Richards Layton & Finger

Third Circuit Provides Guidance on Determining Value

November 15, 2011

In Am. Home Mortg., the Third Circuit addressed an issue of apparent first impression: whether the term “commercially reasonable determinants of value” under section 562(b) is limited to market or sale value. The U.S. Bankruptcy Court for the District of Delaware held that commercially reasonable value can be demonstrated through a discounted cash flow analysis (DCF) under appropriate circumstances. The Third Circuit affirmed the Bankruptcy Court’s holding and reasoning in substantial measure.

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