# Kipperman v. Onex Corp.

> District Court, N.D. Georgia · August 13, 2009 · 411 B.R. 805

URL: https://www.frixlaw.com/law-library/cases/1918821

## Case

- **Full name:** Richard M. KIPPERMAN, Plaintiff, v. ONEX CORPORATION, Et Al., Defendants
- **Court:** District Court, N.D. Georgia
- **Decided:** August 13, 2009
- **Citations:** 411 B.R. 805; 2009 U.S. Dist. LEXIS 71666; 2009 WL 2515664
- **Precedential status:** Published
- **Opinion:** Opinion by Forrester
- **Judges:** J. Owen Forrester
- **Cited by:** 39 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/1918821

## How later opinions describe it (automated extraction)

- holding that whether the defendants provided reasonably equivalent value to the debtor with respect to payments made for services to be provided under the terms of a management agreement created material issues of fact; the trustee plaintiff was not barred as a matter of law f…
- stating, in dicta, that “[l]itigation trustees do not have standing to directly pursue claims on behalf of creditors and creditors may not assign their claims to a litigation trust.”
- applying Georgia law and finding date of injury is date party incurs obligation to pay
- concluding that in pari delicto should not be applied against a trustee in fraudulent transfer actions

## Opinion text

OPINION AND ORDER
J. OWEN FORRESTER, Senior District Judge.
I. Background.814
A. The Parties .815
B. The Acquisitions or LBOs.816
1. ABCO Acquires Windsor Door Using the Credit Agreement.816
2. Onex Acquires a Majority Interest in ABCO in May 1999 .817
i. The Acquisition of ABCO through ABCO Holdings.817
ii. The Financing of the ABCO LBO by the Lenders.818
iii. The Management Agreement between ABCO and Onex.820
3. ABCO Acquires Republic.821
i. The Acquisition.821
ii. The Financing.821
4. ABCO Acquires Jannock.822
i. The Acquisition.822
*814
ii. The Financing.822
C. The Bankruptcy.823
D. Procedural History.824
II. Discussion of Plaintiffs Claims. CM 00
A. Fraudulent Conveyance Counts I, III, VII, and IX. <N 00
1. Plaintiffs Standing to Bring Claims Related to Transfers Before
December 1999. 2. ABCO Acquisition Claims and Statute of Limitations. 3. Insolvency/Finaneial Condition and Reasonably Equivalent Value i. Proving Insolvency or Poor Financial Condition. ii. Proving Lack of Reasonably Equivalent Value. iii. Admissibility of Logue’s Expert Testimony under Rule 702 . ©OqiOiOC-OO CO CO CO CO CO CO oooooooooooo
a. Standards for Admission of Expert Testimony under Rule
702 . b. Logue’s “Zone of Insolvency” Testimony . c. Logue’s Methodology for Calculating DCF Variables. d. Logue’s Calculation of Reasonably Equivalent Value. iv. Showing Insolvency or Lack of Reasonably Equivalent Value ... a. Credit Agreement Transfers. b. Management Agreement Transfers. 4. Proving Actual Fraud. 5. Conclusion on Fraudulent Transfer Claims. B. Preferences Count XVII. 1. General Law with Respect to Preferences under 11 U.S.C. § 547 _ oooocooooooooooooococo OiCnüiüicnüiüi^^^^ ocococotOMocoon^w
2. Plaintiffs Prima Facie Case for the Five Management Agreement Transfers at Issue in its Motion for Partial Summary Judgment 00 © ©
3. Plaintiffs Prima Facie Case for Tranche B Preference Transfers_ 00 © CO
4. Defendants’ Affirmative Defenses under Section 547(c). 00 © ^
C. Breach of Fiduciary Duty Count X and XI . 00 © -4
D. Aiding and Abetting Breach of Fiduciary Duty Count XI and Civil Conspiracy Count XII. 00 © ©
E. Unjust Enrichment Count XIX. 00 to
F. Lender Liability Count XVI. 00 -q CO
III. Discussion of Defendants’ Defenses as to Plaintiffs Remaining Claims. A. The Parties’ Cross Motions on “Cap” Defense or Defense 4. 1. The Absolute Priority Rule Does Not “Cap” the Trustee’s Recovery 2. Section 550 Does Not “Cap” the Trustee’s Recovery. 3. Judicial Estoppel Does Not “Cap” the Trustee’s Recovery_ B. The Parties’ Cross Motions on the Doctrine of In Pari Delicto. CO lO CO CO © c- C- C- C- t-oooooooooooo
C. Defendants’ Claim that the Court Lacks Personal Jurisdiction over Gerald Schwartz. 00 00
Plaintiffs Request to Establish Certain “Transfers” . Plaintiffs Motion to Bar Defenses 7,11,12, 27 and 28 QH 00 00 00 00
rv. Conclusion. .887
The instant matter is before the court on the Trustee’s Motion for Partial Summary Judgment [620]; the Onex Defendants’ Motion for Partial Summary Judgment [621]; and Plaintiffs Motion for Leave to File Post-Hearing Submission on
Daubert
Issues [639].
I. Background
The instant action arises out of Magna-trax Corporation (“Magnatrax”) and its subsidiaries’ (collectively “the Debtors”) bankruptcy in 2003 in the Delaware Bankruptcy Court following a number of leveraged buyouts (“LBOs”) involving Magna-trax, its predecessor entity American
*815
Building Company (“ABCO”) and Onex Corporation (“Onex”).
A. The Parties
The Plaintiff in this matter is Richard M. Kipperman, not individually but solely in his capacity as Trustee for the Magna-trax Litigation Trust (“the Trust”). The court will refer to Plaintiff as “the Trustee.” The Trust was established during Magnatrax’s bankruptcy pursuant to the Litigation Trust Agreement and the Mag-natrax Debtors’ Fifth Amended and Restated Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code (“the Plan”).
The Defendants in this matter include Onex, various entities associated with Onex (referred to collectively as “the Onex entities”), and individuals who serve or have served as officers for Onex or the Onex entities. Onex is a publicly traded private equity firm with its principal place of business in Toronto, Ontario. Onex makes money by buying or acquiring businesses, improving their value and selling them at a profit, and by charging management fees to its subsidiaries. Onex engages in the practice of acquiring businesses through leveraged buyouts. Onex explains its leveraged buyout business model in part in its annual reports as follows:
In completing acquisitions, it is generally Onex’s policy to finance a large portion of the purchase price with debt provided by third-party lenders. This debt is assumed by the company acquired and is without recourse to Onex — the Parent Company — or its subsidiaries or partnerships. The foremost consideration, however, in developing a financing structure for an acquisition is to identify the appropriate amount of equity to invest. In Onex’s view, that is the amount of equity which maximizes the risk/reward equation for both Onex and the acquired company; in other words the amount which allows the acquired company to not only manage its debt but also have significant financial latitude for business to vigorously pursue its growth objectives.
While we seek to maximize the risk/reward equation in all acquisitions, there is risk that the acquired company will not generate sufficient profitability or cash flow to service its debt requirements. If such circumstances arise, the recovery of Onex’s equity and any other investment in that subsidiary is at risk.
The following Defendants are “Onex entities”: Onex ABCO Limited Partnership (“Onex LP”), 1354495 Ontario, Inc. (“Ontario”), Onex American Holdings, LLC (“Onex American”), 302733 Nova Scotia, Inc. (“Nova Scotia”), Onex ABCO Finance, LLC (“Onex Finance I”), Onex ABCO Finance II, LLC (“Onex Finance II”), and OMI Partnership Holdings, LTD (“OMI”).
1
Gerald Schwartz founded Onex in 1983; he is the company’s President, Chief Executive Officer, Chairman of the Board of Directors, and majority shareholder. Schwartz holds the right to elect six out of the ten members of the Board of Directors of Onex Corporation. Christopher Govan, Nigel Wright, and Mark Hilson were at all relevant times Managing Directors of Onex. Hilson and Wright also served as directors of Magnatrax from May 11, 1999
*816
through at least May 12, 1999.
2
All of these individuals reside in Canada. The court will refer to Onex, the Onex entities, Schwartz, Govan, Hilson, and Wright collectively as the “Onex Defendants.”
Magnatrax and its various subsidiary entities including ABCO are not parties to this action; however, they feature prominently in the factual scenario underlying it. The company known as ABCO has been involved in the manufacture and marketing of metal building systems since 1947. ABCO was incorporated in Delaware and was licensed to do business in and had manufacturing facilities in numerous states. ABCO was headquartered in Eu-faula, AL. Onex engaged in a LBO with ABCO in 1999, and the new company was renamed Magnatrax. Following the LBO, Onex American owned more than 50% of Magnatrax, and had control of more than 50% of its voting stock. Onex was the indirect owner of all of Onex American through Onex LP. Magnatrax moved its corporate headquarters to Alpharetta, GA sometime in 2002. The court will use the term “the Debtors” to refer to Magnatrax and its related entities affiliated with the Plan coming out of Delaware bankruptcy court.
Charles Blackmon served as Executive Vice President and Chief Financial Officer of ABCO/Magnatrax during the relevant LBOs and through 2002. Robert Ammer-man served as President during this period. Both individuals reside in the United States. Ammerman testified that he was on the Board of Directors for ABCO/Mag-natrax from some time in 1992 through January 10, 2002. Blackmon testified he was on the Board from May 1999 through November 4, 2002.
