Bankruptcy Court Uses the ‘Replacement Value Standard’ as It Determines That Debtor ‘Enterprise Value’ Is Lower and Inappropriate

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Court Case Digests
June 13, 2022
8713 Surveying Services
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bankruptcy
bankruptcy, business valuation, asset value, collateral, fair market value (FMV), noncompete agreement, book value, burden of proof, accounts receivable, fixed assets, replacement value

In Re S-Tek 1, LLC
2022 Bankr. LEXIS 1649
US
Federal Court
New Mexico
United States Bankruptcy Court
Jeremiah Grant, Sam Baca
Robert H. Jacobvitz

Summary

The debtor, S-Tek 1 LLC, submitted a motion to value to the Bankruptcy Court to determine the value of the collateral of Surv-Tek Inc. as to debt owed it by the debtor pledged as collateral for debt owed by S-Tek to Surv-Tek. The valuation was to be used in the confirmation of a Chapter 11 reorganization of S-Tek. The court used the replacement value standard of value instead of the “ongoing concern” value since the replacement value provided a value greater than the “enterprise value” (i.e., ongoing concern value).

See Also

In Re S-Tek 1, LLC

The debtor, S-Tek 1 LLC, submitted a motion to value to the Bankruptcy Court to determine the value of the collateral of Surv-Tek Inc. as to debt owed it by the debtor pledged as collateral for debt owed by S-Tek to Surv-Tek. The valuation was to be used in the confirmation of a Chapter 11 reorganization of S-Tek. The court used the replacement value standard of value instead of the “ongoing concern” value since the replacement value provided a value greater than the “enterprise value” (i.e., ongoing concern value).

This article also appears in:
Business Valuation UpdateVol. 28 No. 8