.
& COM. CODE ANN. § 24.004(a)).
18. 	In particular, the Plaintiffs seek partial summary judgment on the question of
whether the excluded promise clause encompass the Funding Agreement and therefore precludes
it from constituting value for purposes of this fraudulent transfer adversary proceeding.52 The
Plaintiffs argue that summary judgment is both proper—if not mandatory—because the question
represents a discrete matter of law as to which no material fact is genuinely disputed.53
51 The state value statutes have identical text (with the exception of Pennsylvania, which added “[g]eneral rule” as a
title). The text of the federal and the state value statutes is generally similar, save for various formalistic changes to
the first part, the defining clauses (as defined below), as well as the state value statutes’ substantive change to their
excluded promise clause with the addition of the not-ordinary-course-of-business phrase.
52 Motion ¶ 6–7.
53 Reply ¶ 23.
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Predominantly, the Defendants object on the basis that summary judgment is improper here
because genuine disputes of material fact exist as to the value of the Funding Agreement.
Additionally, Defendants vigorously contest the application of the excluding promise clauses to
the Funding Agreement as a matter of law.
A. Legal Background
1. 	Summary Judgment and Partial Summary Judgment
19. 	Under Federal Rule of Civil Procedure 56,54 “court[s] shall grant summary
judgment if [a] movant shows that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” FED. R. CIV. P. 56(a) (emphasis added). This
applies to a “claim or defense—or the part of [a] claim or defense.” Id. (emphasis added). Partial
summary judgment, which the rule expressly permits without distinguishment, functions as a
“pretrial adjudication that certain issues shall be deemed established for the trial” and “serves the
purpose of speeding up litigation by eliminating before trial matters wherein there is no genuine
issue of fact.” Id. Adv. cmt. 1946 note.55
54 Incorporated into bankruptcy adversary proceedings by Federal Rule of Bankruptcy Procedure 7056.
55 The Defendants cite two extra-circuit federal district court cases for the proposition that partial summary
judgment motions “are generally disfavored because they are resolved by orders that cannot be appealed until final
adjudication” and “are permissible only when they benefit both parties and serve the interest of judicial economy.”
See Objection ¶ 45 (citing Interstate 10 Partners, LLC v. Berkley Nat’l Ins. Co., No. 3:23-cv-01233, 2026 WL
800967, at *4 (M.D. Tenn. Mar. 21, 2026); Arconic Inc. v. Novelis Inc., No. 17-1434, 2020 WL 7360152, at *1
(W.D. Pa. Dec. 15, 2020)). However, as the Plaintiffs note, first, that view is divorced from the text of Federal Rule
of Civil Procedure 56, which “does not ‘disfavor’ or impose a more exacting standard on motions for partial
summary judgment.” See Reply ¶ 26. Second, the two cases cited are nonbinding and inapplicable here, given that
their specific procedural histories counseled against allowing consideration of partial summary judgment given
efficiencies. See Reply ¶¶ 27, 27 n.20 (discussing how both cases, first, “involved motions for leave to file partial-
summary-judgment motions governed by case management orders,” and, second, sought summary judgment on
issues that were moot or already thoroughly litigated (citing Interstate 10 Partners, 2026 WL 800967, at *3–4;
Arconic, 2020 WL 7360152, at *1). Since this case is distinguishable based on the considerations addressed by the
two cases the Defendants cite, the Plaintiffs argue that any such disfavor, even if it did exist or the cases were
binding, would not exist here. See id. (noting how no leave is required here since the Motion is brought explicitly in
accordance with the Case Management Order and asserting that these issues have not previously been contested by
the parties before the Court).
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20. 	For a motion for summary judgement, the movant “bears the initial burden of
demonstrating that there is no genuine dispute of material fact.” Armstrong v. Hutcheson, 80 F.4th
508, 514 (4th Cir. 2023) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)); see also
Bouchat v. Balt. Ravens Football Club, Inc., 346 F.3d 514, 522 (4th Cir. 2003) (same). If the
movant overcomes this burden, the burden shifts to the nonmovant to show a material fact that is
genuinely disputed. See Anderson v. Diamondback Inv. Grp., LLC, 117 F.4th 165, 174 (4th Cir.
2024) (citing Celotex, 477 U.S. at 325); see also Bouchat, 346 F.3d at 522 (same). At this stage, a
movant is entitled to summary judgement if the nonmovant “fails to establish a triable issue of fact
‘on an essential element of [their] case with respect to which [they] ha[ve] the burden of proof.’”
Diamondback, 117 F.4th at 174 (citing Celotex, 477 U.S. at 323).
21. 	Either side may prevail as to the existence or nonexistence of a genuine dispute of
material fact by affirmatively citing to parts of the record or by challenging the opposing side’s
record citations. See FED. R. CIV. P. 56(e). When making determinations and inferences, “[t]he
evidence of the [nonmovant] is to be believed, and all justifiable inferences are to be drawn in
[their] favor.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986) (citing Adickes v. S. H.
Kress & Co., 398 U. S. 144, 158–59 (1970)).56 However, “conclusory allegations or denials,
without more, are insufficient.” Giles v. Nat’l R.R. Passenger Corp., 59 F.4th 696, 702 (4th Cir.
2023) (quoting Wai Man Tom v. Hosp. Ventures LLC, 980 F.3d 1027, 1037 (4th Cir. 2020)).
The Court concurs with the Plaintiffs on this point. Far from there being any disfavor for partial summary
judgement under the federal procedure rules, the rules expressly permit and mandate courts allow partial summary
judgement in the interest of judicial efficiency.
56 See also Masson v. New Yorker Magazine, 501 U.S. 496, 520 (1991) (“On summary judgment, [courts] must draw
all justifiable inferences in favor of the nonmoving party, including questions of credibility and of the weight to be
accorded particular evidence” (citing Anderson, 477 U.S. at 255)).
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22. 	As to the standard for summary judgement, a factual question can preclude
summary judgement so long as it is (1) genuinely disputed and (2) material. The first criterion,
genuine disputability, requires that “the evidence offered is such that a reasonable jury might return
a verdict for the non-movant,” Armstrong, 80 F.4th at 514 (quoting Wai Man Tom, 980 F.3d at
1037),57 which includes, inter alia, when evidence is “subject to conflicting interpretations.”
Hanna v. Silencio Global Inc., No. 3:20-cv-00144, 2020 WL 7427740, at *1 (W.D.N.C. Dec. 18,
2020). As to the second criterion, a factual dispute is material when it “might affect the outcome
of the suit under the governing law,” and “irrelevant or unnecessary [factual disputes] will not be
counted.” Anderson, 477 U.S. at 248; see also Armstrong, 80 F.4th at 514 (citing Wai Man Tom,
980 F.3d at 1037) (same).
23. 	In contrast to material factual disputes, legal disputes warrant, if not demand, a
decision at the summary judgement stage, since “[t]he point of a trial, after all, is not to hash out
the law.” Dupree v. Younger, 598 U.S. 729, 735 (2023).58 Generally, legal disputes are “issues that
can be resolved without reference to any disputed facts.” Id. Courts must grant summary
judgement on such legal disputes “where it is perfectly clear that . . . inquiry into the facts is not
necessary to clarify the application of the law.” McKinney v. Bd. of Trs. of Mayland Cmty. Coll.,
955 F.2d 924, 928 (4th Cir. 1992) (citing Charbonnages De France v. Smith, 597 F.2d 406, 414
(4th Cir. 1979); Stevens v. Howard D. Johnson Co., 181 F.2d 390, 394 (4th Cir. 1950)).
57 See also Red Apple Dev., LLC v. Rufus Road Partners, LLC, No. 3:19-cv-00157, 2020 WL 1441437, at *1
(W.D.N.C. Mar. 20, 2020) (same).
58 See also Bradacs v. Haley, 58 F. Supp. 3d 514, 521 (D.S.C. 2014) (discussing how the “exist[ence of] an
important, difficult or complicated question of law is not a bar to a summary judgment where . . . no genuine []
material fact” exists since “[r]esolution of the legal issues will not be rendered easier by going through the trial when
there is no issue of fact to be tried,” such as “when the parties merely ‘dispute the significance of the events . . . but
do not dispute which events actually occurred’” (first quoting Lewis v. Coleman, 257 F. Supp. 38, 40 (S.D. W. Va.
1966); then quoting Transamerica Delaval Inc. v. Citibank, N.A., 545 F. Supp. 200, 203 (S.D.N.Y. 1982))).
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24. 	Besides legal and factual questions, courts sometimes demarcate a third category,
“the so-called ‘mixed question’ of law and fact,” which “asks whether ‘the historical facts . . .
satisfy the statutory standard, or to put it another way, whether the rule of law as applied to the
established facts is or is not violated.’” U.S. Bank Nat’l Ass’n v. Vill. at Lakeridge, LLC, 583 U.S.
387, 394 (2018) (citing Pullman-Standard v. Swint, 456 U.S. 273, 289 n.19 (1982)).59 However,
“[m]ixed questions are not all alike.” Id. at 395–96. On the one hand, courts treat mixed questions
as legal questions routinely enough that legal questions “can reasonably encompass questions
about whether settled facts satisfy a legal standard.” Guerrero-Lasprilla v. Barr, 589 U.S. 221,
227–28 (2020).60
59 See also Pullman, 456 U. S. at 289 n.19 (describing mixed questions as “questions in which the historical facts are
admitted or established [and] the rule of law is undisputed”).
60 See, e.g., Guerrero, 589 U.S. at 227 (proffering examples from Supreme Court treatment of mixed questions such
as “[d]o the facts alleged in a complaint, taken as true, state a claim for relief under the applicable legal standard,” or
“did a Government official’s alleged conduct violate clearly established law” (first citing FED. R. CIV. P. 12(b)(6);
Neitzke v. Williams, 490 U. S. 319, 326 (1989) (“Rule 12(b)(6) authorizes a court to dismiss a claim on the basis of a
dispositive issue of law”); then citing Mitchell v. Forsyth, 472 U.S. 511, 528 n.9 (1985) (“[T]he appealable issue is a
purely legal one: whether the facts alleged . . . support a claim of violation of clearly established law”); Nelson v.
Montgomery Ward & Co., 312 U. S. 373, 376 (1941) (“The effect of admitted facts is a question of law”)));
Pullman, 456 U. S. at 289–90 (discussing how some mixed questions are “of the kind that in some cases may allow”
them to be treated as pure questions of law); Armstrong v. Hutcheson, 80 F.4th 508, 513 (4th Cir. 2023) (“When
there is no dispute about the historical facts—the who, what, where and when of what happened—the objective
reasonableness of officers’ conduct is a matter of law to be decided by the court. In Scott v. Harris, the Supreme
Court said ‘[a]t the summary judgment stage, [] once we have determined the relevant set of facts and drawn all
inferences in favor of the nonmoving party to the extent supportable by the record, [] the reasonableness of Scott's
actions—or, in Justice Stevens’ parlance, [w]hether [respondent’s] actions have risen to a level warranting deadly
force []—is a pure question of law.’ (cleaned up). And since Scott, we have repeated that principle several times.”
(first quoting 550 U.S. 372, 381 n.8 (2007); then citing Cloaninger ex rel. Cloaninger v. McDevitt, 555 F.3d 324,
333 (4th Cir. 2009) (“The officers’ conduct is thus established beyond genuine dispute. The only remaining question
is whether that conduct was objectively reasonable, which is a question of law, not fact.”); then citing Henry v.
Purnell, 652 F.3d 524, 531 (4th Cir. 2011) (“At the summary judgment stage, once we have viewed the evidence in
the light most favorable to the nonmovant, the question of whether the officer's actions were reasonable is a question
of pure law.”); and then citing Putman v. Harris, 66 F.4th 181, 186 (4th Cir. 2023) (“To determine whether the force
used was excessive, we apply a ‘standard of objective reasonableness.’ This is a question of law, which we judge
‘from the perspective of a reasonable officer on the scene.’” (first quoting Clem v. Corbeau, 284 F.3d 543, 550 (4th
Cir. 2002); then quoting Graham v. Connor, 490 U.S. 386, 396 (1989)))).
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25. 	However, on the other hand, some courts treat mixed questions more similarly to
factual ones. Accordingly, the Supreme Court has recognized that whether a mixed question is
treated as a legal or factual “may turn on practical considerations, such as whether the question
primarily ‘require[s] courts to expound on the law, particularly by amplifying or elaborating on a
broad legal standard’ (often calling for review de novo), or rather ‘immerse[s] courts in case-
specific factual issues’ (often calling for deferential review).” Id. at 228 (quoting Vill. at Lakeridge,
583 U.S. at 396). Still, the Supreme Court had also cautioned that “[t]hat a mixed question
requir[ing] a court to immerse itself in facts does not transform the question into one of fact.”
Wilkinson v. Garland, 601 U.S. 209, 221–22 (2024).