3
Numerous other entities and individuals are relevant to this matter. Canadian Imperial Bank of Commerce (“CIBC”) is a financial institution that was heavily involved in the transactions relevant to this case. The court will refer to CIBC and other affiliated institutions that lent money to the Debtors as “the Lenders.” CIBC World Markets is the investment arm of CIBC. CIBC World Markets and the Ontario Teachers’ Pension Plan Board both invested in ABCO/Magnatrax.
B. The Acquisitions or LBOs
There are four primary acquisitions relevant to the instant matter — the Windsor Door Acquisition, the ABCO Acquisition, the Republic Acquisition, and the Jannock Acquisition. Each of these acquisitions involved a number of financial transactions.
1. AJBCO Acquires Windsor Door using the Credit Agreement
In December 1997 ABCO acquired the Windsor Door division of Dominion Industries, Inc., a metal door manufacturer. In order to finance the acquisition, ABCO entered into a credit agreement with CIBC and several other lenders dated December 4, 1997 (“the Credit Agreement”). Under the Credit Agreement, CIBC provided ABCO with $75 million in revolving credit, a $40 million term loan, and a $5 million swing line loan, and ABCO pledged its assets as security. William L. Selden, a partner at Sterling Investment Partners
*817
(“Sterling”), a private equity firm, was the Chairman of ABCO’s Board of Directors during this time, and ABCO had a management agreement with Sterling from January 19, 1993 until May 1999 (the “Sterling Management Agreement”). Pursuant to the Sterling Management Agreement, ABCO agreed to pay Sterling an annual management fee of $375,000 and a $487,500 fee for the Windsor Door transaction.
2. Onex Acquires a Majority Interest in ABCO in May 1999
i. The Acquisition of ABCO through ABCO Holdings
Onex’s relationship with ABCO began in 1998 while Hilson and Wright were researching the metal buildings industry on Onex’s behalf. Both Onex and ABCO were considering a transaction with Jan-nock Limited (“Jannock”), a Canadian supplier of metal building products. In January 1999 Onex contacted Selden, as Chairman of ABCO’s Board of Directors, about an acquisition. By the spring of 1999 three companies were interested in acquiring ABCO — Jannock, Onex and Citi-corp Venture Capital (“CVC”). ABCO obtained an investment advisor to assist with acquisition negotiations.
In late March and early April of 1999 Onex and Jannock performed some “due diligence” on ABCO. ABCO allowed both companies to access its data room. On behalf of Onex, Hilson and Wright researched the metal buildings industry; reviewed ABCO’s accounting records; spoke with ABCO’s customers, competitors and sellers; spoke with industry analysts; interviewed builders who used ABCO’s systems and the systems of ABCO’s competitors; examined the company’s historical performance; met with ABCO management; and visited ABCO facilities and other companies in the industry. Onex also reviewed ABCO’s Strategic Plan for 1999-2003 which contained financial projections for each of ABCO’s business units.
4
In March 1999, Onex expressed a willingness to pay $32 per share of ABCO stock; Jannock indicated it would pay between $30-33 per share; and CVC proposed to pay between $31 and $32 per share. On April 7, 1999, Onex and ABCO agreed to an acquisition.
5
Onex created two entities to help effectuate the acquisition — ABCO Holdings and its subsidiary ABCO Acquisition Corp. ABCO entered into an Agreement and Plan of Merger (“Merger Agreement”) with ABCO Holdings and ABCO Acquisition Corp. on April 7, 1999.
6
Pursuant to the Merger Agreement (1) ABCO was to merge with ABCO Acquisition Corp. under Delaware law, and (2) ABCO Acquisition Corp. was to acquire the stock of ABCO by tender offer. On April 13, 1999, Onex, ABCO Holdings, and ABCO Acquisition filed a Schedule 14D-1 setting forth ABCO Acquisition’s tender offer for ABCO’s stock (the “Tender Offer”) with the Securities and Exchange Commission (“SEC”), and ABCO filed its Schedule 14D-9, setting forth, among oth
*818
er things, the bidding process and negotiations.
Pursuant to the Tender Offer, ABCO Acquisition offered to purchase all of the outstanding shares of common stock in ABCO for $36 per share; all ABCO shareholders who accepted the offer were to tender their shares by midnight on May 10, 1999. ABCO Acquisition and American Stock Transfer & Trust Company (“AST”) entered into a Depository Agreement dated “as of April 13, 1999” which provided for AST to act as agent for ABCO Acquisition’s purchase of ABCO’s shares pursuant to the Tender Offer, to accept ABCO Acquisition’s payment of the purchase price for those shares, and to transmit the purchase price to those shareholders who had tendered their shares pursuant to the Tender Offer. On May 11, 1999, ABCO Acquisition, ABCO Holdings and AST entered into the Disbursing Agent Agreement pursuant to which AST was appointed paying agent to deliver checks to those shareholders who had tendered their shares pursuant to the Tender Offer for the $36 per share purchase price. On May 12, 1999, ABCO Acquisition merged with ABCO, and ABCO thereby became a subsidiary of ABCO Holdings. ABCO Holdings was then renamed Mag-natrax.
ii. The Financing of the ABCO LBO by the Lenders
Onex agreed to provide or cause to be provided the total amount of funds required for ABCO Acquisition and ABCO Holdings to purchase all of the ABCO shareholders’ shares and to pay the related fees and expenses. The purchase price for the ABCO Acquisition was financed through equity contributions to ABCO Holdings and two credit agreements- — the Tender Facility Credit Agreement dated as of May 10, 1999, and the Amended and Restated Credit Agreement (“ARCA”) dated as of May 10,1999.
The total equity contributions in ABCO Holdings as of June 7, 1999, were approximately $100 million. The Onex entities, members of Onex’s management team, members of ABCO’s management team, CIBC World Markets and the Teachers’ Pension Fund invested in ABCO Holdings. It is clear that the Onex entities invested at least $60.6 million in ABCO Holdings as of June 7, 1999. Members of ABCO management collectively contributed roughly $4.5 million. Of that amount Ammerman invested roughly $2 million and Blackmon invested roughly $750,000.
7
It is unclear how much Schwartz, Hilson, Wright and Govan personally committed.
8
On June 9,
*819
1999, CIBC World Markets contributed roughly $15 million and the Teachers’ Pension Fund contributed roughly $20 million to ABCO Holdings in order to acquire stock.
ABCO Acquisition and ABCO Holdings entered into the Tender Facility Credit Agreement with CIBC and other Lenders. Under the Tender Facility Credit Agreement the Lenders agreed to loan ABCO Acquisition $110 million secured by the ABCO shares being tendered. ABCO Holdings, ABCO as borrower, and Onex LP as “Tranche B borrower,”
9
entered into the ARCA with the Lenders. The ARCA refinanced the Debtors’ existing debt under the 1997 Credit Agreement and the Tender Facility Credit Agreement. Under ARCA the Lenders provided a $40 million five-year term loan facility to ABCO (“the Tranche A Loan”), a $30 million revolving credit facility to ABCO (“the Revolving Credit Loan”), and a $140 million, six-and-one-half-year term loan facility to Onex LP (“the Tranche B Loan”).
The Tranche B loan flowed through the Tranche B Structure, which was a “tower” financing structure. Such a financing structure, commonly used in transactions involving Canadian companies, permits a Canadian company, under certain circumstances, to report the equivalent of interest expense deduction, without removing the deduction of interest from the U.S. taxpayer, or in other words allowing the company to “double dip.” Under the Tranche B Structure, CIBC lent money to Onex LP rather than directly to ABCO. The money flowed through numerous subsidiaries and shells to ABCO. The Tranche B Structure involved six steps — (1) the Lenders distribute the Tranche B Loan proceeds to the Tranche B Borrower, Onex LP; (2) Onex LP invests all the proceeds in the capital common stock of Nova Scotia; (3) Nova Scotia invests all the proceeds of Onex LP’s investment in the capital common stock of Onex Finance II; (4) Onex Finance II invests all the money from the prior transaction in Onex Finance I; (5) on the closing date Onex Finance I lends ABCO, Windsor Door, and an ABCO subsidiary ABC Transportation the entire amount invested in Onex Finance I on economic terms and conditions identical to those applicable to the Tranche B Term Loans, except with an interest rate 25 basis points higher; and finally (6) Windsor Door and ABC Transportation pay cash dividends and/or repay existing debts owed to ABCO in an amount equal to the principal amount of the loans made to them by Onex Finance I. The parties dispute the ultimate impact of the Tranche B Structure on the Debtors and its ultimate benefit to the Onex Defendants.
