NERA's Role in a Fraudulent Conveyance Bankruptcy Dispute

The Situation

The Estate Representative for the Chapter 11 post-confirmation estate of Reliance Acceptance Group ("Reliance") alleged fraudulent transfer resulting from the "split-off transaction" against Reliance's parent company, defendants Cole Taylor Financial Group. The split-off transaction of Reliance from Cole Taylor Financial Group resulted in Reliance receiving 4.5 million shares of its own common stock from Cole Taylor in exchange for the defendants receiving the capital stock of CT Bank and mortgage company.  

NERA's Role

NERA was retained by the counsel for Cole Taylor to assess the solvency and capitalization of Reliance Acceptance Group as of the date of the split-off, and to analyze the financial conditions leading Reliance to file for bankruptcy. NERA's work included the valuation of Reliance's assets, namely its subprime loan portfolio, the analysis of Reliance's static pool analysis, and the estimation of the appropriate discount rates for the discounted cash flow valuation model.  

The Result

The case settled.