Dean C. Copelan

Publication Date


Document Type



In Grissom v. Johnson (In re Grissom), the Eleventh Circuit Court of Appeals established a case-by-case analytical model to determine when a foreclosure sale brought a "reasonably equivalent value" under 11 U.S.C. § 548. Absent fraud, collusion, or illegal or unlawful procedures, courts should presume that the price brought at the legitimate foreclosure sale is a reasonably equivalent value of the property. For a bankruptcy trustee "to avoid [a] foreclosure sale as [a] transfer of property for which [the] debtor received less than reasonably equivalent value," the trustee "must establish specific factors which undermine confidence in the reasonableness of the foreclosure sale price." The court held that in order to determine reasonable equivalency under 11 U.S.C. § 548, the court must consider and analyze all of the circumstances and factors surrounding a foreclosure sale. The seventy percent test set forth by Durrett v. Washington National Insurance Co. should only be used as a guideline or one factor in a court's analysis. As this casenote will discuss, courts experience difficulty in interpreting the words "reasonably equivalent value" given the lack of both a statutory definition and prior legal precedent.