Before agreeing to enter into the ARCA and the Tender Facility Credit Agreement, CIBC investigated ABCO. In the May 1999 Confidential Information Memorandum prepared by CIBC to syndicate the ARCA, CIBC set forth historical ABCO financial data. It looked at ABCO’s performance under the ABCO managements’ predictions, or the best case scenario, a moderate case scenario, and a downside case scenario. In deciding to invest, CIBC considered ABCO’s favorable industry growth dynamics, substantial market share, geographically diverse operations, established builder/dealer network, diversification of product mix and consumer base, strong historical financial performance, solid cash flow and credit statistics,
*820
experienced management team, and strong equity sponsor in the form of Onex. Standard
&
Poor’s awarded a B + rating to the ARCA debt. This is a “sub investment” or “speculative” grade rating.
iii. The Management Agreement between ABCO and Onex
The ARCA funds were also used to finance costs under a management agreement between Onex and ABCO dated as of May 11, 1999 (“the Management Agreement”). The Management Agreement was backdated and was actually executed on June 8, 1999. Under the Management Agreement Onex agreed to perform certain management functions and “consulting services” for ABCO. Specifically, Onex would
consult[] with and assist[] [ABCO’s] Board and management in the following: (i) developing and implementing corporate and strategic plans; (ii) budgeting future corporate investments; (iii) developing and implementing acquisition and divestiture strategies; (iv) providing other management, administration, financial and support services; (v) subsequent debt and equity financing; and (vi) developing international joint ventures or licensing arrangements with prospective partners or licensees.
(P. Resp. D. SMF ¶ 141). The Management Agreement only obligated Onex to perform such services “as may be reasonably requested from time to time by the Board or management of [ABCO].”
(Id).
Pursuant to the Management Agreement, ABCO agreed to pay the Onex entities an initial fee of $1.5 million and a yearly fee of $875,000, subject to an increase equal to 0.75% of the annual EBIT-DA
10
of any businesses acquired by ABCO or its subsidiaries. ABCO was also required to “reimburse Onex for such reasonable travel expenses and other direct out-of-pocket expenses as may be incurred by Onex or its subsidiaries and their personnel in connection with the rendering of services [under the Management Agreement], including, without limitation, services of such personnel as members of the Board and the fees of external advisors, consultants and professionals.” The Management Agreement also provided for ABCO to pay the Onex entities “[i]f [ABCO] uses Onex personnel to provide investment banking or financial advice in connection with any acquisition, Onex will be entitled, if the acquisition is consummated, to receive fees equal to 1.25% of the transaction value of such acquisition ... less any amount paid by the Company for similar services to any investment banker or other third party in connection such [sic] transaction.” The larger payments received by Onex under the Management Agreement were for these “investment banking services.” ABCO paid the Onex entities transaction fees associated with the Republic and Jannock acquisitions. The parties disagree as to whether Onex ever actually performed any services pursuant to the Management Agreement.
The last payment of quarterly fees under the Management Agreement was made to OMI on August 16, 2002 for the period July 1 — September 30, 2002. As of the date of the bankruptcy filing, Magnatrax still owed $592,876.80, plus $8,934.93 in interest, pursuant to the terms of the Management Agreement. Onex filed a proof of claim for these fees and was paid $45,987.12.
*821
3. ABCO Acquires Republic
i. The Acquisition
Republic Builders Products (“Republic”), based in Tennessee, manufactured and sold metal doors and frames for commercial, industrial, and instructional use. In May 1999 ABCO management, including Ammerman and Blackmon, saw the potential for synergies by combining Republic with Windsor Door. Ammerman believed Republic could be a great “bolt-on acquisition,” very similar to the Windsor Door transaction in late 1997, and would allow ABCO to increase sales by 12-15% a year. Howard Burns, as President of Windsor Door, wrote Ammerman and Blackmon about the value of obtaining Republic, and ABCO management proposed to Onex that ABCO acquire Republic. ABCO and Onex representatives met with Republic management, toured Republic’s facilities and requested information from Republic. Ammerman wrote to Republic’s investment banking firm on behalf of ABCO and indicated ABCO’s hope that an acquisition would produce synergies. Hil-son and Wright analyzed the Republic acquisition in internal memoranda to Onex management. Hilson and Wright estimated that ABCO’s acquisition of Republic would result in $2.9 million in further EBITDA per year resulting from cost savings, purchasing economies of scale, and margins on incremental sales.
Other parties bid on Republic; one bid higher than ABCO. It is unclear how much information the parties had before they bid. On or about September 1, 1999, Republic Builders Products Company, a subsidiary of ABCO and a Delaware corporation, purchased Republic pursuant to the Asset Purchase Agreement dated August 11, 1999, as amended on September 1, 1999, for $44.1 million.
ii. The Financing
ABCO funded the acquisition of Republic with additional equity and additional funds from the Lenders. CIBC, Onex LP and the Debtors amended the ARCA as of August 5, 1999, to provide for additional loans from the Lenders to ABCO to partially fund the purchase of Republic. The terms of the Second Amendment increased the Tranche A loan by $5 million and the $140 million Tranche B loan by $20 million, to $160 million, and increased the interest on the existing $140 million Tranche B loan by 25 basis points. Increasing the Tranche B loan by $20 million increased the size of each of the last two balloon payments which would become due on the Tranche B loans in 2005. The remainder of the purchase was funded by $8.5 million equity contribution by Onex, a $1.9 million equity contribution by CIBC World Markets, and a $2.5 million contribution by Teachers’ Pension Fund. ABCO represented to CIBC that it intended to finance the Republic acquisition with $9.1 million in existing cash.
CIBC investigated Republic and how it would fit into ABCO’s overall strategy and current loans before agreeing to the Second Amendment. CIBC determined that the Second Amendment would allow CIBC to “sell down” its “remnant position” from the ABCO acquisition in 1999. CIBC had been unable to syndicate to other banks as much of the original loan exposure as it had planned to do because the transaction was perceived by the market as a highly leveraged senior stretch transaction for a cyclical company. Following the Republic transaction, Standard & Poor’s assigned a B + debt rating, and Moody’s assigned a Ba3 rating to the ABCO debt. The year 1999 was ABCO’s most profitable year on an operating basis.
*822
4. ABCO Acquires Jannock
i. The Acquisition
After Jannock lost the bid to acquire ABCO in June 1999, Jannock put itself up for sale in a public auction process. Merrill Lynch prepared a Confidential Descriptive Memorandum about Jannock and its future prospects. Ammerman, as CEO of ABCO, believed that an acquisition of Jannock was very important to ABCO’s three-to-five-year vision and believed it would achieve synergies and other efficiencies. Other companies, including CVC and Robertson-Ceco, were also interested in acquiring Jannock. ABCO conducted due diligence of Jannock, building on the prior discussions between the two companies regarding a potential acquisition in 1998, and reviewed Jannock’s historic performance, prospects for future industry growth and projections for future revenues. On January 26, 2000, the Executive Committee of the Onex Board of Directors approved Onex’s participation in the Jannock acquisition. The Magnatrax Board of Directors unanimously approved the acquisition of Jannock. Pursuant to the acquisition, Jan-nock shareholders were to receive CND$16 per share in cash and CND$2.50 per share in subordinated notes, plus a share in certain Jannock real estate assets that were not being sold to Magnatrax. Magnatrax Corporation acquired Jannock on March 10, 2000, pursuant to the Jan-nock Arrangement Agreement for a purchase price of $445 million.
ii. The Financing
ABCO financed the acquisition of Jan-nock through additional equity contributions and loans from the Lenders. On March 10, 2000, Magnatrax, through its wholly-owned subsidiary Delta Acquisition Corporation (“Delta”), executed the Second Amended and Restated Credit Agreement (“SARCA”) with the Lenders. Under the SARCA the Lenders provided financing for the Jannock transaction including an additional $5 million in Tranche A borrowing, $27 million in additional Tranche B borrowing, and $15 million in revolving credit commitments, as well as certain Canadian credit facilities. Delta ultimately merged with Jannock. This company became VicWest, a wholly-owned subsidiary of ABCO. American Buildings Interholdings, Inc. (“ABI”), then acquired the stock of Vicwest from ABCO.
In addition to the SARCA indebtedness, the Debtors incurred additional debt relating to a seven-year subordinated note (the “Subordinated Note”) in the amount of CND$83,984,035 (approximately US$57 million). The Subordinated Note had a fixed coupon equal to 12.5% per annum which was to pay cash interest semiannually, and mature on the seventh anniversary of the date of issuance. The Subordinated Note was supported in part by a “Mirror Note” provided by Magnatrax Finance Co. (“Magnatrax Finance”). Magnatrax Finance was created for the sole purpose of incurring the indebtedness under the Mirror Note. Through various agreements, ABCO indirectly guaranteed Vicwest’s obligations under the Subordinated Note and directly guaranteed Magnatrax Finance’s obligations under the Mirror Note.
CIBC World Markets contributed roughly $16 million and Teachers’ Pension Fund contributed $30 million in additional equity. Defendants also contributed funds as Magnatrax shareholders to fund the Jannock acquisition. Before deciding to invest, CIBC World Markets prepared an analysis of the Jannock transaction. CIBC World Markets found ABCO’s valuation of Jannock to be attractive and to compare favorably to similar publicly traded companies and noted ABCO’s belief that the transaction would produce syner
*823
gies. Prior to the financing of the Jan-nock acquisition, CIBC also conducted what it characterized as a “due diligence” meeting with Jannock, ABCO and Onex personnel; visiting Jannock plants; and reviewing public filings, internal data room “due diligence” materials, research analyst reports and other industry data. CIBC concluded that Jannock was a sound strategic fit for ABCO’s goal of acquiring similar businesses to gain market share, realize synergies, and leverage its existing infrastructure, and that the loan was a good investment even under a downside case. Prior to, and in anticipation of the Jannock acquisition, Standard & Poor’s raised the corporate credit rating and bank loan rating of ABCO to BB- from B +. The syndication of the debt following the Jannock transaction was well received and oversubscribed.
