“Reasonably-Equivalent Value” Re-Defined:
White v. Wardley and the Tenth Circuit’s Blueprint for Evaluating Guaranties and Debt Satisfaction under the Utah UFTA

Introduction

White v. Wardley (In re White), No. 24-4033 (10th Cir. July 22 2025), emerges from a Chapter 7 bankruptcy in Utah and tackles one of the hardest questions in modern fraudulent-transfer litigation: When does a debtor receive “reasonably equivalent value” in exchange for (a) incurring a personal guaranty and (b) later satisfying that guaranty? Trustee J. Kevin Bird sought to avoid both the guaranty and the $750,000 payment that debtor Theodore White made to creditor Lynn Wardley, arguing that the transactions depleted the bankruptcy estate without reciprocal consideration. Both the Bankruptcy Court and the Bankruptcy Appellate Panel (BAP) entered summary judgment for Wardley; the Tenth Circuit has now affirmed, crystalising several key principles under the Utah Uniform Fraudulent Transfer Act (UFTA) and, by extension, Bankruptcy Code §§ 544 & 550.

Summary of the Judgment

The Court of Appeals held, de novo, that:

• White’s guaranty obligation was not voidable because, at the moment he signed it (December 2010), he directly received reasonably equivalent value: (i) a $20,000-per-month executive position, (ii) a 15 % equity stake, (iii) contingent cash/equity incentives, and (iv) the opportunity to lead a funded start-up.
• White’s $750,000 transfer to satisfy that guaranty likewise was not avoidable because the guaranty was “irrevocable and unconditional,” creating an antecedent debt; payment therefore produced a dollar-for-dollar reduction of liability, which is per se reasonably equivalent value.
• The so-called indirect-benefit rule (which can shift the burden of proof to the transferee) was “academic” where undisputed facts showed that the benefits flowed directly to the debtor.

Accordingly, the Tenth Circuit affirmed summary judgment in full for Wardley and, in a concurring/dissenting opinion, Judge Hartz urged that factual disputes about investment risk should have precluded summary judgment.

Analysis

Precedents Cited and Their Influence

• BFP v. Resolution Trust Corp., 511 U.S. 531 (1994)
  Quoted for the Supreme Court’s lexical definition that “reasonably equivalent” means “approximately or roughly equivalent.” The Tenth Circuit leveraged this formulation to hold that an exact monetary match is not required but, conversely, a dollar-for-dollar payoff is self-evidently equivalent.
• Mellon Bank v. R.M.L., 92 F.3d 139 (3d Cir. 1996)
  Adopted for the proposition that courts must value benefits at the moment the transaction is contemplated, disregarding “the benefit of hindsight,” and should assign no value to an investment with “zero probability of success.” This framework drove the panel’s risk-analysis: ABC Club exhibited a plausible chance of success, so its attendant benefits held value.
• Klein v. Cornelius, 786 F.3d 1310 (10th Cir. 2015)
  Reaffirmed that the core inquiry under fraudulent-transfer law is whether the debtor’s net worth is preserved.
• In re Expert South Tulsa (Tulsa I & II), 534 B.R. 400 (BAP 10th Cir. 2015) & 842 F.3d 1293 (10th Cir. 2016)
  Supplied the three-pronged reasonably-equivalent-value test: (1) Was value given? (2) Was it given in exchange? (3) Was the value reasonably equivalent?