2. 	Fraudulent Transfers and Value
a. 	Fraudulent Transfers in General and Applicable Codes
26. 	The current federal fraudulent transfer law was enacted in the 1978 Bankruptcy
Code, as codified in Title 11 of the U.S. Code. All fifty states have enacted fraudulent transfer
codes through the adoption of uniform acts promulgated by the Uniform Law Commission (the
“ULC”).61 In 1918, the ULC promulgated its first uniform fraudulent transfer act, the Uniform
Fraudulent Conveyance Act (“UFCA”), then in 1984 its second, the Uniform Fraudulent Transfer
Act (“UFTA”), and then lastly in 2014 its third, the Uniform Voidable Transactions Act (“UVTA”).
These provisions serve as the primary source of law for fraudulent transfer claims.
i. 	Constructive Fraudulent Transfers and Defenses
27. 	Fraudulent transfers are transactions that “treat or otherwise affect a debtor’s
liabilities, either purposefully or sufficiently in fact, to an extent [that] the law deems sufficiently
unfair or negative as to the debtor’s creditors [so] as to constitute fraud.” Order Partially Granting
61 Also called the National Conference of Commissioners on Uniform State Laws.
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and Sustaining and Partially Denying Plaintiffs’ Privilege Motion and Defendants’ Objection
¶ 167 [Case No. 20-30080, Doc. No. 3390; Adv. Proc. No. 22-03000, Doc. No. 348] (“Privilege
Order”).62 Bipartite, fraudulent transfers come in two forms: actual fraudulent transfers and
constructive fraudulent transfers. Actual fraudulent transfers are transactions where the debtor
executed “with actual intent to hinder, delay, or defraud” the debtor’s creditors. See 11 U.S.C.
§ 548(a)(1)(A); 6 DEL. C. § 1304(a)(1); N.C. GEN. STAT. ANN. § 39-23.4(a)(1) (omitting “actual”);
12 PA. C.S. § 5104(a)(1); TEX. BUS. & COM. CODE § 24.005(a)(1).63
28. 	The second form, constructive fraudulent transfers, involve two elements. Most
constructive fraudulent transfers require for their first element proof that the debtor “received less
than a reasonably equivalent value” from the transaction “in exchange” for the debtor’s provided
consideration. See 11 U.S.C. § 548(a)(1)(B)(i); 6 DEL. C. § 1305(a); N.C. GEN. STAT. ANN. § 39-
23.5(a); 12 PA. C.S. § 5105(a); TEX. BUS. & COM. CODE § 24.006(a). The second element—
although satisfiable multimodally—is commonly met through proof of insolvency on the debtor’s
part either at the time of the transaction or “as a result” thereof. See 11 U.S.C. § 548(a)(1)(B)(ii)(I);
62 See also Privilege Order ¶ 168 n.289 (citing, inter alia, Fraudulent Conveyance, BALLENTINE’S LAW
DICTIONARY (3d ed. 1969) (defining as a “transaction” of assets either (1) intended by their owner to “place the
[assets] beyond the reach of his creditors,” or (2) one “which operates to the prejudice of the[] legal or equitable
rights” of creditors or “of other persons, including subsequent purchasers” (citing 37 AM. JUR. 2D FRAUDULENT
CONVEYANCES § 1 (1968))).
63 Accordingly, actual fraudulent transfers thus have as their sine qua non specific allegations of the debtor’s actual
intent as to the transaction. See Whitaker v. Mortg. Miracles, Inc. (In re Summit Place, LLC), 298 B.R. 62, 70
(Bankr. W.D.N.C. 2002) (discussing how an “actual fraudulent [transfer] requires a purposeful act” (citation
omitted)). Still, due to the difficulty of proving intent, the law has developed certain ‘badges of fraud’ that allow
presuming fraudulent intent even without any direct evidence. Although the Bankruptcy Code does not expressly
codify the badges, all state fraudulent transfer statutes codify both the badges’ effect and options. See
6 DEL. C. § 1304(b); N.C. GEN. STAT. ANN. § 39-23.4(b); 12 PA. C.S. § 5104(b); TEX. BUS. & COM. CODE
§ 24.005(b). Notably, two badges of fraud, the debtor’s receipt of less than reasonable equivalent value from the
transaction and their contemporaneous or ensuing insolvency, see 6 DEL. C. § 1304(b)(8)–(9); N.C. GEN. STAT.
ANN. § 39-23.4(b)(8)–(9); 12 PA. C.S. § 5104(b)(8)–(9); TEX. BUS. & COM. CODE § 24.005(b)(8)–(9), are also two
elements that suffice in combination to prove a constructive fraudulent transfer.
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6 DEL. C. § 1305(a); N.C. GEN. STAT. ANN. § 39-23.5(a); 12 PA. C.S. § 5105(a); TEX. BUS. & COM.
CODE § 24.006(a).
29. 	Generally, the remedy for transactions that courts find to be fraudulent transfers is
avoidance, which can include recovery of the transfer or unwinding of the transaction, as well as
by 	any 	relief 	warranted 	by 	the 	specific 	circumstances 	under 	state 	law. 	See
11 U.S.C. §§ 548, 550(a); 	6 DEL. C. §§ 1307(a)(1)–(3), 	1308(b); 	N.C. 	GEN. 	STAT. 	ANN.
§§ 39-23.7(a)(1)–(3), 23.8(b); 12 PA. C.S. §§ 5107(a)(1)–(3), 5108(b); TEX. BUS. & COM. CODE
§§ 24.008(a)(1)–(3), 24.009(b).
30. 	However, a determination that a transaction constituted a fraudulent transfer does
not necessarily require avoidance of the transaction as to all non-debtor parties to the transaction,
given possible affirmative defenses for such parties that are available under state and federal law.
11 U.S.C. § 548(c) provides one such defense, sometimes called the “good-faith-for-value
defense,” which precludes a transferee of consideration from the debtor through the fraudulent
transfer—be it actual or constructive—from being deprived of that consideration, so long as the
transferee acted in good faith and provided value in exchange, and only to the extent of that value
given by the transferee.
ii. 	Background of Fraudulent Transfer Law
31. 	American fraudulent transfer law is established and governed principally by statute.
As the Supreme Court has canvassed, these statutes “ha[ve their] origin in the Statute of 13
Elizabeth” (the “1570 Elizabethan Statute”), “which invalidated ‘covinous and fraudulent’
transfers designed ‘to delay, hinder or defraud creditors and others.’” BFP v. Resolution Tr. Corp.,
511 U.S. 531, 540 (1994) (citing 13 Eliz., c. 5 (1570)). As one commentator has laid out, while the
1570 Elizabethan Statute only expressly proscribed actual fraudulent transfers, the statute’s
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exclusion from that proscription of transfers for “good consideration” and made in good faith was
later “construed to provide the basis for setting aside conveyances in which, although no fraudulent
intent could be shown, the consideration paid to the grantor-debtor, while good enough to support
a contract, was not adequate to constitute a fair exchange.” Note, Rights of Creditors in Property
Conveyed in Consideration of Future Support, 45 IOWA L. REV. 546, 547–48, 547 nn.3–5 (1960)
(citing 13 Eliz. 1, c. 5 (1570); 13 Eliz. 1, c. 5, § 6 (1570); other citations omitted).64
32. 	On the federal level, historically all bankruptcy laws “ha[ve] incorporated a
fraudulent transfer provision,” with § 67(e) of 1898 Bankruptcy Act “specifically adopt[ing] the
language of the [1570 Elizabethan Statute].” BFP, 511 U.S. at 541 (citing Bankruptcy Act of July
1, 1898, ch. 541, § 67(e), 30 Stat. 564–565). Thus, § 67(e), while not the first in America or on the
federal level, was the first permanent fraudulent transfer statute nationally formulated and the
earliest direct progenitor of the modern fraudulent transfer statutes in America.65 Section 67(e) was
followed on the state level by UFCA, which borrowed significantly from § 67(e) but with
substantial revisions and additions. Id. After many states enacted UFCA, in 1938, Congress
substantially revised § 67(e) of 1898 Bankruptcy Act to closely mirror the language in the UFCA.
See infra ¶ 34.
64 See also Note, Rights of Creditors in Property Conveyed in Consideration of Future Support, 45 IOWA L. REV.
546, 548, 548 nn.6–8 (1960) [hereinafter Rights of Creditors] (describing two early rationales for constructive
fraudulent transfers as being that inadequate consideration constituted evidence negating the transferee’s good faith
or that the excess value transferred constituted a transfer for no consideration, sometimes called a voluntary
conveyance, while conjecturing “the real reason underlying these rulings” was simply that such conveyance depleted
assets otherwise available to creditors, which “properly saved the [1570 Elizabethan Statute] from nullification by
the difficulties of proof presented by a transfer for some but not adequate consideration” (citations omitted)).
65 While the 1898 Bankruptcy Act was “the first permanent American bankruptcy law,” In re Bestwall LLC, 658
B.R. 348, 366–67 (Bankr. W.D.N.C. 2024), it followed three prior short-lived bankruptcy codes. See In re Marshall,
300 B.R. 507, 513-14 (Bankr. C.D. Cal. 2003) (discussing how Congress passed bankruptcy codes in 1800, 1841,
and 1867, but repealed the first two within two years and the third after about a decade (citations omitted)).
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33. 	By the end of the 1960s, the need for significant reform to the fraudulent transfer
provisions in the 1898 Bankruptcy Act was apparent. In 1978 Congress overhauled the 1898
Bankruptcy Act with its passage the Bankruptcy Reform Act of 1978, which enacted the modern
Bankruptcy Code that, as subsequently amended, remains in force today. See Bestwall LLC, 658
B.R. at 367. The 1978 Bankruptcy Code stemmed from almost a decade of work by government
advisors and officials. The most notable contributions came from the Commission on the
Bankruptcy Laws of the United States (the “Bankruptcy Commission”), which Congress
authorized in 1970 through the Joint Resolution to Create a Commission to Study the Bankruptcy
Laws of the United States, Pub. L. No. 91-354, 84 Stat. 468 (1970). After three years of work, the
Bankruptcy Commission released its report in 1973 (the “1973 Report”). The 1973 Report not only
provided thorough commentary on the 1898 Act and its effects, but also directly proposed language
that ultimately became a new bankruptcy code.
34. 	Regarding 	the 	fraudulent 	transfer 	provisions, 	the 	Bankruptcy 	Commission
criticized 	the 	pre-1978 	bankruptcy 	code’s 	fraudulent 	transfer 	provisions 	as 	generating
“[s]ubstantial complexity” due to its drafters attempted incorporation of the UFCA’s language. See
1973 Commission Report, pt. 1, at 211, n.181 (citing Analysis of H.R. 12889, Committee Print,
74th Cong., 2d Sess. 204-05 (1936)); 1973 Commission Report, pt. 2, at 176 (citing same).
Accordingly, the Bankruptcy Commission recommended “a substantial simplification” of the
fraudulent transfer provisions using “terminology [] no longer track[ing] that of [UFCA].” See
1973 Commission Report, pt. 1, at 211. Accordingly, the Bankruptcy Commission provided
various changes to the language and definitions within the Bankruptcy Code. Congress ultimately
adopted many of the recommendations of the Bankruptcy Commission with the passage of the
Bankruptcy Reform Act of 1978.
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35. 	Following the passage of the Bankruptcy Reform Act of 1978, ULCA promulgated
UFTA in 1984. While UFTA substantially borrowed from the 1978 Bankruptcy Code, it differed
materially not only where interests differed (i.e., on the state level compared to the federal level)
but also where the drafters of UFTA simply disagreed with the language of the 1978 Bankruptcy
Code. Lastly, UFTA was succeeded by UVTA in 2014. While UFTA had substantially overhauled
and replaced UFCA, UVTA’s changes to UFTA were far more narrow and surgical, and did affect
any provisions at issue here.
iii. Statutory Interpretation in General and in the Fraudulent Transfer Context
36. 	Fraudulent transfer analysis largely involves statutory interpretation, which, “[a]s
with all such questions, [] begin[s] with the plain language of the Code.” In re Derivium Cap. LLC,
716 F.3d 355, 363 (4th Cir. 2013) (considering “[w]hether brokers’ commissions and fees can be
shielded from avoidance and recovery as a ‘settlement payment’ under 11 U.S.C. § 546(e)”). When
interpreting statutes, “[t]he plain meaning of” the statute’s text “should be conclusive, except in
the ‘rare cases [in which] the literal application of a statute will produce a result demonstrably at
odds with the intentions of its drafters.’” United States v. Ron Pair Enters., Inc., 489 U.S. 235,
241–42 (1989) (citation omitted). For the plain meaning of “a term [] undefined in a statute,
[courts] give the term its ordinary meaning” which often involves dictionary consultation. See
Taniguchi v. Kan Pac. Saipan, Ltd., 566 U.S. 560, 566 (2012).
