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The article examines Section 548 of the U.S. Bankruptcy Code which helps trustees avoid fraudulent asset transfers, highlighting the balance sheet test. It provides a background of the fraudulent transfer law which originated from the Statute of Elizabeth in 1571. It explores fraudulent transfers of assets as well as several insolvency tests. Other topics include liquidation value, return on assets, and discount rates.

The article presents a primer on discount rates, the third in a four-part series addressing the complex issues bankruptcy professionals encounter when dealing with fraudulent conveyance claims and other issues related to analyzing solvency. It explains why discount rates are often controversial and discusses opportunity cost. The article also explores the build-up method, capital asset pricing model (CAPM) and the Fama-French three-factor model of discount rate derivation.

The article discusses the valuation of contingent liabilities. It states that the valuation of such liabilities poses a challenge to business appraisers and bankruptcy trustees. An elaboration of valuation theory that equates the present value of an asset to its discounted future value and the theory's application using the single-scenario model or the multiple-scenario model is also offered.