Legal Reasoning

1. Time-of-transaction Perspective
   The panel insisted that value is measured as of December 2010 (when the oral deal and LLC formation occurred), not by later failure. Citing R.M.L., the Court refused to treat ex-post insolvency as proof that the earlier value was illusory.
2. Direct vs. Indirect Benefits
   Although the Trustee invoked the “indirect-benefit rule” to shift the burden onto Wardley, both lower tribunals—and now the Circuit—found the benefits flowed directly to White: Wardley’s loans paid White’s salary; White controlled the company’s account; and the equity went straight into White’s hands. The Court therefore sidestepped any formal adoption of the burden-shifting rule.
3. Unconditional Guaranty = Immediate Antecedent Debt
   Parsing the Operating Agreement, the Court deemed the guaranty “an irrevocable and unconditional promise to pay,” thereby generating a present debt on day one. The Trustee’s reading—treating the obligation as contingent on ABC’s future 12-month performance—was rejected as incompatible with the contract’s plain language.
4. Dollar-for-Dollar Satisfaction
   Section 25-6-104(1)(b) U.C.A. equates “satisfying an antecedent debt” with value. Thus, the $750,000 transfer automatically carried equivalent value because it extinguished a $750,000 liability.
5. Plausibility of ABC’s Success
   Applying a risk-adjusted approach, the Court found no evidence that ABC was “obviously doomed” or had “zero probability of success.” Wardley’s continued lending, White’s industry experience, and the parties’ written expectations were enough to characterise the start-up as a legitimate, arm’s-length venture.

Impact of the Decision

White v. Wardley marks the Tenth Circuit’s most detailed exposition on reasonably-equivalent value since Klein v. Cornelius. Its doctrinal contributions will reverberate across four fronts:

1. Guaranties in Startup Ventures – Trustees will face a higher bar when trying to unwind personal guaranties that accompany genuine business launches, provided the debtor receives employment, equity, or other demonstrable benefits.
2. Dollar-for-Dollar Rule Strengthened – Where a debtor satisfies an undeniable antecedent debt, litigation over the “value” side of the equation is largely foreclosed.
3. Indirect-Benefit Rule Limited – By labelling the burden-shifting debate “academic,” the Court signals that fact-specific inquiries trump bright-line shifts; practitioners must marshal evidence on value itself, not merely on who carries the burden.
4. Summary-Judgment Viability Expanded – The opinion validates resolving reasonable-equivalence issues on summary judgment when the factual record is uncontested, reducing costly trials in straightforward fraudulent-transfer disputes.

Complex Concepts Simplified

• Reasonably Equivalent Value (“REV”) – A statutory yardstick under fraudulent-transfer laws. It does not require actuarial precision; the focus is on whether the estate’s net value is preserved approximately.
• Antecedent Debt – A debt that already exists before a challenged transfer occurs. Paying such a debt automatically counts as receiving value under the UFTA / Bankruptcy Code.
• Indirect-Benefit Rule – A doctrine (from other circuits) that shifts the proof burden to the transferee when the debtor’s benefit passes through an intermediary. The Tenth Circuit left this rule open but found it irrelevant here.
• Constructive Fraud vs. Actual Fraud – Constructive fraud does not require bad intent; it hinges on objective deficiencies in value or resulting insolvency. Actual fraud involves intent to hinder or delay creditors.
• Summary Judgment – A procedure allowing the court to decide a claim without trial when the material facts are undisputed and one party is entitled to judgment as a matter of law.

Conclusion

White v. Wardley provides a road-map for litigants and judges confronted with guaranty-related fraudulent-transfer claims. The Tenth Circuit clarified that:

• Courts must value consideration at the moment the obligation is incurred, discounting later failure.
• Where a guaranty is unconditional, the resulting liability is immediate; paying it off is inherently equivalent in value.
• Employment, equity, incentive compensation, and entrepreneurial opportunity collectively can constitute REV—even if the venture later collapses.
• Burden-shifting doctrines are secondary; what matters is the concrete, contemporaneous exchange.

In short, net-worth preservation—not hindsight-driven outcomes—anchors the REV inquiry. For creditors, trustees, and transactional lawyers, the decision underscores the importance of documenting direct, discernible benefits whenever a debtor extends a personal guaranty. For courts, it confirms that where the record is undisputed and the exchange is economically balanced, summary judgment remains an efficient and legally sound endpoint.

© 2025 Commentary prepared for educational purposes only. All rights reserved.