37. 	However, ordinary meaning does not necessarily end the analysis. First, the
ordinary meaning considered is what was “commonly understood . . . at the time [of] enact[ment]”
and not merely the current understanding. New York v. Nat’l Highway Traffic Safety Admin., 974
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F.3d 87, 95 (2d Cir. 2020).66 Second, courts must consider this ordinary meaning “with a view to
[the phrases’] place in the overall statutory scheme.” Id. These required considerations necessitate
that courts view undefined phrases in accordance with dictionary definitions or authoritative case
law published around the time when a statute was passed, to supplement any precedential
interpretation of the statute post-enactment. See Food & Drug Admin. v. Brown & Williamson
Tobacco Corp., 529 U.S. 120, 132 (2000). Third, the use of legal terms of art can denote specialized
and sometimes even non-ordinary meanings because courts presume that the legislature “knows
and adopts the cluster of ideas that were attached to each borrowed word in the body of learning
from which it was taken.” See FAA v. Cooper, 566 U.S. 284, 292 (2012) (quoting Molzof v. United
States, 502 U.S. 301, 307 (1992)).
b. 	The Value Statutes under 11 U.S.C. § 548(d)(2)(A)
38. 	The value statutes provide the meaning of the term ‘value’ for purposes of a
fraudulent transfer action through two different mechanisms. First, the statutes provide that value
can constitute one of two broad categories: value may comprise property (the “Property Phrase”),
or it may comprise the satisfaction or securing of debt (the “Debt Phrase,” and, together with the
Property Phrase, the “Defining Clauses”). Second, through the excluded promise clauses, the value
statutes exclude certain “promises” from what can constitute value for a fraudulent transfer,
66 But see, e.g., Bostock v. Clayton Cnty., 590 U.S. 644, 674 (2020) (“[W]hen the meaning of the statute’s terms is
plain, our job is at an end. The people are entitled to rely on the law as written, without fearing that courts might
disregard its plain terms based on some extratextual consideration. . . . To be sure, the statute’s application [of the
term ‘sex’ to encompass sexuality and gender identity] reaches ‘beyond the principal evil’ legislators may have
intended or expected to address. But ‘[t]he fact that [a statute] has been applied in situations not expressly
anticipated by Congress’ does not demonstrate ambiguity; instead, it simply ‘demonstrates [the] breadth’ of a
legislative command. And ‘it is ultimately the provisions of’ those legislative commands ‘rather than the principal
concerns of our legislators by which we are governed.’” (citing A. SCALIA & B. GARNER, READING LAW: THE
INTERPRETATION OF LEGAL TEXTS 101 (2012) (noting that unexpected applications of broad language reflect only
Congress’s “presumed point [to] produce general coverage—not to leave room for courts to recognize ad hoc
exceptions”) (other citations omitted))).
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namely, those meeting three criteria: promises that (1) are “of support,” (2) are “unperformed,”
and (3) are “to the debtor or to a relative of the debtor.” 11 U.S.C. § 548(d)(2)(A). The state
excluded promise clauses add one wrinkle: a promise can evade being encompassed by the state
excluded promise clauses only if it was “made [] in the ordinary course of the promisor’s business.”
6 DEL. CODE § 1303(a); N.C. GEN. STAT. § 39-23.3(a); 12 PA. CONS. STAT. § 5103(a); TEX. BUS.
& COM. CODE ANN. § 24.004(a).
39. 	The state excluded promise clauses only contain additional language to the federal
excluded promise clause, namely, the ordinary course of business phrase, rendering that phrase an
additional requirement on top of the federal excluded promise clause. Accordingly, a court’s
application of the state excluded promise clauses requires assessment of both the federal excluded
promise clause, and the addition of the ordinary course of business phrase secondarily. Therefore,
the state excluded promise clauses can only ever apply where the federal excluded promise clause
also applies but may not apply in some instances even where the federal version does apply. Put
differently, because the ordinary course of business phrase is an exclusion of an exclusion, if the
federal excluded promise clause does not apply, the state excluded promise clause also cannot
apply.
i. 	Background
40. 	The federal excluded promise clause did not constitute novel law when it was first
enacted into the Bankruptcy Code in 1978, nor when it was first proposed by the Bankruptcy
Commission in 1973. Rather, the excluded promise clauses directly followed and were derived
from over two centuries of fraudulent transfer common law decisions regarding executory
consideration. That case law, while frequently divergent, had as its main thrust the view that certain
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executory consideration rendered a transaction fraudulent.67 It is unclear when and from where
this rule originated.68 Some courts treated the executory consideration as contributing evidence, if
67 See ORLANDO F. BUMP, FRAUDULENT CONVEYANCES 218–219, 218 n.4, 219 n.1 (3d ed. 1882) (canvassing a
multitude of case law holding that “[a]n agreement to support the debtor or his family . . . is not sufficient to uphold
a transfer when the [debtor] is insolvent” or “enough is not left for the payment of the[ir] debts” (citing Russell v.
Hammond, 26 Eng. Rep. 9, 10 (1738); Jackson v. Parker, 1828 N.Y. LEXIS 329; Geiger v. Welsh, 1 Rawle 349 (Pa.
1829); Johnston’s Heirs v. Harvy, 2 Pen. & W. 82 (Pa. 1830); Gunn v. Butler, 35 Mass. 248 (1836); Smith v. Smith,
11 N.H. 459 (1841); Crane v. Stickles, 15 Vt. 252 (1843); Albee v. Webster, 16 N.H. 362 (1844); Rollins v. Mooers,
25 Me. 192 (1845); Webster v. Withey, 25 Me. 326 (1845); Tyner v. Somerville, 1 Ind. 190 (1848); Hawkins v.
Moffitt, 49 Ky. 81 (1849); Sturdivant v. Davis, 31 N.C. 365 (1849); Stokes v. Jones, 18 Ala. 734 (1851); Henderson
v. Downing, 24 Miss. 106 (1852); Robinson’s Ex’rs v. Robards, 15 Mo. 459 (1852); Miner v. Warner, 2 Grant 448
(Pa. 1854); Robinson v. Stewart, 10 N.Y. 189 (1854); McLean v. Button, 1854 N.Y. App. Div. LEXIS 139; Bott v.
Smith, 52 Eng. Rep. 957 (Ch. 1856); Hunt v. Knox, 34 Miss. 655 (1857); Church v. Chapin, 35 Vt. 223 (1862);
Coolidge v. Melvin, 42 N.H. 510 (1861); Stanley v. Robbins, 36 Vt. 422 (1863); Morrison v. Morrison, 49 N.H. 69
(1869); Graham v. Rooney, 42 Iowa 567 (1876); Annis v. Bonar, 86 Ill. 128 (1877); Henry v. Hinman, 25 Minn. 199
(1878); Egery v. Johnson, 70 Me. 258 (1879); Graves v. Blondell, 70 Me. 190 (1879); Stearns v. Gage, 79 N.Y. 102
(1879); Todd v. Monell, 19 Hun 362 (N.Y. Sup. Ct. Gen. Term 1879); Tupper v. Thompson, 26 Minn. 385, 4 N.W.
621 (1880); Woodward v. Wyman, 53 Vt. 645 (1881))); MELVILLE MADISON BIGELOW, THE LAW OF FRAUDULENT
CONVEYANCES 567, 567 n.1, 567 n.a (Kent Knowlton ed., 1911) (discussing how executory consideration can render
a transaction a fraudulent transfer where “the promise [] to pay money[] is by a person known to be without means
or the ability to provide means,” as well when it is “in the form of a promissory note or otherwise, [] even when the
grantee is a responsible person,” in some circumstances (citing in support Perkins v. Webster, 56 Mass. 480 (1848);
Ringgold v. Waggoner, 14 Ark. 69 (1853); Leach v. Fowler’s Devisees, 22 Ark. 143 (1860); Blair v. Alston, 26 Ark.
41 (1870); Peebles v. Horton, 64 N.C. 374 (1870); Nicol & Davidson v. Crittenden, 55 Ga. 497 (1875); Massie v.
Enyart, 32 Ark. 251 (1877); Thames & Co. v. Rembert’s Adm’R, 63 Ala. 561 (1878); Jaffers v. Aneals, 91 Ill. 487
(1879); Whelan v. McCreary, 64 Ala. 319 (1879); Bell v. Devore, 96 Ill. 217 (1880); Knowlton v. Hawes, 10 Neb.
534, 7 N.W. 286 (1880); Gregg v. Lee & Co., 37 La. Ann. 164 (1885); Earnshaw v. Stewart, 64 Md. 513 (1886);
Jackson v. Harby, 65 Tex. 710 (1886); then citing in opposition Beasley v. Bray, 98 N.C. 266, 3 S.E. 497 (1887);
then citing Barnes v. Reilly, 81 Mich. 374, 45 N.W. 1016 (1890); Seger’s Sons v. Thomas Bros., 107 Mo. 635, 18
S.W. 33 (1891); Hall & Farley v. Ala. Terminal & Improv. Co., 143 Ala. 464 (1904); Howell v. Crawford, 89 S.W.
1046 (Ark. 1905))); 1 GARRARD GLENN, FRAUDULENT CONVEYANCES AND PREFERENCES 474, 474 n.25 (rev. ed.
1940) (“A transfer by a debtor, insolvent or left insolvent in consequence, in consideration of the grantee’s
agreement to support the debtor for life, is a fraudulent conveyance as matter of law” (citing Church, 35 Vt. 223;
Egery, 70 Me. 258; Good-man v. Wineland, 61 Md. 449 (1883); Davidson v. Burke, 143 Ill. 139 (1892); Rolfe v.
Clarke, 224 Mass. 407 (1916))); Rights of Creditors, supra note 64, at 550, 550 n.17 (discussing how, as early as the
mid- to late 19th Century, there was “general agreement that a conveyance in consideration of an executory promise
of future support is voidable by creditors under the common law and various statutes” (citing in support Church, 35
Vt. at 229; Mallow v. Walker, 115 Iowa 238, (1901); Ludlow Sav. Bank & Trust Co. v. Knight, 92 Vt. 171, 173
(1917); GLENN, supra, at § 277; and then citing in opposition In re Johnson, 20 Ch. D. 389 (1881); Farlin v. Sook,
30 Kan. 401 (1883); Neilson v. Larson, 158 Minn. 305 (1924); Ayer v. First Nat’l Bank & Trust Co., 182 Ga. 765
(1936); Avary v. Avary, 41 S.E2d 314 (Ga. 1947))).
68 Compare BUMP, supra note 67, at 219, 219 n.2–3 (sourcing the excluded promise rule to a view that a transfer for
executory consideration plus the insolvency required is, “in effect, a transfer to the use of the [debtor], which is
always void,” with “[t]he gist of the objection consist[ing], not in the amount to be paid in future support, but in the
fact that the promise of future support forms part of the consideration as an inducement to the transfer” (citing
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not per se evidence, of fraudulent intent due to the inherent suspicion from the consideration’s
circumstances.69 Other courts viewed the executory consideration involved as fraudulent based on
the bare fact that, regardless of the intent of the parties involved, creditors’ recovery rights were
inherently undermined by an exchange of the debtor’s assets for certain executory consideration.70
Cadogan v. Kennett, 98 Eng. Rep. 1171 (1776); Anonymous, 73 Eng. Rep. 663 (K.B. 1570) (Dyer 295a);
Sidensparker v. Sidensparker, 52 Me. 481 (1864); Adams v. Adams, 1879 Ky. LEXIS 234; Graves v. Blondell, 70
Me. 190 (1879); Moore v. Wood, 100 Ill. 451 (1881))), with GLENN, supra note 67, at 475, 475 n.28 (explaining that
a debtor creates a fraudulent, private exemption from creditors by exchanging reachable property for a
nonassignable executory consideration of support payments since it unfairly depletes the estate, and, “even if [] the
creditor could get at [] the support-money,” it deprives creditors of the “facility for collecting [their] debt” (quoting
Church, 35 Vt. 223)), with Rights of Creditors, supra note 64, at 550–552, 550–552 nn.20–30 (canvassing that the
bases for transfers in exchange for executory consideration constituting fraudulent transfers included that such
consideration constituted (1) a badge of fraud, a presumption of fraud, or fraud itself, (2) a voluntary conveyance,
(3) a secret trust established by the debtor for his own benefit, or (4) a private exemption, while positing “the
principal public policy reason[]” for these rules as to fraudulent transfers being that a debtor should not be permitted
to exchange presently reachable property for an executory promise of future support, thereby diminishing the
property available to satisfy creditors’ claims, substituting a presently nonenforceable or unavailable future benefit
for an asset creditors could have reached, and hindering or delaying collection (first citing in support Henry, 25
Minn. 199; Goodman, 61 Md. 449; Hays v. Montgomery, 118 Ind. 91 (1889); Merithew v. Ellis, 116 Me. 468
(1917); Smith v. Clark, 242 Mass. 1 (1922); Schmitz v. Wentzel, 166 Minn. 435 (1926); Castleton v. Peterson, 85
Cal. App. 51 (1st Dist. 1927); Grimes Say. Bank v. McHarg, 224 Iowa 644 (1937); Kahre v. McCourtney, 204 Ark.
272 (1942); Westminster Say. Bank v. Sauble, 183 Md. 628 (1944); In the Matter of Nat’l City Bank, 269 App. Div.
1040 (1945); Leonardo v. Leonardo, 251 F.2d 22 (D.C. Cir. 1958); Royal Indem. Co. v. McClendon, 64 N.M. 46
(1958); in opposition Nat’l Valley Bank v. Roudabush, 170 Va. 528 (1938); then citing in support Pursel v.