C. The Bankruptcy
In early 2001 the United States economy began to slip into a recession, and by November 2001, the construction industry was experiencing severe challenges. In March 2002, the U.S. Government imposed tariffs on certain types of steel imported into the United States — a core raw material in Magnatrax’s business. On May 12, 2003, Magnatrax and its subsidiaries, including ABCO, Republic, and Jannock, each filed Chapter 11 petitions in the U.S. Bankruptcy Court for the District of Delaware. On November 17, 2003, the U.S. Bankruptcy Court for the District of Delaware confirmed the Plan which outlined how all the Debtors’ assets would be allocated. Under the Plan, CIBC and the Lenders, on account of their approximately $250 million secured claim, received $100 million in notes plus 92% of the equity in the reorganized Magnatrax. Pursuant to a settlement among the Magnatrax Debtors, CIBC and the Creditors’ Committee, the unsecured creditors received $5 million, plus a 2% contingent interest in the reorganized Magnatrax. In return, the unsecured creditors released any claims they might have had against Magnatrax, its officers and directors, and the Lenders. Under the Plan, equity interests were “cancelled and extinguished” and received no distribution.
As stated above, the Plan also established the Trust pursuant to the Litigation Trust Agreement and confirmed Richard Kipperman as the Trustee. The Magna-trax Debtors transferred the assigned causes of action
11
to the Litigation Trust, for and on behalf of the Trust Beneficiaries. The Plan gave the Debtors’ Class 9 general unsecured creditors the opportunity to opt into the Trust, contribute a portion of their bankruptcy distributions, and become one of the Trust Beneficiaries. As a Trust Beneficiary an unsecured creditor would be eligible to receive a portion of any return garnered by the Trustee minus litigation expenses. Under the Litigation Trust Agreement, the Trustee agreed to distribute whatever he recovered only “to the Trust Beneficiaries as described in the Plan and this Litigation Trust Agreement,” and the Trust Beneficiaries were not required to pay any portion of any
*824
recovery in this action to either Magnatrax or to unsecured creditors who did not opt into the Trust. The Plan stated that the exact amount of the unsecured creditors’ claims was unknown at that time but that “the Magnatrax Debtors estimate[d] that the [unsecured creditors’ claims] [would] not exceed $56.6 million in the aggregate
At the Creditors’ Committee’s request, the following language was included in the Debtors’ Disclosure Statement filed with the Bankruptcy Court prior to confirmation of the Plan:
The value of the claims against Onex and the Onex Affiliates is difficult to ascertain with any reasonable certainty because of the amount of discovery and investigation yet to be completed. Based on the limited discovery obtained to date, the Creditors’ Committee estimates that the gross amount of claims against Onex and the Onex Affiliates could range from approximately $8 million to approximately $24 million.
(D.A.11 at 98). Among the causes of action included in this estimate were claims against Onex based on the Management Agreement fees paid by ABCO, claims that Onex directed Magnatrax to “substantially overpay” for Republic and Jannock, and claims that Onex “created and implemented a financing structure designed to provide a tax benefit to Onex” while damaging Magnatrax through the payment of additional interest. The total allowable claims of the unsecured creditors who opted into the Trust was a little over $14 million. As of September 28, 2007, the unsecured creditors who opted into the Trust had been paid a little over $2.5 million in the aggregate on their claims.
D. Procedural History
The procedural history of this matter is voluminous and occupies more than 636 docket entries. For a complete procedural history of this matter the court directs the reader to the more than thirty orders entered in the case. The following is meant to provide a brief history of the pleadings and orders relevant to the instant motions.
On May 10, 2005, Richard Kipperman, not individually but solely in his capacity as Trustee for the Magnatrax Litigation Trust, filed a complaint against the Onex Defendants, Robert Ammerman, and Charles Blackman, and VicWest alleging actual or fraudulent conveyances in violation of O.C.G.A. §§ 18-2-70,
et seq.,
and 11 U.S.C. §§ 544 , 548, and 550; transfers in violation of the Federal Debt Collections Procedures Act, 28 U.S.C. § 3304 (a); breach of fiduciary duty; aiding and abetting breach of fiduciary duty; civil conspiracy; alter ego liability; disregard of corporate formalities; single business enterprise and
de facto
partnership liability; lender liability, avoidance of preferential transfers under 11 U.S.C. § 547 ; and unjust enrichment.
On September 30, 2005, Plaintiff voluntarily dismissed its claims against VicWest in Counts IV-VI[50]. The court issued an Opinion and Order on September 15, 2006, dismissing Plaintiffs Control Premium Acquisition Transfer claims incorporated throughout the fraudulent transfer counts, Disregard of Corporate Formalities claim (Count XIV),
defacto
Partnership Liability claim (Count XV), and Plaintiffs breach of fiduciary duty claim except as to Onex American, Hilson, and Wright. Following the court’s Opinion and Order, the parties answered and asserted various affirmative defenses [72][73]. Plaintiff amended its complaint on October 18, 2006, to plead its claims with additional particularity [78]. The parties began to engage in discovery. The court has detailed the extensive and contentious discovery process in this matter in its May 27, 2009 Opinion and Order
*825
awarding more than $1 million in discovery sanctions against Defendants [630]. On January 31, 2007, Plaintiff filed its More Definite Statement supplementing its Amended Complaint [123].
In April 2007 the Bankruptcy Court of Delaware held a hearing to consider reopening Magnatrax’s bankruptcy to address Defendants’ concerns about the Trustee’s potential recovery in this matter. The Bankruptcy Court explained that it was troubled by the effect that a $600 million recovery, or recovery significantly in excess of the dollar amount of the claims of the beneficiaries of the liquidation trust, would have on the integrity of the Plan. Regardless, on April 16, 2007, the Bankruptcy Court issued an order denying Defendants’ Motion to Reopen and stated that a “decision on the motions would constitute an ill-advised advisory opinion and would interfere with the jurisdiction of the District Court in violation of the principle of comity and contrary to the best interests of justice.” On September 26, 2007, the court entered an order finding that Ammerman, Blackmon, Hilson, and Wright were all “Released Parties” under the Plan and should be dismissed. The court also held that all ABCO Acquisition Transfers made prior to May 12, 1999, should be dismissed as time barred. Following the court’s September 26, 2007 Order, only Counts I-III, VII-XIII, XVIX-VII, and XIX remained a part of this litigation.
Plaintiff filed a Statement of Additional Transfer Information on December 7, 2007, further particularizing its claims [361]. On January 8, 2008, Plaintiff settled any outstanding matters with Defendants Ammerman and Blackmon [396]. The parties filed their respective Motions for Partial Summary Judgment on April 30, 2009[620][621]. These motions have been fully and extensively briefed. The parties’ briefs raised issues with respect to Plaintiffs asserted experts. The court accepted a pre-hearing
Daubert
submission from Plaintiff and held a
Daubert
hearing on July 10, 2009. Plaintiff filed a Motion for Leave to File PosiAHearing Submission on
Daubert
Issues on July 22, 2009.
II. Discussion of Plaintiffs Claims
The instant matter involves statutory claims of fraudulent conveyance, preferences, and transactions under the Federal Debt Collection Procedures Act and common law claims relating to alter ego, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, conspiracy, lender liability, and unjust enrichment. The Trustee moves for partial summary judgment (1) to establish that 255 individual financial transactions were “transfers of an interest of the debtor in property” for purposes of the Trustee’s statutory claims; (2) to establish five of the six elements necessary to prove five of its preference claims in Count XVII; and (3) to bar the Defendants from asserting certain affirmative defenses.
12
Defendants move for par
*826
tial summary judgment as to all of Plaintiffs claims except alter ego liability and claims under the Federal Debt Collection Procedures Act.
A. Fraudulent Conveyance Counts I, III, VII, and IX
In Counts I, III, VII, and IX of the First Amended Complaint, Plaintiff alleges that the Onex Entity Defendants executed “Credit Agreement Transfers,” including a subset of “Tranche B Transfers,” “Acquisition Transfers,” and “Management Fee Transfers,” which were voidable actual or constructive fraudulent conveyances. Defendants have moved for summary judgment as to all of Plaintiffs allegedly fraudulent transfers. Defendants’ Motion for Partial Summary Judgment addresses each category of Transfers separately and moves for summary judgment as to each category of Transfers on different grounds. Defendants’ motion addresses certain aspects of the prima facie case to avoid and recover a fraudulent transfer and does not address others. Here, the court has only addressed those grounds on which Defendants moved; the court has not made an independent assessment of whether Plaintiff can make out
every
element of its
prima facie
case with respect to each group of Transfers. The court did not do so because it did not want to penalize Plaintiff for not coming forth with evidence on a ground which Defendants had not yet attacked.