Armstrong, 37 Mich. 326 (1877); Seekel v. Winch, 108 Iowa 102 (1899); Bank of Willow Springs v. Lillibridge, 316
Mo. 968 (1927); Grimes, 224 Iowa at 648; in opposition Ayer, 182 Ga. 765; Wallace v. Williams, 212 Ga. 692
(1956); then citing Allard v. La Plain, 152 Wash. 211(1929); Townsend v. McGrain, 43 N.J. Super. 438 (Ch. 1957);
BIGELOW, supra note 67, at 547; then citing in support Church, 35 Vt. at 229; Mallow, 115 Iowa 238; Goodrich v.
Bagnell Timber Co., 105 Ark. 90 (1912); Kahre, 204 Ark. 272; in opposition Cherokee Auto Co. v. Stratton, 210
Iowa 1236 (1930))).
69 See, e.g., Slater v. Dudley, 35 Mass. 373, 375–76 (1836) (describing how a debtor’s transfer of all his assets to his
son in exchange for the son’s obligation under a written contract of “support and maintenance of the [debtor] and his
wife [] was prima facie evidence of fraud”); Smith, 11 N.H. at 464-66; Crane, 15 Vt. at 257.
70 See, e.g., Jackson, 1828 N.Y. LEXIS 329 (1828) (holding that executory consideration in the form of future
utilization of a debtor’s assets in exchange for that consideration infringed “creditors[’] [] right[s] to have
appropriated [the assets] to the payment of [the] debts” on the creditor’s terms); Gunn, 35 Mass. at 251–52 (finding
a fraudulent transfer not only on the basis that the terms of the contract exchanged for the assets required payments
for debts at a later time, but also separately because “the rights of creditors are not to be affected by a mere
executory contract of the debtor with a third person, to pay the debts for him”); Royal Indem. Co., 64 N.M. at 49
(stating that, “[b]y the weight of authority a transfer of property in consideration of future support is held to be
invalid when the rights of existing creditors are thereby prejudiced”); see also BIGELOW, supra note 67, at 567 n.a
(discussing how a transfer in exchange “a promise to pay, in the form of a promissory note or otherwise, may be
objectionable [] because it substitutes for tangible property easily reached by creditors a species of property not so
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Courts appeared to have been split on whether the executory consideration was fraudulent due to
its sufficiency as evidence of fraudulent intent or due to questions as to the certainty of its purported
value.71 Finally, later courts developed the view, which the modern excluded promise clause most
closely embodies, that the uncertainty of certain executory consideration precludes its ability to
sufficiently constitute value for a fraudulent transfer action.72 Lastly, as to the procedure involved,
although many of these courts applied the excluded promise rule as a matter of law,73 courts did
not do so unanimously, with some courts expressly requiring the determination be made by a trier
of fact.74
41. 	Three points must be made as to this common law that are critical in understanding
the excluded promise clauses of today. First, these decisions were the first to use the terms
‘promise’ and ‘support’ to describe the fraudulent executory consideration,75 from which it appears
readily accessible” (citing Barnes v. Reilly, 81 Mich. 374 (1890); Seger’s Sons v. Thomas Bros., 107 Mo. 635
(1891))).
71 Indeed, as to the view that executory consideration was fraudulent due to fraudulent intent, many courts and
commentators expressly recognized that the executory consideration at issue had actual value to the debtor, but
nevertheless found the existence of a fraudulent transfer. See supra note 70.
72 See, e.g., Royal Indem. Co., 64 N.M. at 49 (affirming that a transfer of all the debtors’ assets in exchange for a
promise of support from the transaction counterpart “constituted a conveyance upon a glaring inadequacy of
consideration”); Townsend, 43 N.J. Super. at 440–41; Westminster, 183 Md. at 631–32 (holding that “when a person
conveys property in consideration of an agreement to support him in the future, and by the conveyance renders
himself unable to pay his debts,” the conveyance was fraudulent,” “[n]ot only [because] such a conveyance, until
support is actually furnished, have the infirmity of an executory agreement, but it is presumed as a matter of law that
the grantor had fraudulent intent, and that the grantee had knowledge of the grantor's indebtedness (citing Wilmer v.
Placide, 102 A. 541 (Md. 1917), 543; Ludlow, 92 Vt. at 172–74)).
73 See, e.g., Geiger, 1 Rawle at 353 (holding that the form of consideration involved made the question of the
transfer’s fraudulency one which “the court had the right to decide, and not the jury”); Townsend, 43 N.J. Super. at
440–41.
74 See, e.g., Slater, 35 Mass. at 375–76 (affirming jury’s finding of no fraudulent transfer since although a debtor’s
transfer of all his assets to his son in exchange for the son’s obligation to pay the debtor and his wife’s expenses
“was prima facie evidence of fraud,” the jury was entitled to disregard that evidence); Royal Indem. Co., 64 N.M. at
48, 50.
75 See, e.g., Jackson, 1828 N.Y. LEXIS 329 at *13; Wood, 8 Wend. at 20; Robinson, 10 N.Y. 189 (syllabus);
Sidensparker, 52 Me. at 490–91; Rice, 116 Mass. at 470; Pursel, 37 Mich. at 330; Tupper, 26 Minn. at 386;
Woodward, 53 Vt. At 647; Woodall, 85 Ala. at 375; Walker, 106 Mich. at 26; Rolfe, 224 Mass. at 411 (citing Gunn,
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the Bankruptcy Commission later sourced its language for the proposed excluded promise clause
that ultimately became the enacted statutory language. Second, a litany of these courts found
transactions to be fraudulent based on the presence of certain executory consideration despite
explicitly recognizing that the executory consideration involved constituted actual value (at least
to the parties).76
42. 	Third, and most important, courts never automatically applied the rule to any
transaction involving executory consideration. While executory consideration was necessary
element for the rule’s application, it was not by itself sufficient to prove a fraudulent transfer.
Courts commonly applied the excluded promise rule in the context of intrafamilial executory
consideration.77 However, courts also consistently considered the rule in the context of commercial
contracts when similar concerns existed as to the consideration’s uncertain value.78 Of course,
some courts did rely on the consideration’s occurrence in the intrafamilial transfer context as
35 Mass. 248); Castleton, 85 Cal. App. at 53; Cherokee, 210 Iowa at 1240; Ayer, 182 Ga. at 767; Grimes, 224 Iowa
at 648; Nat’l Valley Bank, 170 Va. at 533; Nat’l City Bank, 269 App. Div. 1040; Avary, 202 Ga. at 29.
76 See, e.g., Geiger, 1 Rawle at 349 (holding that although a transfer “in consideration, or on condition of supporting
the grantor for life [] would have been, as to them, a valuable consideration,” it constituted an actual fraudulent
transfer as a matter of law); see also BUMP, supra note 67, at 218–219, 218 n.4, 219 n.1 (discussing how courts
found the executory consideration to be fraudulent despite the recognized fact that such “is a valuable
consideration”).
77 See, e.g., Jackson, 1828 N.Y. LEXIS at 329; Gunn, 35 Mass. at 248; Slater, 35 Mass. at 375–76; Albee, 16 N.H. at
362; Geiger, 1 Rawle at 349; Westminster, 183 Md. at 631–32; Townsend, 43 N.J. Super. at 439; Royal Indem. Co.,
64 N.M. at 48.
78 See, e.g., Smith, 11 N.H. at 459; Crane, 15 Vt. at 257; Allard, 152 Wash. at 213, 217–218; Castleton, 85 Cal. App.
at 52–54; see also Rights of Creditors, supra note 64, at 555, 555 nn.44–46 (explaining how the fact that courts
appear more willing to uphold executory consideration to “institutional grantees” does not mean “the relationship of
the parties to a transaction” determines whether the transaction is fraudulent, since although “a close personal or
family relationship between the parties “raises a presumption of fraud or at least constitutes a badge of fraud,” “a
close personal relationship does not control[], however, as conveyances for future support have been invalidated
when the grantee had nothing more than a business association with the debtor,” and explaining that “the close
relationship between the grantor and grantee in many of these transactions is merely a result of the nature of a
promise for future support,” given someone “seeking to provide for his future support would turn to his most trusted
friend, relative, or personal advisor and not to a stranger” (citations omitted)).
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constitutively problematic, wherefore it does appear that intrafamilial executory consideration
comprised the usually quintessential example of the fraudulent transfer based on executory
consideration.
43. 	Courts during this period declined to apply the excluded promise rule where the
executory consideration stemmed from arms-length negotiations and a good-faith bargain between
the parties, particularly when the consideration was in the form of employed services,79 where the
consideration was made in the ordinary course of the promisor or the promisee’s business,80 when
transfer had been done in a way whereby creditors could still levy the assets transferred in
79 See, e.g., Faulkner v. Waters, 28 Mass. 473, 474–75 (1831) (finding no fraudulent transfer where a debtor
deposited under an employment contract funds with his employers as security for any loss incurred by the employers
from the venture that the debtor was specially employed for and the employers had invested into under the contract;
finding the contract was “not [] unusual or fraudulent” since the debtor “had skill,” the employers “had property,”
the debtor “desirous of obtaining employment and having confidence in the success of his enterprise, agreed” to the
terms, wherefore the “contract [], at the time, apparently mutually beneficial to the parties;” holding that because
“[t]his [was] in itself a reasonable and lawful contract,” the debtor’s creditors could not avoid the contract and “[t]he
parties had a right, for a reasonable time at least, to proceed in the execution of their agreement”); BUMP, supra note
67, at 220, 220 n.2 (noting how executory consideration “to employ the [debtor]” “may” suffice to make a transfer
not fraudulent (citing Griffin v. Cranston, 10 Bosw. 1 (N.Y. Super. Ct. 1862)). But cf. BIGELOW, supra note 67, at
570 n.a (“The question [of executory consideration in the fraudulent transfer context] frequently arises regarding the
assignment of property for future services, usually to an attorney. It has been held that the attorney can hold the
property only as a security for services that he has performed before the intervention of creditors. Other courts allow
such assignments for future services in particular matter. Here the attorney will be allowed only for services
performed before notice of the claims of creditors” (first citing Swift v. Hart, 35 Hun 128 (N.Y. Sup. Ct. Gen. Term
1885); Shideler v. Fisher, 57 P. 864 (Colo. 1899); then citing Crain v. Gould, 46 Ill. 293 (1867); Reed v. Mellor,
1878 Mo. App. LEXIS 65; In re Parsons, 23 N.E. 50 (Mass. 1890); Morrell v. Miller, 43 P. 490 (Or. 1896); then
citing Winfield Nat’l. Bank v. Croco, 26 P. 942 (Kan. 1891); Crain, 46 Ill. 293)).
80 Rights of Creditors, supra note 64, at 554, 554 n.42 (“The purchase of an annuity contract by an insolvent debtor
has likewise been upheld as to creditors. These cases may, however, be explained by the fact that the grantees were
[] commercial establishments whose business depends upon transactions for future support. Certainly it would be
easier for a home for the aged or an insurance firm to establish good faith in such a case. Because the consideration
paid to such a grantee is based on actuarial tables, it would be difficult to challenge the adequacy of the return
consideration” (citing Osgood v. Mass. Mut. Life Ins. Co., 93 N.H. 160, 37 A.2d 12 (1944); Rinn v. N.Y. Life Ins.
Co., 89 F.2d 924 (7th Cir. 1937); Rishel v. Pacific Mut. Life Ins. Co., 78 F.2d 881 (10th Circ. 1935))).
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exchange,81 or where the executory consideration was enforceable,82 although not always.83 As
those examples where the rule did not apply should evince, courts in general applied the rule to
executory consideration made in the commercial context less frequently. However, given the fact
that courts did sometimes apply the excluded promise rule in the commercial context, the rule
under the common law was not exclusively limited to the intrafamilial transfer context.
ii. 	Drafting and Passage
44. 	In 1973, the Bankruptcy Commission proposed the first statutory provision for the
excluded promise clause. The Bankruptcy Commission described the clause as “new” and as
intended to define value “so as to require an increase in the assets of the debtor or a reduction in
the liabilities of the debtor,” which would “make[] it clear that the value must enhance the financial
position of the debtor.” 1973 Commission Report, pt. 1, at 211, n.180. Thereafter, Congress first
enacted the excluded promise clause in the 1978 Bankruptcy Code’s new value statute. While
Congress altered the defining clauses substantially in the 1978 Bankruptcy Code, it adopted the
excluded promise clause as proposed by the Bankruptcy Commission without significant edits.
81 See Smith, 11 N.H. at 464–66 (suggesting consideration in part because the form of a “bond and mortgage for [the
debtor’s] maintenance during life” could be protected from being voided so long as the transaction party providing
such consideration in exchange for the debtor’s assets “show[s] that full means for that object were left in the
possession of the grantor, which the creditors may levy upon, or have lost by their own negligence”).
82 See, e.g., Slater, 35 Mass. at 375–76 (affirming a finding of no fraudulent transfer where the transaction
counterparty had not fulfilled his duties as of the time of the transfer as obliged by the contracted underpinning the
transaction, since that later performance was “but a slight circumstance” given that the counterparty had “agreed to”
perform as he later did, “and that agreement was binding”); Dyer v. Homer, 39 Mass. 253, 261–62 (1839) (finding
no fraudulent transfer where the executory consideration was in the form of “a contract good and valid as between
the parties” that is a “note [] payable to the vendors only and not to order, [] not a security which any one by law
could take, otherwise than as taking a right to recover the same amount that the assignors had a right to recover, at
the time of the assignment,” since such executory consideration is distinguishable “from the cases of 4 Greenleaf
415, and 7 Conn. 399, . . . [where] the notes were made for the purpose of enabling the promisee to hold out a false
appearance of contract when there was no real contract”).
83 See Gunn, 35 Mass. at 251–52 (rejecting that value existed based on the “terms of the contract” obliging the
counterparty to provide the covenant funds rendered the transfer nonfraudulent given other surrounding
circumstances).
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45. 	Next, in 1983, UFTA incorporated the excluded promise clause, ostensibly
following the lead of the 1978 Bankruptcy Code.84 However, the version of UFTA that was
originally proposed was quite different from the ultimate resulting statutory provision. Instead of
simply denoting and excluding certain promises from value, the language of UFTA’s original
proposal gave substantial context to the excluded promise clause provisions. First, the original
proposed UFTA made the excluded promise clause its own subsection in the statute. That
subsection additionally listed four promises not encompassed by the version of the excluded
promise clause ultimately enacted by Congress: promises that (1) “may be exchanged for money
or money’s worth,” (2) are “enforceable at law or in equity,” (3) are “made in the ordinary course
of the promisor’s business,” or (4) where avoidance would not make possible restoring the
promisor’s former position. 1973 Commission Report, Minutes at 43. Second, the original
proposed UFTA provided certain executory contractual interests which would have constituted
value. Id. at 43–44.
46. 	The UFTA committee members discussed this language at length, and some
members viewed the detail included in UFTA’s original proposal as unnecessary at best given that
84 But see Peter A. Alces & Luther M. Dorr, Jr., A Critical Analysis of the New Uniform Fraudulent Transfer Act,
1985 U. ILL. L. REV. 527, 601 nn.106–108 (1985) (discussing how some “[c]ourts construing the UFCA have
concluded that an executory promise is not within the Act’s definition of fair consideration” and “have rejected
some promises to discharge the debtor's obligations or to support the debtor for life as inadequate value,” while
“[o]ther UFCA decisions, however, have reached the opposite result” (first quoting Hulsether v. Sanders, 223 N.W.
335 (S.D. 1929) (promise to discharge mortgage and support debtor held insufficient); and then quoting Angers v.
Sabatinelli, 293 N.W. 173 (Wis. 1940) (interpreting section to exclude any executory promise not embodied in a
negotiable instrument already negotiated to a holder in due course); then citing James McLaughlin, Application of
the Uniform Fraudulent Conveyance Act, 46 HARV. L. REV. 404, 404–05 (1933) (concluding that executory promise
is not fair consideration under unequivocal language of UFCA § 3); Sandler v. Parliapiano, 258 N.Y.S. 88 (1932)
(promise of future support held insufficient); Cooper v. Cooper, 124 S.W.2d 264 (Tenn. App. 1938) (promise to pay
criminal judgment, support for life, and pay for funeral expenses held insufficient); Freitag v. Strand of Atlantic
City, Inc., 205 F.2d 778 (3d Cir. 1953) (finding that executory promise may be “property” and “fair consideration”);
Hollander v. Gautier, 168 A. 860 (N.J. 1933) (deciding enforceable promise may constitute fair consideration under
UFCA)); Rights of Creditors, supra note 64, at 550–62)).
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ordinary course could arguably cover all the components of the original proposal. Some members
also viewed the language in the original UFTA proposal as problematically worded and likely to
create internal inconsistencies for some promises such a guaranties. The UFTA committee
subsequently modified the excluded promise clause and settled on the simpler version officially
promulgated in 1984, which UVTA repromulgated without edit, and which forty-five states have
now made part of their fraudulent transfer codes.
iii. Case Law on the Value Statutes and the Excluded Promise Clauses
47. 	Formal enactment of the excluded promise rule into the fraudulent transfer codes
has not precluded continued judicial confusion and inconsistency as to its coverage.85 While courts
continued to routinely apply the excluded promise clause to intrafamilial executory consideration,
sometimes as a matter of law,86 or sometimes after a trial,87 courts also declined to apply it in every
85 See, e.g., DAVID G. EPSTEIN, STEVE H. NICKLES & JAMES J. WHITE, BANKRUPTCY 374 (1993) (describing the
federal value statute as “surprisingly uncertain and confused [] on the seemingly basic issue whether the term
includes an executory promise”).
86 See, e.g., VanCampen v. United States ex rel. IRS, 1997 U.S. Dist. LEXIS 11384 (D. Kan. July 9, 1997); Simione
v. Nationsbank of Del., N.A. (In re Simione), 229 B.R. 329 (Bankr. W.D. Pa. 1999); Lawson v. Barden (In re
Skalski), 257 B.R. 707 (Bankr. W.D.N.Y. 2001); Hahn v. Leong (In re Llamas), 2011 Bankr. LEXIS 4779 (Bankr.
C.D. Cal. Dec. 12, 2011); Silagy v. Morris (In re Morris), 2013 Bankr. LEXIS 4369 (Bankr. N.D. Ohio Oct. 18,
2013); Kane v. Tin-Lo Chu (In re Hung Chung Chu), 2014 Bankr. LEXIS 2463 (Bankr. D. Haw. June 5, 2014);
Schlant v. Smierciak (In re Creeley), 644 B.R. 264 (Bankr. W.D.N.Y. 2022); DWC3, Inc. v. Kissel, 246 N.C. App.
361, 784 S.E.2d 237 (2016); Gonzales v. Sexton (In re Esquibel), 2018 Bankr. LEXIS 2155 (Bankr. D.N.M. July 23,
2018); Silagy v. Schroeder (In re Schroeder), 2017 Bankr. LEXIS 420 (Bankr. N.D. Ohio Feb. 14, 2017); SE Prop.
Holdings, LLC v. Center, 2016 U.S. Dist. LEXIS 180248 (S.D. Ala. Dec. 30, 2016); Renneker v. Wyman (In re
Wyman), 626 B.R. 480 (Bankr. S.D. Ohio 2021).
87 See, e.g., Zubrod v. Kelsey (In re Kelsey), 270 B.R. 776 (B.A.P. 10th Cir. 2001); Sergeant v. G.R.D. Invs. L.L.C.
(In re Schaefer), 331 B.R. 401 (Bankr. N.D. Iowa 2005); Bayer Emples. Fed. Credit Union v. Sapp (In re Sapp), 364
B.R. 618 (Bankr. N.D.W. Va. 2007); Hasse v. Rainsdon (In re Pringle), 495 B.R. 447 (B.A.P. 9th Cir. 2013); Gocha
v. Downs (In re Downs), 2019 Bankr. LEXIS 456 (Bankr. W.D. Mich. Feb. 15, 2019); Erickson v. McCaw (In re
Hodel), 2024 Bankr. LEXIS 247 (Bankr. C.D. Ill. Feb. 2, 2024); Allred v. Porter (In re Porter), 2009 Bankr. LEXIS
1119 (Bankr. D.S.D. Mar. 13, 2009); Satterfield v. Sigmon (In re Mahaffey), 1996 U.S. App. LEXIS 16419 (4th Cir.
July 10, 1996).
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situation involving intrafamilial executory consideration.88 Additionally, many courts have
expressly declined to make the determination as to intrafamilial executory consideration as a
matter of law, instead requiring a trial due to the required inquiry involving questions of fact.89
48. 	Crucially, however, the cases in the following paragraphs demonstrate that courts
have also continued to apply the excluded promise clauses to executory consideration in the
commercial context between corporate entities. These commercial context cases display two
competing views that track the body of pre-enactment case law. Some courts’ treatment of the
excluded promise clause displays a broader reluctance to recognize wholly unperformed
consideration as value, particularly when the promised benefit is speculative or produces no
present benefit for the debtor. Other courts contend the excluded promise clause’s language is
limited, from which they reason that enforceable executory promises outside the specified
exclusion may constitute value. Accordingly, while some courts made performance to date a
central part of their analysis, all courts consider as critical the promise’s enforceability,
assignability, likelihood of performance, present economic value, and capacity to confer a direct
or indirect benefit on the debtor at the time of the transfer.
49. 	Initially, many of the decisions denying value involved promises that were not
merely unperformed but also indefinite, unenforceable, or unlikely to produce a benefit. For
example, Nisselson v. Empyrean Investment Fund, L.P. (In re MarketXT Holdings Corp.) assessed
alleged consideration that included a “vague, speculative promise” of future access to funds,
88 See, e.g., In re Blair, 2000 WL 33710889 (Bankr. D.S.C. June 27, 2000); Frank v. Kiesel (In re Denison), 292
B.R. 150 (E.D. Mich. 2003); Kendall v. Carbaat (In re Carbaat), 357 B.R. 553 (Bankr. N.D. Cal. 2006); Nathan v.
Libra (In re Libra), 584 B.R. 550 (Bankr. E.D. Mich. 2018).
89 Arnold v. Walsh (In re Walsh), 2006 Bankr. LEXIS 5026 (Bankr. W.D.N.Y. Dec. 4, 2006); Dymarkowski v.
McConegly (In re Martin), 2021 Bankr. LEXIS 51 (Bankr. N.D. Ohio Jan. 12, 2021); Pergament v. Reisner (In re
Reisner), 357 B.R. 206 (Bankr. E.D.N.Y. 2006); Sweet v. Chambers (In re Chambers), 2015 U.S. Dist. LEXIS
133165 (E.D. Mich. Sep. 30, 2015).
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together with the opportunity supposedly preserved by that promise. 376 B.R. 390, 414–15, 421–
22 (Bankr. S.D.N.Y. 2007). There, the court held that the promise and associated opportunity
“provided no value” because the defendants committed none of their own funds, never performed,
and gave the debtor no legitimate and reasonable expectation of a benefit. Id.90 Similarly, although
not in the context of an avoidance claim but similar to the facts presented here, a bankruptcy court
accorded no weight to a conditional future-funding proposal—ironically enough, called a ‘support’
agreement—because it created no enforceable obligation, remained wholly unperformed, and
offered no realistic prospect of payment. In re Nat’l Gypsum Co., 257 B.R. 184, 202–03 (Bankr.
N.D. Tex. 2000). Crucially however, in National Gypsum Co., there was no evidence that the
purported agreement was executed or even existed; rather, the agreement was simply being offered
as evidence to represent what the parties were willing to do but did not represent a finalized
contract between the parties. Id.
50. 	In excluding promise clause cases involving assumptions, guarantees, or promised
support, courts likewise focused on whether the consideration actually relieved the debtor of an
obligation or otherwise benefited the estate. In Viscount Air Services, Inc. v. Cole (In re Viscount
Air Services, Inc.), the court found that an executory guarantee and an assurance that the transferee
would relieve the debtor of contractual liabilities conferred no value because the guarantee was
never honored, the relevant creditor never released the debtor, and the debtor remained liable. 232
B.R. 416, 434–37 (Bankr. D. Ariz. 1998) (concluding that only actual satisfaction of the debtor’s
contingent liability might have supplied reasonably equivalent value). Likewise, the court in
90 See also Mishkin v. Ensminger (In re Adler, Coleman Clearing Corp.), 247 B.R. 51, 105–10, 113–14 (Bankr.
S.D.N.Y. 1999) (using the more categorical language that an alleged enforceable but unperformed promise to deliver
securities could not, “by definition,” constitute value, although the court alternatively found that the promise was
worth no more than the nearly worthless securities to be delivered).
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Nathan v. Brownstone Plastics, LLC, treated a transferee’s assumption of liabilities as valueless
where none of the liabilities were paid, contemporaneously or thereafter, and the asserted
preservation of the business and its employees did not furnish a cognizable benefit to the transferor.
511 B.R. 863, 868–70 (E.D. Mich. 2014).91
51. 	By contrast, the courts in Krommenhoek v. Natural Resources Recovery (In re
Treasure Valley Opportunities) and White v. Coyne, Schultz, Becker & Bauer, S.C. (In re Pawlak)
treated enforceable contractual rights as presently valuable for the purposes of the excluded
promise clause even though substantial performance remained due.92 The Treasure Valley court
drew a “strong negative implication” from the excluded promise clause’s language that the statute
excludes only a specified type of unperformed support promise, and specifically found that an
enforceable executory promise outside that exclusion may constitute property or value in a
fraudulent transfer analysis. 166 B.R. 701, 703–706 (Bankr. D. Idaho 1994) (discussing how each
progress payment of the defendant discharged an installment obligation of the debtor, preserved
the debtor’s proportionate interest in a binding and assignable contract, reduced the unpaid contract
price, and further supported equivalence of value due to the contractor’s partial performance and
the objective value of the contemplated completed performance).