The following analysis of Plaintiffs fraudulent transfer claims is long and detailed. In sum the court: (1) GRANTS Defendants’ Motion for Partial Summary Judgment on Plaintiffs Credit Agreement Transfer claims because Plaintiff has not created a genuine issue of material fact as to whether the Debtors received reasonably equivalent value; (2) GRANTS Defendants’ Motion for Partial Summary Judgment on Plaintiffs Acquisition Transfer claims because Plaintiff has not created a genuine issue of material fact as to insolvency or whether the Debtors received reasonably equivalent value; and (3) DENIES Defendants’ Motion for Partial Summary Judgment on Plaintiffs Management Agreement Transfer claims because Plaintiff has created a genuine dispute of material fact as to whether the Debtors received reasonably equivalent value. The court also finds that (1) Plaintiff has not presented a genuine dispute of material fact as to whether Defendants acted with “actual” fraudulent intent; (2) Plaintiff has standing to pursue all its fraudulent transfer claims; and (3) Plaintiffs ABCO Acquisition Transfer claims are barred by the statute of limitations.
Typically, a fraudulent transfer claim is made by a creditor who seeks to recover property that was wrongfully transferred by the debtor in an attempt to avoid paying the debt. Fraudulent transfers are prohibited by federal law as codified in 11 U.S.C. § § 544, 548 and by numerous state statutes mirroring the Uniform
*827
Fraudulent Conveyance Act and the Uniform Fraudulent Transfer Act.
13
Georgia prohibits fraudulent transfers which occurred prior to July 1, 2002, under O.C.GA. § 18-2-22, and transfers which occurred after July 1, 2002, under the Uniform Fraudulent Transfer Act codified in O.C.GA. § § 18-2-70,
et seq.
14
Gerschick
*828
v. Pounds,
281 Ga.App. 531 , 533 n. 8, 636 S.E.2d 663 (2006). These statutes allow courts to set aside transfers made “with actual intent to hinder, delay, or defraud” creditors and transfers indicative of fraud even though actual fraud may not be provable. Once a court has set aside a transfer, a plaintiff may recover the value of that conveyance under 11 U.S.C. § 550 .
15
Therefore, in order for the Trustee to succeed in its suit against Defendants on these claims, the Trustee must establish that there has been a section 548 or 544 actual or constructive fraudulent transfer and that Defendants are the parties from whom it may seek recovery under section 550.
See In re Chase & Sanborn Corp.,
848 F.2d 1196, 1199 (11th Cir.1988) (addressing whether a bank was initial transferee under section 550 when it honored a check before receiving wire to cover it).
In order to establish that there has been a constructive fraudulent transfer under either section 548 or section 544 and O.C.G.A. §§ 18-2-74(a)(2), 18-2-22(3) (repealed in 2002), the Trustee must prove that Magnatrax (1) received “less than reasonably equivalent value” in consideration for the transfers and (2) was insolvent at the time the transfer was made or was rendered insolvent as a result of the transfer.
See In re Clarkston,
387 B.R. 882, 888 (Bankr.S.D.Fla.2008) (outlining prima
*829
facie case under section 548);
16
In re Stewart,
No. 05-3085, 2007 WL 1704423 , at *4 (Bankr.M.D.Ga. June 8, 2007) (outlining prima facie case under O.C.G.A. § 18-2-22(3));
17
Word v. Stidham,
271 Ga.App. 435, 436-37 , 609 S.E.2d 651 (2004) (outlining the prima facie case under sections 18-2-74(a) and 18-2-75(a)). In order to prove that the relevant transfers were actually fraudulent, a plaintiff must show through direct evidence or various “badges of fraud” that the relevant transfers “were made with actual intent to hinder, delay, or defraud” the debtor’s unsecured creditors.
See, e.g.,
O.C.G.A. § 18-2-74(a)(l). In order to recover funds conveyed in a fraudulent transfer from a particular defendant, a trustee must show that the particular defendant was an initial transferee, the entity for whose benefit the transfer was made, or a subsequent transferee of the initial transferee. 11 U.S.C. § 550 (a).
Defendants contend that (1) Plaintiff has presented no evidence of actual fraud; (2) Plaintiff lacks standing to assert claims of constructive fraud occurring prior to December 1999; and (3) Plaintiff cannot make out a prima facie case for construc-five fraudulent transfers after December 1999 as to the Credit Agreement,
18
Acquisition,
19
or Management Agreement Transfer claims. Defendants insist that Plaintiff cannot establish that the Credit Agreement Transfers were fraudulent transfers because (1) the Debtors received “reasonably equivalent value,” and (2) Defendants were neither initial transferees nor entities for whose benefit the transfers were made. Defendants maintain that Plaintiff cannot establish that the Acquisition Transfers were fraudulent transfers because (1) the Debtors received “reasonably equivalent value,” (2) the Debtors were solvent at the time of all the Acquisition Transfers, and (3) Defendants were neither initial transferees nor entities for whose benefit the transfers were made. Defendants further aver that to the extent Plaintiff can make a prima facie case for the Acquisition Transfer claims, the statute of limitation bars all such claims before May 12, 1999. Lastly, Defendants contend that Plaintiff cannot establish that the Management Agreement Transfers were fraudulent transfers because the Debtors received “reasonably
*830
equivalent” value for all such transfers. Defendants’ contentions require the court to address six primary questions — (1) standing, (2) statute of limitations, (3) insolvency, (4) reasonably equivalent value, (5)proof of actual fraud, and (6) whether Defendants are the appropriate parties from whom Plaintiff can recover under section 550. Plaintiffs claims that — (1) the Debtors did not receive reasonably equivalent value for their transfers, and (2) the Debtors were insolvent or in poor financial condition at the time the transfers were made, rely upon the proffered expert testimony of Dennis E. Logue, Ph.D. Defendants have moved to exclude this testimony under Fed.R.Civ.P. 702 and
Daubert v. Merrell Dow Pharmaceuticals, Inc.,
509 U.S. 579 , 113 S.Ct. 2786 , 125 L.Ed.2d 469 (1993). Therefore, in the course of evaluating Defendants’ contentions as to reasonably equivalent value and insolvency, the court must address whether Logue’s testimony is admissible.
1. Plaintiffs Standing to Bring Claims Related to Transfers Before December 1999
Defendants insist that the Trustee lacks standing to assert claims for fraudulent transfers occurring prior to December 1999 due to the “subsequent creditors” rule. Defendants contend that this argument prohibits $5 million of Plaintiffs claims.
Under Georgia law a creditor may move to set aside a transfer made or an obligation incurred by a debtor that is fraudulent as to the creditor. O.C.G.A. § 18-2-74. “Under 11 U.S.C. § 544 (b), a [bankruptcy] trustee [or debtor in possession] in bankruptcy may ‘step into the shoes’ of an unsecured creditor and void a transfer of an interest in the debtor’s property that the unsecured creditor would have the power to void under federal or state law.”
In re Int’l Pharmacy & Discount II, Inc.,
443 F.3d 767, 770 (11th Cir.2005).
See also
11 U.S.C. § 1107 (a) (Bankruptcy Code providing that such “debtor-in-possession” has essentially all the rights and powers of a trustee). An assignee of claims from a trustee, or debt- or-in-possession, “stands in the shoes” of the assignor and has the same rights, benefits and remedies as the assignor.
Official Committee of Unsecured Creditors of Color Tile, Inc. v. Coopers & Lybrand, LLP,
322 F.3d 147, 156 (2d Cir.2003).
Here, Magnatrax was a debtor-in-possession under the Plan, and Magnatrax assigned all of its causes of action to the Trust. Therefore, if the bankruptcy trustee or Magnatrax, as debtor-in-possession, would have had standing to pursue fraudulent conveyance claims that occurred prior to December 1999, so would the Trustee. As stated above, the bankruptcy trustee’s standing is based upon whether there was an unsecured creditor to bring the claim into whose shoes it may step.
Under Georgia’s “subsequent creditors” rule a pre-transfer creditor has the right to recover property actually or constructively fraudulently transferred, but a subsequent creditor or post-transfer creditor may only recover property which was
actually
fraudulently transferred.
In re Veterans Choice Mortgage,
291 B.R. 894, 897 (Bankr.S.D.Ga.2003).
20
A pre-transfer creditor is an entity which is a creditor at the time of the fraudulent transfer and reduces its claim to a judgment lien after
*831
the transfer.
Id.
at 897 n. 4. The subsequent creditors rule is based on the principle that post-transfer creditors have the benefit of evaluating the effect of the transfer on the debtor before extending unsecured credit.
Defendants maintain that the Trustee can only step into the creditors’ shoes with respect to the claims of those creditors that elected to opt into the Trust. Defendants insist that none of the Trust Beneficiaries’ possible claims accrued before December 1999, or in other words, none of the Trust Beneficiaries are pre-transfer creditors with respect to the transfer before December 1999, and accordingly Plaintiff lacks standing to avoid any constructive fraudulent transfers that occurred prior to that time. Plaintiff insists that the relevant inquiry is whether
any
creditors, and not just the Trust Beneficiaries, had possible claims which accrued before December 1999. Plaintiff argues that if any such creditors existed, the Debtors could have pursued claims on their behalf and as the Debtors’ assignee the Plaintiff may also do so. Regardless, Plaintiff contends that two creditors who opted into the Trust, or Trust Beneficiaries, asserted claims that accrued before May 12, 1999, one going back to 1995.