91 See also Bailey v. Metzger, Shadyac & Schwarz (In re Butcher), 72 B.R. 447, 450 (Bankr. E.D. Tenn. 1987)
(applying the excluded promise clause to prepaid future legal services that were ultimately furnished for the debtor’s
wife rather than the debtor, concluding that the debtor’s estate received nothing from that portion of the arrangement
notwithstanding the asserted familial duty of support).
92 See Krommenhoek v. Natural Resources Recovery, Inc. (In re Treasure Valley Opportunities, Inc.), 166 B.R. 701,
706 (Bankr. D. Idaho 1994) (“[T]he value of the completed contract was equal to the price, the contract retained its
validity as a result of the payments.”); White v. Coyne, Schultz, Becker & Bauer, S.C. (In re Pawlak), 483 B.R. 169,
185 (Bankr. W.D. Wis. 2012) (“As indicated previously, the reasonableness of the value must be determined by the
facts and circumstances of the particular case. The notion that the prepayment of future legal services can never
constitute reasonable value, however, must be rejected for the same reason discussed in Chomakos and Leonard.”).
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52. 	The Pawlak court similarly held that prepayment for future legal representation
purchased enforceable contract rights, including a breach-of-contract remedy, and therefore
conferred 	a 	present 	economic 	benefit. 	483 	B.R. 	169, 	183–87 	(Bankr. W.D. Wis. 	2012)
(acknowledging that the representation depended on future litigation but finding that litigation was
sufficiently likely and its expected cost sufficiently estimable to give the contractual commitment
value as of the transfer date). The Court further emphasized that the firm’s later performance did
not establish value by itself, but rather value was established through an evaluation of the
likelihood of future payment at the time that the contract was executed. Id.93
53. 	The cases taken together demonstrate that no uniform rule exists that all executory
consideration either is or is not, solely by virtue of its executorial form, value for purposes of
excluded promise clause analysis. Importantly, the decisions in which courts denied finding value
generally involved more than the mere postponement of performance but instead involved
promises that were unperformed, speculative, unenforceable, unsupported by present rights,
ineffective as to their attestations, or directed toward someone other than the debtor. Lastly and
most importantly, of the cases that did apply the excluded promise clause to executory
93 See also Havis v. AIG SunAmerica Life Assurance Co. (In re Bossart), 2007 Bankr. LEXIS 4349, at *52–56
(Bankr. S.D. Tex. Dec. 21, 2007) (finding, where the debtor received an annuity with an ascertainable current value,
an unrestricted withdrawal right, and a contractually guaranteed future income stream, that those present rights made
the annuity an investment with current economic value, rather than merely an unperformed promise to make future
payments); In re Morton Shoe Cos., 24 B.R. 1003, 1010–11, 1011 n.7 (Bankr. D. Mass. 1982) (recognizing a
contingent royalty agreement as having value even though the amount of future payments depended on sales and
could not be guaranteed, on the grounds that the agreement resulted from arm’s-length negotiations, the record
showed a reasonable likelihood that royalties would be earned, and the debtor’s own expert evidence assigned the
agreement a substantial present value).
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consideration, only a few outlier courts did so on summary judgement and without a trial.94 Most
other cases applied the clause after a trial and based on significant evidence.95
B. Arguments and Analysis
1. 	The Plaintiffs Properly Seek Summary Judgment
54. 	The Plaintiffs argue that the issues on which the Motion seeks partial summary
judgment are appropriate for adjudication now as a matter of law. First, the Plaintiffs contend that
whether the excluded promise clauses encompass the Funding Agreement—based solely on the
language of the excluded promise clauses and the Defendants’ own characterizations of the
Funding Agreement—presents a discrete legal question that is sufficiently developed to warrant
consideration on summary judgment. The Plaintiffs further argue that resolving the issues
presented by the Motion would promote the efficient and just administration of these proceedings
because (1) determinations in the Plaintiffs’ favor “will narrow the issues as to Plaintiffs’
constructive fraudulent transfer claims;” (2) the Debtor’s bankruptcy case and the adversary
proceedings have already been delayed for years; and (3) increasing numbers of Plaintiffs are
becoming ill and dying. Motion at 1.
55. 	The Defendants vigorously contest the propriety of summary judgment on the
issues raised by the Motion, asserting that genuine disputes of material fact preclude judgment on
most, if not all, of those issues. Although the Court ultimately concludes that summary judgment
is unavailable, it rejects many of the Defendants’ asserted reasons for that conclusion. First, there
is at least a colorable argument that the plain text of the excluded promise clauses encompasses
the Funding Agreement based solely on undisputed facts—and, in some instances, the Defendants’
94 See, e.g., Nathan, 511 B.R. at 868–89; In re Butcher, 72 B.R. at 450, Crampton v. Immediato (In re Persinger),
545 B.R. 896, 904 (Bankr. E.D.N.C. 2016); Vaughan v. McDowell (In re McDowell), 173 B.R. 131, 135 (Bankr.
N.D. Ohio 1994).
95 See supra notes 87 & 89.
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own characterizations—concerning that Agreement. Whether the excluded promise clauses
encompass the Funding Agreement is therefore, at most, a mixed question of law and fact.96
Second, the question might be suitable for resolution on summary judgment as some courts have
resolved the applicability of excluded promise clauses at the summary judgment stage.97 The Court
recognizes the value of the parties’ efforts to narrow the issues, conserve judicial resources, and
seek prompt resolution of a potentially dispositive legal question, particularly in light of the
lengthy delay in DBMP’s case overall and this fraudulent transfer adversary proceeding. Those
considerations do not, however, permit the Court to grant summary judgment unless the governing
standard is satisfied.
56. 	If the Funding Agreement is encompassed by, and therefore excluded under, the
excluded promise clauses, the Defendants could not establish reasonably equivalent value for the
transfer in the Restructuring. The record establishes that the Debtor’s liabilities substantially
exceed the value of its remaining assets, and the Funding Agreement is the only asserted asset that
could potentially bridge that gap. See DBMP, 2021 Bankr. LEXIS 2194, at *67 (stating that,
“[a]part from the Funding Agreement, DBMP lacks the ability to pay asbestos claims”). Although
reasonably equivalent value ordinarily presents a fact-intensive inquiry, the issue may be resolved
as 	a 	matter 	of 	law.98 The 	inquiry 	commonly 	requires 	evidence 	concerning 	equivalence,
reasonableness, prevailing economic conditions, and market value—all matters that are often
variable and fact dependent. But where, as here, the undisputed facts establish that the remaining
96 See Williams v. Taylor, 529 U.S. 362, 408 (2000) (“Just as it is sometimes difficult to distinguish a mixed question
of law and fact from a question of fact, it will often be difficult to identify separately those state-court decisions that
involve an unreasonable application of a legal principle (or an unreasonable failure to apply a legal principle) to a
new context.”).
97 See supra notes 86 & 94.
98 See Ingalls v. Erlewine (In re Erlewine), 349 F.3d 205, 209 (5th Cir. 2003) (“Certain transactions, however, can
give the debtor reasonably equivalent value as a matter of law.”).
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assets have no possibility of equaling the Debtor’s liabilities, no further factual inquiry or
estimation is necessary to determine that reasonably equivalent value is absent if the Funding
Agreement is excluded from the Court’s analysis.
57. 	The Defendants’ asserted factual disputes do not alter that conclusion. The actual
value of the Funding Agreement, the specific value attributed to the account receivable, any
uncertainty concerning the value of M&P, and the ultimate amount of the liabilities as determined
through the Estimation Trial are not material to the operation of the precise question presented by
the Motion. The Funding Agreement may possess actual economic value yet nevertheless be
excluded from the reasonably equivalent value analysis if it falls within the excluded promise
clauses. Likewise, the account receivable cannot provide an independent source of value because
its existence and value depend on the Funding Agreement. Any uncertainty concerning the value
of M&P is immaterial because the Defendants do not contend, and the record would not support a
finding, that M&P’s value alone is sufficient to eliminate the shortfall between the transferred
assets and liabilities. Nor does the Estimation Trial create a material factual dispute concerning the
liabilities: whatever the precise amount, the undisputed record establishes that liabilities greatly
exceed the value of DBMP’s assets without the Funding Agreement.
2. 	The Funding Agreement Could Be Excluded from Value as a Matter of Law
a. 	The Excluded Promise Clause Applies Regardless of the Defining Clauses
58. 	The Defendants reject the possibility that the excluded promise clauses could ever
encompass the Funding Agreement, regardless of what the excluded promise clauses encompass,
since, on their view, the Funding Agreement affirmatively comprises value. Most prominently, the
Defendants argue that because the Funding Agreement “clearly” satisfies the Property Phrase, it
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“thus cannot fall within the … [Excluding Phrase] as a matter of law.”99 The Defendants base this
conclusion on the following facts. First, the Bankruptcy Code “broadly construe[s]” value for
purposes of fraudulent transfers to encompass any “‘opportunity’ to receive an economic benefit
in the future,” regardless of the directness, conditionality, or present performance to date of such
benefits.100 Second, the Funding Agreement “is a legally enforceable contract right, akin to a
guaranty,” which, on their view, is one of “a variety of categories of unperformed promises [that
courts hold] unequivocally constitute property with value.”101 Lastly, the Funding Agreement has
actual “ascertainable expected value,” at least as a matter of law, given this Court’s statement in
Bestwall that that Funding Agreement “‘is enforceable’” and “‘cannot be disregarded’,” as well as
“the asserted asbestos liabilities, creditworthiness of New CertainTeed, the terms of the [Funding]
Agreement, and the probability of performance,” which is further “support[ed]” by the “[o]ngoing
performance under the Funding Agreement since it was first entered into.”102
59. 	This argument fails because, it rests on the flawed view that, if something is already
encompassed by the defining clause as value, the excluded promise clauses cannot or do not
encompass it, at least as a matter of law.103 That view misconstrues the structure and text of the
value statutes. The fact that the excluded promise clauses follow the defining clause, together with
the connector linking the former to the latter—namely, “but does not include” language—signals
99 Objection ¶ 56.
100 Objection ¶¶ 51–53, 57.
101 Objection ¶¶ 54–56.
102 Objection ¶ 56. The Defendants further argue that the “[o]ngoing performance under the Funding Agreement” to
date “estops the parties from now contending” it does not constitute value. Objection ¶ 56, 56 n.75 (citing IHFC
Props., LLC v. Whalen Furniture Mfg., Inc., 614 F. App’x 623, 626 (4th Cir. 2015) (estopping the defendant from
asserting a defense based on statute of frauds when that argument was inconsistent with its use and enjoyment of the
benefits of the contract at issue)).
103 Objection ¶ 19.
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that the excluded promise clauses modify and limit the defining clause and not the other way
around. Countless statutory interpretation cases confirm this plain meaning and dispel the
Defendants’ interpretation.104 Consideration, if encompassed by the excluded promise clauses, is
precluded from constituting value for purposes of a fraudulent transfer regardless of whether any
consideration falls within the defining clause.
b. 	The Excluded Promise Clauses Are Not Limited to Familial Support
60. 	The Defendants argue that the excluded promise clauses extend only to familial
support on roughly three grounds: (1) the plain and ordinary meaning of the text; (2) the intra- and
inter-statutory context; and (3) the legislative histories and the broader legal context. Beginning
with the first, the Defendants assert that “the common meaning of ‘support’ is in the context of
family relationships,” citing in support, two familial illustrations from the Merriam-Webster
Online Dictionary’s definitions of ‘support’ as a verb and as a noun.105 However, as the Plaintiffs
note,106 the Defendants’ own dictionary reveals no such ‘common meaning,’107 given that, of the
more than ten definitions provided therein, no definition is limited to the familial context (or even
intimates such a limitation), whereas, of the twenty illustrations also provided by that dictionary,
104 See, e.g., Burgess v. United States, 553 U.S. 124, 136 n.3 (2008) (“‘[T]he word “includes” is usually a term of
enlargement, and not of limitation’. 2A Singer § 47:7, p. 305 (some internal quotation marks omitted). Thus ‘[a]
term whose statutory definition declares what it “includes” is more susceptible to extension of meaning . . . than
where’—as in §802(44)—‘the definition declares what a term “means.”’ Ibid. See also Groman v. Commissioner,
302 U. S. 82, 86 (1937) (‘[W]hen an exclusive definition is intended the word “means” is employed, . . . whereas
here the word used is “includes.”’)).
105 Objection ¶ 62 (providing as one definition of ‘support’ in verb form as “to pay the expenses of: maintain,
support a family;” providing as one definition of ‘support’ in noun form as “someone or something that supports:
such as a means of livelihood, sustenance, or existence, financial/emotional support, spousal support” (citing
Support, MERRIAM-WEBSTER.COM DICTIONARY, https://www.merriam-webster.com/dictionary/support (last visited
June 15, 2026)).
106 Reply ¶ 29.
107 Objection ¶ 62.
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only two illustrations represent a familial context—namely, the two cited by the Defendants.108
Further, the other definitions and illustrations clearly demonstrate that nonfamilial forms of
support, 	including 	expressly 	commercial 	support, 	are 	embraced 	by 	the 	word’s 	common
meaning.109 Accordingly, the plain meaning of the word ‘support’ does not carry a common
understanding of some limitation to familial situations. Rather, ‘support’ is a generic and broad
term, with a plain meaning that generally encompasses the providing of resources, or really
anything of use, regardless of the specific context. The Defendants cherry-pick one example of a
concept and treat a dimension of that example as imposing a criterion on the interpretation of the
meaning of ‘support.’ The Court is not persuaded by such an argument.