Here, Defendants cite to no case law to support their position that Plaintiffs claims are limited by the creditors who opted into the Trust, and this court cannot find any. Plaintiffs standing in this matter derives from the Debtors, not the unsecured creditors or Trust Beneficiaries. Under the Plan and the Litigation Trust Agreement the Debtors set up the Litigation Trust as the successor to and the representative of the Debtors’ bankruptcy estate and transferred all of their rights, title, and interest to pursue, litigate, settle, or otherwise resolve any Cause of Action against Onex Corporation or any Onex Affiliate to the Litigation Trust, for and on behalf of the Trust Beneficiaries. Therefore, if the Debtors could have brought the claim, the Plaintiff may bring it. The Debtors’ right to bring constructive fraudulent transfer claims under 11 U.S.C. § 544 and Georgia’s subsequent creditor rule is contingent on there being an unsecured creditor into whose shoes they may step. That creditor does not necessarily have to be one of the unsecured creditors who opted into the Litigation Trust. The relationship between the Trust Beneficiaries and the Litigation Trust is not based upon assigned claims and does not control what constructive fraudulent transfer claims Plaintiff may bring. The Litigation Trust simply sets up a relationship in which unsecured creditors forfeited their initial distribution to the Trust for a stake in any future larger recovery.
21
Plaintiff has presented evidence of at least eight proofs of claim that were filed against the Debtors by creditors indicating debts they had incurred prior to May 12, 1999. (P. Resp. at 38 n. 30). The Debtors could have stepped into the shoes of any of these
*832
claimants, and under the Plan the Trustee also had standing to do so.
See In re Leonard,
125 F.3d 543, 544 (7th Cir.1997) (explaining that the court need not identify which creditor because trustee could step into shoes of any one).
Even if the court were to accept Defendants’ argument, the court finds that two of the Trust Beneficiaries were pre-transfer creditors as of December 1999. Durwood Graddy and Norman Mahan submitted proofs of claim for failure to pay pension benefits under ABCO’s Management Security Plan Agreement. (App. 145 at MLT0007448-60, App. 146 at GC 0003005-24). Mahan and Graddy signed the Plan Agreement with ABCO on April 4, 1995. Mahan and Gaddy both contend that ABCO “incurred” its debt to them on or before January 1, 1999. ABCO paid Mahan and Graddy benefits under the plan until early 2003.
Under Georgia law a creditor relationship arises when “one person, by contract or by law, is liable and bound to pay to another an amount of money, certain or uncertain.”
Beeson v. Crouch,
227 Ga. App. 578, 583 , 490 S.E.2d 118 (1997) (quoting O.C.G.A. § 18-2-1). A pre-transfer creditor is one “who held demands against the debtor at the time of the conveyance.”
Id.
As soon as Mahan and Graddy signed the Management Security Plan with ABCO, they became creditors. This occurred prior to December 1999; at that time these individuals were pre-transfer creditors. The trustee and subsequently the Plaintiff could step into their shoes to pursue a fraudulent transfer claim.
22
The court finds that Plaintiff had standing to bring constructive fraudulent transfer claims prior to December 1999, and DENIES Defendants’ Motion for Partial Summary Judgment on this basis.
2. ABCO Acquisition Claims and Statute of Limitations
Plaintiffs fraudulent transfer claims are governed by the statute of limitations in O.C.G.A. § 9-3-32 which states that “[a]c-tions for recovery of personal property, or for damages for the conversion or destruction of the same, shall be brought within four years
after the right of action accrues.
” (Emphasis added).
See Stenger v. World Harvest Church, Inc.,
No. 1:04-CV-00151, 2006 WL 870310 (N.D.Ga. Mar. 31, 2006) (Story, J.) (relying on
In re Dulock,
282 B.R. 54, 59 (Bankr.N.D.Ga.2002)). The parties dispute whether the ABCO Acquisition claims “accrued” on or before May 11, 1999, when the Debtors 'became obligated to buy the shareholders’ stock, or on or after May 11, 1999, when the Debtors physically transferred the funds
*833
necessary to purchase the stock. The court must determine as a matter of law when a claim for a fraudulent transfer “accrues” under Georgia law.
Defendants contend that (1) pursuant to the Tender Offer, ABCO Acquisition accepted for payment 4,727,559 of ABCO’s 5,077,180 shares orally between 12:00 Midnight, New York City time, on May 10, 1999, and 9:80 a.m., New York City time, on May 11, 2009; (2) Onex and Acquisition combined these shares with the 255,000 shares owned by Onex; and (3) by the end of the day on May 11, 1999 at the latest, Onex and Acquisition collectively owned 98% of ABCO’s stock.
23
Plaintiff contends that (1) there is no evidence that ABCO Acquisition had actually wired the money to purchase the ABCO stock as of May 11, 1999; (2) numerous documents show that May 12, 1999 was the date the Debtors’ property transferred, including closing statements showing money was paid May 12, 1999; (3) financial statements said the deal closed on May 12, 1999; and (4) backdated documents relating to the acquisition of ABCO call into question the date of all documents relating thereto.
24
The Eleventh Circuit examined the meaning of “accrues” in the context of a conversion case in
Chep USA v. Mock Pallet Co.,
138 Fed.Appx. 229 (11th Cir. 2005). The court found that under Georgia law “[t]he true test to determine when a cause of action accrues is to ascertain the time when the plaintiff could first have maintained her action to a successful result.”
Chep,
138 Fed.Appx. at 237 . The court looked at the prima facie case for conversion and found that the plaintiffs
*834
cause of action accrued from the time defendant actually could be said to have “converted” the relevant property.
Id.
238 .
In order to make out a claim for fraudulent conveyance under Georgia law, a plaintiff must show (1) a transfer made or an obligation incurred, (2) for less than reasonably equivalent value, (3) while the debtor was insolvent or likely to become insolvent. O.C.G.A. §§ 18-2-74 and 75. “A transfer is not made until the debtor has acquired rights in the asset transferred,” and an obligation is incurred “[i]f oral, when it becomes effective between the parties”; or “[i]f evidenced by a writing, when the writing executed by the obligor is delivered to or for the benefit of the obligee.”
Id.
§ 18-2-76. The court finds that Georgia law supports Defendants’ assertion that the relevant date for determining the statute of limitations on a fraudulent conveyance claim is the date that the debtor incurred the obligation to make the transfer. The court’s conclusion finds support in case law outside the jurisdiction cited by Defendants.
See In re Van Vleck,
211 B.R. 689, 694 (Bankr. E.D.Mo.1997) (relying on Mo.Rev.Stat. § 428.034.(5)(b) containing language identical to O.C.G.A. § 18-2-76(4) and (5) and finding that the relevant time for examining whether debtor’s payments were fraudulent transfers is the time when the debtor
incurred the obligation to make
those payments);
In re Gibraltar Res., Inc.,
197 B.R. 246, 250 (Bankr.N.D.Tex. 1996) (“A transfer occurs on the date the contractual right to payment is assigned, not on the date payment is actually made or collected.”).
Plaintiff contends that the relevant date for examining whether the payments were fraudulent transfers is when the Debtors
actually made
the payments or transfers. The court is unpersuaded by Plaintiffs citation to
Stafford-Fox v. Jenkins,
282 Ga.App. 667, 674 , 639 S.E.2d 610 (2006) (stating that a claim accrues no sooner than the date of injury), and
Logan v. Tucker,
224 Ga.App. 404, 406 , 480 S.E.2d 860 (1997) (date of injury in conversion case is the date of the conversion). The court finds that the “injury,” if any, to the Debtors here occurred on the day they became obligated to pay the ABCO shareholders $36 per share tendered before midnight May 10,1999.
The court finds that there is no genuine question of material fact as to whether the Debtors incurred the obligation to make the ABCO Acquisition Transfers on or before May 11, 1999. It is undisputed that ABCO entered into the Merger Agreement with ABCO Holdings and ABCO Acquisition Corp. on April 7, 1999, and that this Agreement set out the manner in which the ABCO shareholders would tender their shares and the price at which they would be paid.
(Merger Agreement,
Livingston Ex. 37 (App.50)). It is likewise undisputed that on April 13, 1999, the parties filed a 14D-1 with the SEC and executed a Tender Offer Statement, an Offer to Purchase, and a Letter of Transmittal.
(Id.).
These documents detail exactly how ABCO shareholders were to tender their shares by midnight on May 10, 1999, unless the Tender Offer was extended, and how much they were to be paid for their shares. (D. Stmt. ¶ 56; P. Resp. Stmt. ¶ 56). It is further undisputed that the parties entered into the Tender Facility Agreement dated as of May 10,1999, closing date May 11, 1999, and the ARCA dated as of May 10, 1999, closing date May 12, 1999, in which the Debtors agreed to provide the shares tendered as security in exchange for funding from CIBC to purchase the shares. On May 11, 1999, ABCO Acquisition sent a letter to the American Stock Transfer & Trust Company, to whom
*835
ABCO shareholders were to tender their shares pursuant to the Tender Offer, confirming its acceptance for payment of all tendered shares pursuant to the Offer to Purchase. (Def. Stmt. ¶ 62, ONEX 0058292 (App.58)). The letter stated that ABCO Acquisition orally accepted the shares for payment at 8:47 a.m. on May 11, 1999. Defendants have submitted a copy of this letter signed by both ABCO Acquisition and the American Stock Transfer & Trust Company fax dated 9:20 a.m. and 9:34 a.m., May 11, 1999. Based on the foregoing, the court finds that Plaintiffs ABCO Acquisition Transfer Claims are barred by the four-year statute of limitations because the Debtors incurred the obligation to make them before May 11, 1999.