61. 	Second, as a purported limitation on the excluded promise clause, the Defendants
raise how the excluded promise clause appends “or a relative” after “debtor” to identify another
potential recipient of the support barred from constituting value.110 On their view, because the
word ‘relative’ is defined elsewhere in the Bankruptcy Code as limited to familial related
individuals, ‘support’ in the excluded promise clause “can only be understood to refer to familial
support.”111 While that view—essentially the ejusdem generis canon—is not wholly unpersuasive,
especially under a more relaxed approach to statutory interpretation more willing to seek a statute’s
intended meaning, it ultimately fails under the modern rules of statutory interpretation adhering to
stricter textualism.112 Generally, federal statutory interpretation has moved away and repudiated
108 Support, MERRIAM-WEBSTER.COM DICTIONARY, https://www.merriam-webster.com/dictionary/support (last
visited Sept. 3, 2026).
109 Id.
110 Objection ¶ 63.
111 Objection ¶ 63 (citing 11 U.S.C. § 101(45) (defining ‘relative’ as an “individual related by affinity or
consanguinity within the third degree as determined by the common law, or individual in a step or adoptive
relationship within such third degree”)).
112 See Bostock v. Clayton Cnty., 590 U.S. 644, 653 (2020) (“When the express terms of a statute give us one answer
and extratextual considerations suggest another, it’s no contest. Only the written word is the law.”).
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attempts to impart the specialized meaning from one item in a statutory disjunctive list to another
item when that specialized meaning applies only to the former and the latter’s plain meaning does
not independently carry the meaning. See, e.g., Shular v. United States, 589 U.S. 154, 164 (2020)
(rejecting an argument that “refer[ence] to fully defined crimes” in 18 U.S. Code § 924(e)(2)(A)(i)
meant that reference also applied to crimes in § 924(e)(2)(A)(ii) because “‘the divergent text of
the two provisions . . . makes any divergence in their application unremarkable’” and “Congress’
decision” to use language imbued with a certain meaning in one provision “does not speak to
whether it” also imbued the next provision with that meaning).113 The Fourth Circuit and courts in
Delaware, North Carolina, Pennsylvania, and Texas have all rejected such attempts to adopt that
particular tool of statutory interpretation.114
62. 	Additionally, at the Hearing, the Defendants raised the related argument that
because the Bankruptcy Code uses ‘support’ elsewhere with modifiers to explicitly refer to familial
support, the word itself carries that meaning absent the modifiers.115 But, of course, it is exclusively
113 See also Encino Motorcars, LLC v. Navarro, 584 U.S. 79, 86–87 (2018) (rejecting the view that 29 U.S.C.
§ 213(b)(10)(A)’s use of the phrase “servicing automobiles, trucks, or farm implements” modifying “salesman,
partsman, or mechanic” meant a specialized understanding of the phrase for “mechanic” carried over for the phrase
for “salesman”); id. (“‘[O]r’ is ‘almost always disjunctive’” (citing United States v. Woods, 571 U.S. 31, 45
(2013))); Osmon v. United States, 66 F.4th 144 (4th Cir. 2023); United States v. Redd, 85 F.4th 153 (4th Cir. 2023).
114 See, e.g., Osmon v. United States, 66 F.4th 144 (4th Cir. 2023); United States v. Redd, 85 F.4th 153 (4th Cir.
2023); Cornette v. State, 361 A.3d 19, 28 (Del. 2026) (en banc) (stating that “the use of ‘or’ typically indicates the
intent to create alternatives”); In re The McClatchy Co., 386 N.C. 77, 900 S.E.2d 765 (2024); Claim of Duckett, 271
N.C. 430, 437 (1967) (“The disjunctive participle ‘or’ is used to indicate a clear alternative. The second alternative
is not a part of the first, and its provisions cannot be read into the first.”); Tex. W. Oaks Hosp., LP v. Williams, 371
S.W.3d 171, 184–85 (Tex. 2012) (rejecting that a requirement that certain claims be “‘directly related to health
care,’” which expressly applied to some terms in a disjunctive statutory series, “should be applied to modify each
term in the” series, since that “construction is nonsensical, as it would be entirely redundant as to health care and
medical care, unsupported by the text in the attempted application to safety, and render safety largely repetitive of
health care”); see also id. at 189 (“[T]he specific incorporation of the patient relationship for health care and medical
care claims governs the HCLC for departures from accepted standards of medical care and health care . . . .
However, that limitation does not apply to claims of safety, which is not defined with reference to a patient.”
(citation omitted)).
115 See generally Hr’g Tr. 109:05–116:23 (citing 11 U.S.C. § 101(14)(A); 507(a)(1)(A); 522(d)(10)(D)–
(E); 522(d)(11)(B), (C), (E); 1328)).
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the presence of those modifiers that provides that meaning, and those modifiers are absent from
the excluded promise clause. If anything, the presence of those modifiers elsewhere confirms the
opposite view—namely, that the word ‘support’, without a modifier, has a broader, generic
meaning and must be accompanied by such a modifier to be limited to the familial context. See,
e.g., City and County of San Francisco v. EPA, 604 U.S. 334, 344 (2025) (“[W]here Congress
includes particular language in one section of a statute but omits it in another section of the same
Act, it is generally presumed that Congress acts intentionally and purposely in the disparate
inclusion or exclusion. We have invoked this canon time and time again” (citing Russello v. United
States, 464 U.S. 16, 23 (1983); Gallardo v. Marstiller, 596 U.S. 420, 429–430 (2022); Salinas v.
Railroad Retirement Bd., 592 U.S. 188, 196 (2021); Azar v. Allina Health Services, 587 U.S. 566,
576–577 (2019))); see also id. at 344 (rejecting that view 33 U.S.C. § 1311’s reference to ‘effluent
limitations’ in various of its provisions meant the word ‘limitations’ in 33 U.S.C. § 1311(b)(1)(C),
despite not being modified by ‘effluent’, nonetheless referred to ‘effluent limitations’, since courts
should not “believe that Congress omitted the term ‘effluent’ from §1311(b)(1)(C) simply because
it wanted to save ink or assumed that regulators and interested parties would understand that the
omission of the term was inconsequential”).
63. 	Second, as the Plaintiffs note, the excluded promise clause “also refers to
unperformed promises of support made ‘to the debtor,’” which the Bankruptcy Code elsewhere
defines as encompassing both natural persons and legal entities.116 Accordingly, the term “debtor”
expressly extends beyond the familial context and cannot be artificially narrowed. See Burgess v.
United States, 553 U.S. 124, 130 (2008) (“‘Statutory definitions control the meaning of statutory
116 Response ¶ 30 (emphasis in original) (citing 11 U.S.C. § 101(13) (“The term ‘debtor’ means person or
municipality concerning which a case under this title has been commenced.”), 41 (“The term ‘person’ includes
individual, partnership, and corporation . . .”)).
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words . . . in the usual case’” (quoting Lawson v. Suwannee Fruit & S. S. Co., 336 U. S. 198, 201
(1949); citing Stenberg v. Carhart, 530 U. S. 914, 942 (2000) (“When a statute includes an explicit
definition, we must follow that definition.”); 2A N. SINGER & J. SINGER, SUTHERLAND ON
STATUTORY CONSTRUCTION § 47:7, p. 289–99, nn.2–3 (7th ed. 2007))).
64. 	Finally, the Defendants invoke the legislative histories of the excluded promise
clauses, as well as the overall legal context provided by case law and by the various acts enacting
the value statutes. As to legislative history, the Defendants cite, first, with respect to the federal
value statute, the 1973 Commission Report, which described its value statute proposal as intended
to ensure that value generally corresponds with a positive effect on the debtor’s balance sheet.117
Second, with respect to the state value statute, the Defendants cite UFTA’s official comment on its
proposed state value statute, which first repeats the balance-sheet analogy, but specifically with
respect to the benefit conferred upon unsecured creditors.118 The UFTA comment then explains
that its version of the value statute is not intended to exclude all executory obligations, listing
negotiable notes, insurance, and services contracts as examples of such obligations that
nevertheless “clearly appears to be for value.”119 While those examples, the UFTA comment
continues, are not covered by its excluded promise clause, it provides familial support as a
contrasting example that is covered.120
65. 	Neither of these sources entirely supports the Defendants’ position. Instead, as
explained above, the legislative history paints a nuanced picture of prior interpretations of the
117 See Objection ¶¶ 64–66 (citation omitted).
118 See Objection ¶¶ 64–66 (citation omitted).
119 Id.
120 Id.
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value statutes.121 Furthermore, as the Plaintiffs note, legislative history may be competently
considered by courts conducting statutory interpretation only when a provision’s text is ambiguous
independently of that legislative history; put differently, the legislative history cannot create the
ambiguity. While the Court concurs that the excluded promise clauses can be construed as
somewhat broad without context, the plain meaning of ‘support’ is not itself the source of any
ambiguity.
66. 	As to the balance-sheet goals for the excluded promise clauses in both the 1973
Commission Report and the UFTA comment, nothing about those statements supports a
specialized meaning limited to familial support. The interests being promoted there do not differ
in any relevant regard between individual and corporate debtors or bear more directly on the
familial context than on the commercial context, so as to be limited to the former as a matter of
law. Such concerns can and do exist in any bankruptcy case, whether involving consumer or
corporate debtors.
67. 	The additional statement in the UFTA comment that its proposed state excluded
promise clause is expressly not intended to cover all executory obligations, along with its explicit
mention of three commercial examples of such obligations not covered and a familial support
example of an obligation that is covered, fails to support the Defendants’ overall point. While the
Court wholly concurs with the UFTA comment’s reasoning regarding the excluded promise
clause’s failure to cover all executory obligations, that conclusion does not bar all commercial
contracts. Rather, it establishes, at most, that some commercial contracts are not encompassed by
the excluded promise clause (as is also true of some personal contracts, as explained below, a
121 See supra notes 69–72.
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possibility the Defendants’ reading would foreclose), whereas other commercial contracts may be
encompassed by the excluded promise clause.
68. 	As to the contrasting examples, the Court concurs that uncertain intrafamilial
support is the quintessential model of the future obligation targeted by the excluded promise
clauses in accordance with the balance-sheet goal described above. But the breadth of the balance-
sheet goal’s intended reach itself precludes the conclusion that the target is narrowly limited to the
one intrafamilial illustrative example provided—not to mention that examples, on their face, are
just that; they do not define constitutively.122
69. 	Second, the Defendants point to the context of case law both postdating and
predating the value statutes. As to the cases decided after passage of the value statutes, the
Defendants cite the fact that many cases applying the excluded promise clauses do so in the familial
context. First, considered on its own terms, that argument fails because a trend does not constitute
a rule. That something is true of many, or even most, instances of a type, does not make it invariably
true of that type. Second, considered in the context of the broader case law, the argument is also
wholly negated by the many cases that do in fact apply the excluded promise clauses outside the
familial context.123
122 Additionally, even if UFTA had explicitly espoused the Defendants’ exact position as to the excluded promise
clauses’ meaning, it would still not avail the Defendants because, first, UFTA could only fully inform the state value
statutes, all of which include the added ordinary course of business phrase. That phrase functions in the state
excluded promise clauses not only as a substantive provision, like any statutory phrase, but also as a mandate for a
specific, additional, and somewhat independent analysis under a bankruptcy legal term of art. That analysis also
presumes a commercial context. Therefore, the ordinary course of business phrase must override any mild ambiguity
that may exist in other parts of the state excluded promise clauses as, by itself, it precludes reliance on legislative
history to conclude that the state excluded promise clauses categorically exclude commercial consideration from
their scope.
123 See infra ¶¶ 48–53. Not to mention the converse fact that many cases do not apply the excluded promise clauses
in the familial context when the same considerations that preclude their application in the commercial context are
present. See supra note 89.
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3. 	The Excluded Promise Clauses Do Not Encompass the Funding Agreement as a
Matter of Law
70. 	According to the Plaintiffs, if the Court holds (as it does) that “support” in the
excluded promise clauses encompass the conveyance of economic resources (such as payments)
by nonliving persons, the analysis is straightforward from there. It is undisputed, first, that the
Funding Agreement requires the conveyance of such resources to the Debtor and, second, that such
performance was unperformed as of Old CertainTeed’s transfers of assets to New CertainTeed.
Thus, according to the Plaintiffs, the Funding Agreement squarely constitutes an ‘unperformed
promise of support’ and therefore cannot constitute value for purposes of this adversary
proceeding. However, this reasoning oversimplifies the law in a manner that improperly broadens
the excluded promise clauses.
71. 	‘An unperformed promise of support’ is not a generic statutory phrase, but rather a
legal term of art deriving its meaning from two hundred years of common law that proceeded the
modern excluded promise clauses. The legal history of the excluded promise clause, based on the
breadth of the common law and cases preceding its enactment, makes clear that when Congress,
the ULC, and the state legislatures adopted the phrase “an unperformed promise of support,” first
drafted by the 1973 Bankruptcy Commission, they incorporated the legal principles from that
common law history, inclusive of its dimensions and nuances therein.124 That history embeds
significant substance in the modern excluded promise clauses. The pre-Bankruptcy Code case law
124 See supra notes 67–73; see also, e.g., Royal Indem. Co. v. McClendon, 64 N.M. 46, 49 (1958) (affirming that a
transfer of all the debtors’ assets in exchange for a promise of support from the transaction counterpart “constituted
a conveyance upon a glaring inadequacy of consideration”); Townsend v. McGrain, 43 N.J. Super. 438, 440–41 (Ch.
1957); Westminster Say. Bank v. Sauble, 183 Md. 628, 631–32 (1944) (holding that “when a person conveys
property in consideration of an agreement to support him in the future, and by the conveyance renders himself
unable to pay his debts,” the conveyance was fraudulent,” “[n]ot only [because] such a conveyance, until support is
actually furnished, have the infirmity of an executory agreement, but it is presumed as a matter of law that the
grantor had fraudulent intent, and that the grantee had knowledge of the grantor's indebtedness (citing Wilmer v.
Placide, 102 A. 541, 543 (Md. 1917); Ludlow Sav. Bank & Trust Co. v. Knight, 92 Vt. 171, 172–74 (1917))).
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makes clear that while consideration being executory makes that consideration potentially
susceptible to exclusion from value for a fraudulent transfer action, the performance or
nonperformance of the promise was not the exclusive fulcrum on which the exclusion of a promise
turns. Rather, courts have consistently looked to the objective facts surrounding the consideration
and the commercial market’s overall treatment of the consideration.125
72. 	On the whole, the thrust of the case law both before and after the enactment of the
excluded promise clauses is that such obligations, if sufficiently enforceable and likely to be
performed, are not automatically excluded from value as a matter of law. The exact level of
uncertainty surrounding the realization of the value promised by the obligation controls whether
the excluded promise clauses apply. Compare In re MarketXT Holdings Corp., 376 B.R. at 414
(“In this case, the Debtor could not have had a ‘legitimate and reasonable’ expectation of benefit
from a transaction that transferred all of its non-contingent assets to Defendants in return for a
vague, speculative promise, never performed, to let the Debtor have the use of some of the funds
to trade in securities.” (quoting Mellon Bank, N.A. v. The Official Committee of Unsecured
Creditors of R.M.L., Inc. (In re R.M.L., Inc.), 92 F.3d 139, 152 (3d Cir. 1996))), with In re Pawlak,
483 B.R. at 185 (“While perhaps ‘intangible’ in nature, the defendant’s promise to supply future
legal services was not an ‘unperformed promise to furnish support to the debtor,’ nor was it without
any ascertainable economic value at the time of the transfer. Clearly, the promise of representation
through the ‘conclusion’ of any dischargeability proceeding constituted an economic benefit.”). If
there is a sufficient expectation of realization of the value purported to be forthcoming, the
excluded promise clauses cannot apply, at least as a matter of law.
125 See In re Treasure Valley Opportunities, 166 B.R. at 703–06; In re Pawlak, 483 B.R. at 185. See also infra
¶¶ 40–43.
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73. 	First, as to plain meaning, the phrase ‘unperformed promise to furnish support’ is
somewhat broad but has become a legal term of art given its long and rich interpretive history. 11
U.S.C. § 548(d)(2)(A). As discussed above, ‘support’ is a broad term that can encompass a wide-
ranging meaning, but this characteristic does not make it ambiguous.126 However, unlike ‘support,’
‘promise’ is less broad and carries a more nuanced meaning. While ‘promise’ may suggest an
obligation, it does not do so unequivocally. Congress could have utilized words such as ‘obligation’
or ‘contract’ that have different meanings from ‘promise,’ as evidenced by the litany of courts that
distinguish a statute’s use of ‘contract’ from its use of ‘promise.’ See, e.g., Schlant v. Smierciak (In
re Creeley), 644 B.R. 264, 266 (Bankr. W.D.N.Y. 2022) (“In interpreting section 548(d)(2)(A),
courts have distinguished support obligations from ‘unperformed promises of support.’ . . . The
defining difference is whether the payment satisfies an obligation established by judicial directive,
by agreement or by custom and practice.” (quoting Nathan v. Libra (In re Libra), 584 B.R. 550,
562–64 (Bankr. E.D. Mich. 2018); Schaefer v. Williams, 15 Cal. App. 4th 1243, 1247 (1993) (“A
contract is a promise or a set of promises for the breach of which the law gives a remedy, or the
performance of which the law in some way recognizes as a duty.”); ITX Corp. v. Saad, 2004-Ohio-
3600, 2004 WL 1516856, at *2 (Ohio Ct. App. July 8, 2004) (same); Paymon v. Wayne State
University, No. 358128, 2024 WL 4982522 (Mich. Ct. App. Dec. 4, 2024) (same). At bottom, the
word ‘promise’ connotes a non-trivial potential for unenforceability especially in light of the other
words that Congress could have used.
74. 	One rationale for the narrower view, as espoused by the Defendants and a few
academics, is that the language of the excluded promise clause yields “[t]he strong negative
126 See Da Silva v. Att’y Gen. United States, 948 F.3d 629, 636 (3d Cir. 2020) (“[A] term in a statute is not
ambiguous merely because it is broad in scope.” (quoting In re Philadelphia Newspapers, LLC, 599 F.3d 298, 310
(3d Cir. 2010), as amended (May 7, 2010))).
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implication [] that,” except for the excluded promise clause itself, “any other kind of enforceable
executory promise is value” under the federal value statute. Following this logic, the Property
Phrase “is surely wide enough to reach executory promises.”127Again, while the Court ultimately
does agree with the conclusion that an enforceable executory promise may constitute value,
coming to that conclusion requires evaluation of the phrase ‘unperformed promise to furnish
support’ as a legal term of art in the context of two hundred years of common law history. Indeed,
the Plaintiffs’ broad view of the excluded promise clauses dissects the key words ‘promise’ and
‘support’ in the excluded promise clauses but fails to comprehensively evaluate the phrase
‘unperformed promise to furnish support.’
75. 	Additionally, the broad view of the excluded promise clauses would produce absurd
results. Under that reading, constructive fraudulent transfer actions would be available as to a
litany of transactions that are universally accepted not only as providing value in general, but also
critical to normal business operations. If that were the case, whole swaths of routine commercial
contracts would be unable to reap the benefit of being statutorily defined as possessing “value.”
Such a result would fly in the face of “the common sense intuition that Congress would not
ordinarily introduce a general term that renders meaningless the specific text that accompanies it.”
Fischer v. United States, 603 U.S. 480, 481 (2024). This Court refuses to adopt an interpretation
127 EPSTEIN ET AL., supra note 85, at 374–75 (citing 2 DAVID G. EPSTEIN, STEVE H. NICKLES & JAMES J. WHITE,
BANKRUPTCY (1992), quoted in In re Young, 148 B.R. 886, 892 (Bankr. D. Minn. 1992), aff’d, 152 B.R. 939 (D.
Minn. 1993), rev’d, 82 F.3d 1407 (8th Cir. 1996), cert. granted, judgment vacated sub nom. Christians v. Crystal
Evangelical Free Church, 521 U.S. 1114 (1997), and rev’d on other grounds, 141 F.3d 854 (8th Cir. 1998) (adding
that “[a]ny other reading of section 548(d)(2)(A) does not give credence to the Code’s plain meaning”); in In re
Treasure Valley Opportunities, 166 B.R. at 704–705, in turn quoted in Castle Trading, 2017 Bankr. LEXIS 1462 at
*16, in turn quoted in Objection ¶ 53; and in Janvey v. Golf Channel, Inc., 487 S.W.3d 560, 574 n.75 (2016)); see
also 5 COLLIER ON BANKRUPTCY ¶ 548.03, n.75 (16th 2026) (stating that, “with only limited exceptions,” “such [as
an] unperformed contracts for support, which the statute explicitly excludes from the concept of value,”
“‘any . . . kind of enforceable executory promise is value for purposes of section’” (first citing 11 U.S.C.
§ 548(d)(2)(A); then citing In re Treasure Valley Opportunities, 166 B.R. at 704–705 (in turn quoting EPSTEIN ET
AL. (1992), supra, at 374–75)))).
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of the excluded promises clauses in which a “literal application of a statute will produce a result
demonstrably at odds with the intentions of its drafters.” United States v. Ron Pair Enters., Inc.,
489 U.S. 235, 241–42 (1989).
76. 	In addition to placing routine commercial contracts outside of the scope of “value,”
adopting the Plaintiffs’ reading of the excluded promise clause would undermine the debt
satisfaction clause, something this Court will not do. Under Plaintiffs’ interpretation, any promise
the Definitions Clauses encompass could be excised from the definition of “value,” even if that
promise is a satisfaction of future debt.128 This would be an absurd result. The debt satisfaction
clause, the Debt Phrase, falls within the Defining Clauses, but it does not fall within the excluded
promise clauses. See In re Young, 148 B.R. at 892 n.8 (criticizing various decisions for treating
agreements to release claims against the debtor as covered by the debt satisfaction clause but not
implicating the excluded promise clause despite such agreements being “[p]lainly, [] executory
promise[s]”). Thus, the debt satisfaction clause serves as an example of the absurd results that
would follow from applying the broad view of the excluded promise clause.
77. 	In this case, there is sufficient basis to hold that the excluded promise clause does
not apply as a matter of law. The Funding Agreement is an executed contract that presumptively
gives DBMP rights to enforce New CertainTeed’s obligations under the same. Similarly, there is
some factual bases to assume that New CertainTeed will performs its obligations, given the facts
that (1) New CertainTeed has performed in part by paying $64.5 million in legal fees as of February
18, 2021, and have continued to pay as of the date of this Order, and (2) the dire consequences that
would follow if New CertainTeed did not perform. Throughout the pendency of DBMP’s case, the
128 See infra ¶ 59 (analyzing the structure of the value statutes by emphasizing that the Property Phrase and Debt
Phrase precedes the excluded promise clauses)
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Defendants have sought a bankruptcy resolution of their asbestos liabilities, which must be paid
from New CertainTeed’s assets, in part, for that resolution to be achieved.
78. 	While the Court acknowledges that there may be some situations whereby the
excluded promise clauses could apply without reference to disputed facts, that supposition is far
from a universally accepted position. Rather, courts have frequently turned to the specific facts
involved in order to make their determinations. 129 The Court deems such an approach appropriate
here where the application of the excluded promise clauses lean towards a mixed question of law
and fact. Accordingly, the facts in this case inform the meaning of the rule in this context and
cannot be ignored. Perhaps that is why so few courts have historically applied the excluded promise
clause as a matter of law and usually do so only after a trial.130 Those few courts that identified a
pure question of law did not do so simply because the consideration was executory.131
79. 	Still, the Defendants cannot establish that the Funding Agreement is value merely
by declaring it to be enforceable (including by stipulation). Moreover, prior statements by this
Court or even the Fourth Circuit do not automatically establish enforceability, given the different
contexts, settings, and analyses in which those statements were made. And, indeed, there is at least
one significant issue concerning the Funding Agreement’s enforceability, namely, that it was not
negotiated in arm’s-length dealing and is not assignable. Still, this characteristic of the Funding
Agreement is not enough to render its enforceability sufficiently questionable as a matter of law.
80. 	The 	present 	record 	nevertheless 	leaves 	factual 	questions 	that, 	even 	if 	not
independently material, may accumulate sufficient weight as to inform the governing legal
analysis. For example, even though the Funding Agreement was not negotiated and resulted in a
129 See supra notes 87 & 92.
130 See supra notes 86 & 94.
131 See supra note 94.
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contract that contains certain restraints, nonlegal considerations—including the Defendants’
interest in achieving a resolution under § 524(g) and the potential reputational consequences of
failing to honor the Funding Agreement—may render it practically or effectively enforceable.
81. 	The Funding Agreement’s relative novelty may also limit the usefulness of existing
authority and make it difficult for the Court to assess enforceability in the abstract instead creating
cascading questions of mixed law and fact. Its enforceability may instead depend on facts
concerning confirmation, including the terms and likelihood of a confirmable plan. Further
development of the record, is therefore warranted before the Court resolves this issue. That caution
is especially appropriate where a hasty adverse ruling would effectively establish critical
components of Plaintiffs’ claims despite the Fourth Circuit’s expressed expectation that these
proceedings advance toward confirmation.
82. 	Therefore, summary judgment is not appropriate on this record to determine the
issue of whether the Funding Agreement constitutes fair or reasonably equivalent value for the
fraudulent transfer adversary proceeding because the interpretation of ‘promise of support’ in the
excluded promise clause is a mixed question of fact and law and warrants further fact-finding.
WHEREFORE, the Motion is DENIED.
IT IS SO ORDERED.
This Order has been signed electronically. 	United States Bankruptcy Court
The Judge’s signature and Court’s seal
appear at the top of this order.
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