The court GRANTS Defendants’ Motion for Partial Summary Judgment as to the ABCO Acquisition Transfer claims. The court’s statute of limitations analysis does not affect Plaintiffs Republic and Jannock Acquisition Transfer claims.
3. Insolvency/Financial Condition and Reasonably Equivalent Value
Defendants contend that the Debtors were solvent at the time of each of the Acquisition Transfers. Defendants do not move for summary judgment on the issue of insolvency with respect to the Credit Agreement Transfers or the Management Fee Transfers. Defendants contend that the Debtors received “reasonably equivalent value” for all three sets of transfers. Defendants maintain that Logue’s proffered testimony with respect to insolvency and reasonably equivalent value is inadmissible. In order to provide proper context for the reader, the court will address the legal standards for proving insolvency and reasonably equivalent value before addressing Defendants’ contentions with respect to Logue’s proffered testimony. The court will then address the admissibility of Logue’s testimony and conclude with an analysis of whether Plaintiff has raised genuine issues of disputed fact with respect to insolvency and reasonably equivalent value.
i. Proving Insolvency or Poor Financial Condition
A plaintiff may show that a debtor was in a poor financial condition at the time of an alleged fraudulent transfer in three ways. A plaintiff may show that the debtor (1) “was insolvent on the date that such transfer was made or such obligation incurred or would become so as a result of the transfer or obligation,” (2) was engaged or was about to engage in a business or transaction that would leave it with unreasonably small capital, or (3) intended to incur, or believed that it would incur debts beyond its ability to pay as such debts matured. 11 U.S.C. § 548 ; O.C.G.A. § 18-2-72.
The Bankruptcy Code and the Georgia Code define “insolvent” to mean a “financial condition such that the sum of an entity’s debts is greater than all of such entity’s assets, at a fair valuation.” 11 U.S.C. § 101 (32)(A); O.C.G.A. § 18-2-72. Although a plaintiff may seek to prove “balance sheet” insolvency without an expert on the basis of the debtor’s balance sheet and tax documents alone,
see, e.g., Mellon Bank, N.A. v. Metro Communications, Inc.,
945 F.2d 635, 648-49 (3d Cir. 1991), the majority of plaintiffs seem to employ experts to do so.
See, e.g., MFS/ Sun Life Trust-High Yield Series v. Van Dusen Airport Services Co.,
910 F.Supp. 913, 938-44 (S.D.N.Y.1995). Experts typically rely on a combination of valuation methodologies including actual sale price, discounted cash flow, or DCF, and comparable transactions. Id See also
In re Iridium Operating LLC,
373 B.R. 283 , 344
*836
(Bankr.S.D.N.Y.2007) (listing six different methodologies). The use of an expert is consistent with the notion shared by many courts and commentators that book value of an LBO company’s assets does not control for purposes of insolvency, and the court may modify or reconstruct a company’s balance sheet to determine its value on the date the LBO was consummated.
In re O’Day Corp.,
126 B.R. 370, 398 (Bankr.D.Mass.1991).
“Equitable insolvency,” or whether a debtor is able to pay its debts as they become due, is a forward-looking standard. It is unclear whether a plaintiff must show that the debtor subjectively intended to become incapable of paying its debts or whether a plaintiff must merely show that a debtor should have foreseen such an outcome to prove the debtor “intended to incur, or believed that it would incur debts beyond its ability to pay as such debts matured.”
MFS/Sun Life Trust,
910 F.Supp. at 943 . The term “unreasonably small capital” denotes a financial condition short of insolvency, and the “unreasonably small capital” test of financial condition is “aimed at transferees that leave the trans-feror technically solvent but doomed to fail.”
Id.
at 944 (citing
Moody,
971 F.2d at 1070). In order to determine whether a debtor is operating with inadequate capital, a court must look at the debtor’s debt to equity ratio, its historical capital cushion, and the need for working capital in the specific industry at issue.
Id.
“While a company must be adequately capitalized, it does not need resources sufficient ‘to withstand any and all setbacks.’ ”
Id.
“The test for determining whether parties to a leveraged buy-out left a business with unreasonably small assets is whether it was reasonably foreseeable that an acquisition would fail at the time the projections were made,” and as with an equitable insolvency analysis, a “court must consider the reasonableness of the company’s projections, not with hindsight, but with respect to whether they were prudent when made.”
Fidelity Bond & Mortgage Co. v. Brand,
371 B.R. 708, 723 (E.D.Pa.2007).
Courts should consider contemporaneous evidence “untainted by hindsight or post-hoc litigation interests” when evaluating a company’s financial condition.
In re Iridium,
373 B.R. at 346 . Such contemporaneous evidence may include a company’s stock price or opinions by contemporaneous market participants.
Id.
at 347 (“Absent some reason to distrust it, the market price is a more reliable measure of the stock’s value than the subjective estimates of one or two expert witnesses.”). Courts should evaluate the company’s own projections.
Id.
(“Without a firm basis to replace management’s cost projections with those developed for litigation, the starting point for solvency analysis should be management’s projections.”). “[Projections tend to be optimistic, [so] their reasonableness must be tested by an objective standard anchored in the company’s actual performance.”
MFS/Sun Life,
910 F.Supp. at 943 . “Among the relevant data are cash flow, net sales, gross profit margins, and net profits and losses. However, reliance on historical data alone is not enough. To a degree, parties must also account for difficulties that are likely to arise, including interest rate fluctuations and general economic downturns, and otherwise incorporate some margin for error.”
Moody v. Security Pacific Business Credit, Inc.,
971 F.2d 1056, 1073-74 (3d Cir. 1992).
When assessing whether a company’s projections are reasonable, courts may look to expert analysis by investment bankers and independent accounting firms which affirm management’s projections.
In re Iridium,
373 B.R. at 347 . Courts should also recognize that “a powerful indi
*837
cation of contemporary, informed opinion as to value comes from private investors who with their finances and time at stake, and with access to substantial professional expertise, conclude at the time that the business was indeed one that could be profitably pursued.”
Id. See also Peltz v. Hatten,
279 B.R. 710, 740 (D.Del.2002) (crediting valuations by informed and sophisticated parties at the time whose beliefs were confirmed by market compara-bles and contemporaneous DCF studies over expert post-hoc DCF). Lastly, courts may also consider the ability of a debtor to obtain financing in determining its financial condition.
In re Iridium,
373 B.R. at 346 (placing great weight on the fact that the debtor closed three syndicated bank loans and raised more than $2 billion in the capital markets as an indication of solvency and capital adequacy).
ii. Proving Lack of Reasonably Equivalent Value
The purpose of voiding transfers unsupported by “reasonably equivalent value” is to protect creditors against the depletion of a bankrupt’s estate. Therefore, this provision does not authorize voiding a transfer which “confers an economic benefit upon the debtor,” either directly or indirectly. In such a situation, “the debtor’s net worth has been preserved,” and the interests of the creditors will not have been injured by the transfer.
In re Rodriguez,
895 F.2d 725 , 727 (11th Cir.1990). In order to determine whether a debtor received “reasonably equivalent value,” the court must look at what “value” the debtor received in return for the transfer. The court must then determine whether the value received is reasonably equivalent; this will depend on the facts of each case.
See In re Chase & Sanborn Corp.,
904 F.2d 588, 593 (11th Cir.1990) (addressing guarantee as reasonably equivalent value for loan and noting reasonably equivalent value is largely a question of fact). “The issue of whether a debtor received reasonable equivalent value is a question of fact that must be evaluated as of the date of the transaction. Courts will not look with hindsight at a transaction because such an approach could transform fraudulent conveyance law into an insurance policy for creditors.”
In re Joy Recovery Tech. Corp.,
286 B.R. 54, 75 (Bankr.N.D.Ill.2002).
See also In re Dunham,
110 F.3d 286 , 289 n. 3 (5th Cir. 1997) (noting largely question of fact);
In re Morris Commc’ns, NC, Inc.,
914 F.2d 458 , 466 (4th Cir.1990) (“Neither subsequent depreciation in nor appreciation in value of the consideration affects the value question whether reasonable equivalent value was given.”). The plaintiff seeking to set aside a transaction has the burden of proving a lack of reasonably equivalent value.
In re Tucker,
No. 06-3091, 2007 WL 1548927 , at *2 (Bankr.M.D.Ala. May 25, 2007) (finding plaintiff received reasonably equivalent value for his transfer of funds to pay off his antecedent unsecured loan because the lender released its claim against him once debt was paid).
A court determines reasonably equivalent value in an LBO case by “collapsing” the transaction and ascertaining what the target, rather than any third party, ultimately received in terms of debt retirement, working capital, etc., in exchange for taking on additional debt.
MFS/Sun,
910 F.Supp. at 937 . The “collapsing” methodology is applicable to both stock transfers with common ownership on both sides of the transaction and asset sales.
In re OODC, LLC,
321 B.R. 128 (Bankr.D.Del.2005). The Third Circuit Court of Appeals’ decision in
Mellon Bank, N.A v. Metro Communications, Inc.,
945 F.2d 635 (3d Cir.1991), provides one of the most thorough discussions of this collapsing analysis at the appellate
*838
level. There, the court found that in a reasonably equivalent value analysis, “[t]he touchstone is whether the transaction conferred realizable commercial value on the debtor reasonably equivalent to the realizable commercial value of the assets transferred.”
Mellon,
945 F.2d at 647 .
Mellon
and its progeny seem to hint at two methods for answering this question. The more prominent directs the court to determine the commercial value the debtor received (in terms of monetary value, tangible and intangible assets, debt forgiveness, etc.), or in the case of an acquisition, the value of the company acquired, and compare it to the commercial value of the assets transferred, or the debts incurred. This comparison may be difficult in an LBO because the assets of the target company are pledged as security for a loan that benefits the target’s former shareholders rather than the target itself.
MFS/Sun Life Trust,
910 F.Supp. at 913 . This does not automatically mean that the debtor or the target gets no commercial value and a fraudulent conveyance has occurred, however, because courts must look beyond the actual money received to the indirect benefits to the debtor.
Id.
Such benefits may include synergistic effects of new corporate relationships, the arrival of a new, more successful management team, tax benefits, additional access to credit to facilitate new business opportunities, and the ability to protect a source of supply or customer relationships.
Id.
(finding that an unproven tax benefit and a $10 million reasonably equivalent value of revolving credit line could not be reasonably equivalent to $26.8 million in net additional debt).
See also Mellon,
945 F.2d at 647-48 (finding that trustee did not meet burden to show less than reasonably equivalent value because it introduced no evidence of value of synergies and ability to obtain credit);
In re Nirvana Rest., Inc.,
337 B.R. 495, 502 (Bankr.S.D.N.Y.2006) (listing protecting customer relationships and supply as indirect benefits);
In re Vadnais Lumber Supply, Inc.,
100 B.R. 127, 136 (Bankr. D.Mass.1989) (finding that the debtor must receive the required value, not some third party, “[a]nd unlike the doctrine of consideration in contract law, that value must pass a measurement test.”).
Language in
Mellon
also appears to indicate that a court may determine whether reasonably equivalent value was given by analyzing the value of a target as a going concern before and after the transaction— “when the debtor is a going concern and its realizable going concern value after the transaction is equal to or exceeds its going concern value before the transaction, reasonably equivalent value has been received.” 945 F.2d at 647 .
Mellon
provides no citation for this statement, and the court does not indicate exactly when the valuation would need to take place whether the day before and the day after or at some other point in the transaction.
Mellon
also does not indicate the precise meaning of “value.” The remainder of the discussion in
Mellon
addressing indirect benefits like the “value created by the LBO itself’ would seem to indicate that the court is discussing more than asset or book value.
iii. Admissibility of Logue’s Expert Testimony under Rule 702
Defendants maintain that Logue’s proffered expert testimony is inadmissible. In order to address Defendants’ objections, the court will summarize Logue’s qualifications and testimony, articulate the standard for admitting expert testimony under Fed.R.Evid. 702, and examine Defendants’ specific objections to Logue’s testimony.
In determining whether Logue’s testimony is admissible under Rule 702, the court will only rely upon the informa
*839
tion in the parties’ summary judgment pleadings, the information in Plaintiffs Pre-Hearing
Daubert
submission [636], and the parties’ arguments at the
Daubert
hearing held on July 10, 2009. The court will not rely on Logue’s declaration submitted with Plaintiffs Motion for Leave to File Post-Hearing Submission on
Daubert
Issues filed on July 22, 2009. This declaration is an improper supplemental expert report submitted out of time far after the close of discovery and with no possibility for cross examination. Federal Rule of Civil Procedure 26 requires that a party disclose to other parties any expert witnesses who may be used at trial to present evidence. Fed.R.Civ.P.26(a)(2)(A). Furthermore, this disclosure is to be accompanied by a written report signed and prepared by the witness, which report is to contain: a complete statement of all opinions and the basis therefor; the data or other information used by the witness in forming the opinion; any exhibits to be used; the qualifications of the witness; compensation to be paid to the witness; and a listing of other cases in which the witness has testified within the preceding ten years. Fed.R.Civ.P. 26(a)(2)(B). This court’s local rules provide that “[a]ny party who desires to use the testimony of an expert witness shall designate the expert sufficiently early in the discovery period to permit the opposing party the opportunity to depose the expert ....” LR 26.2C, N.D. Ga. Any party failing to comply with the foregoing requirement “shall not be permitted to offer the testimony of the party’s expert.”
Id. See also
Fed.R.Civ.P. 37(c)(1) (stating that party who, without substantial justification, fails to disclose or supplement information required by Rule 26(a) “shall not ... be permitted to use as evidence at a trial, at a hearing, or on a motion any witness or information not so disclosed”). For these reasons, the court will not consider Logue’s declaration and DENIES Plaintiffs Motion for Leave to File Post-Hearing Submission [639].
Logue has a Doctorate from Cornell University in managerial economics with minors in finance and marketing and a Master’s degree in Business Administration from Rutgers University. (P.A. 52 at 5-6). Logue has written and taught extensively on financial topics and has served on numerous boards of directors.
(Id.)
The Trustee engaged Logue to assess and analyze, among other things, the financial condition of ABCO/Magnatrax before and after each of the relevant leveraged buyouts and whether ABCO/Magnatrax received “reasonably equivalent value” in exchange for the transfers made and obligations incurred in each of the leveraged buyouts. (Id at 4-5). With respect to the financial condition of ABCO/Magnatrax, Logue analyzed whether at each of the relevant times (1) the company was “solvent”; (2) the company was in a position to repay its debts as they became due; and (3) the company was left with unreasonably small capital to conduct its business. (Id). Lo-gue issued an expert report on April 28, 2008, which concluded that (a) at all times between May 12, 1999 and March 10, 2000, ABCO/Magnatrax was in the “zone of insolvency”; (b) at all times between March 10, 2000 and the bankruptcy petition date ABCO/Magnatrax was “insolvent”; (c) at all times between May 12, 1999 and the petition date ABCO/Magnatrax had unreasonably small capital to conduct its business and was unable to pay its debts as they became due; and (d) ABCO/Magna-trax did not receive “reasonably equivalent value” in exchange for the transfers made and the obligations incurred in connection with all three of the relevant LBOs. (Id. at 6-7).
Logue defined “insolvency” to be a condition that exists when the fair value of a company’s assets is less than the value of
*840
its liabilities.
(Id.
at 5). Logue employed two methods to assess the fair value of ABCO/Magnatrax at the relevant times— (1) the Comparable Company Multiple Valuation Analysis (“CompCo”) and (2) the Discounted Cash Flow Analysis (“DCF”). Defendants’ challenges to Logue’s testimony largely relate to the DCF, which he weighted 75% to CompCo’s 25%, and thus the court will focus its attentions on this model.
(Id.
at 44).
In order to calculate the value of ABCO using DCF, Logue found it necessary to calculate the company’s debt-free cash flows, or the after-tax cash flows generated from firm operations and available to make payments to creditors and pay dividends to shareholders.
(Id.
at 36r37). Logue used the debt-free cash flow numbers along with the company’s cost of capital and net debt to determine its value.
(Id.
at 36).
In order to calculate debt free cash flow, Logue had to determine projected sales or revenue growth, EBITDA margin, changes in working capital, capital expenditures, and taxes.
(Id.
37-41). Logue began his analysis of these factors by looking at the company’s projections for the years 1999-2005 as detailed in various models. Logue looked at models prepared by the Debtors’ management in May, July, and December 1999, prior to each of the respective LB Os.
25
He “reviewed key elements of these projections for reasonableness by comparing them with ABCO’s historical performance, and by giving consideration to facts known or knowable as of the valuation date that would impact ABCO’s ability to meet its performance objectives in the future,” and when required, “adjusted the projections and derived from the revised figures the debt free cash flows that ABCO would be reasonably expected to generate over the years 1999-2005.”
(Id.
at 36, 48, 52, 63). Logue adjusted the company’s projections as to sales growth, EBITDA, working capital, capital expenditures, and the company’s tax projections for each of the three time periods. Lo-gue’s adjustments largely replaced management’s nuanced projections with a flat figure representing a three-year historical average. To calculate the three-year historical averages, Logue looked at the prior three years’ statistics excluding the year of the transaction (1996-1998 for the ABCO LBO, 1996-1998 accounting for a portion of 1999 for the Republic LBO, and 1997-1999 for the Jannock LBO) and averaged them.
(Id.
at Ex. 9(B)). Logue’s largest and most significant adjustments to managements’ projections were his adjustments to projected sales growth. He adjusted the company’s May 1999 projection of 8.1%-15.3% to 6.3%, September 1999 projection of 8.0%-15.8% to 6.1%, and March 2000 projection of 6.5%-7.8% to 4.4%.
(Id.
at 37, 52, 64).
Logue rejected management’s projections based on (a) conditions in the metal buildings industry as indicated by the growth rates of the Metal Building Manufacturing Association (“MBMA”), (b) capacity constraints in primary frame manufacturing and engineering creating
*841
bottlenecks and delays, (c) concerns regarding the company’s system software and technical staffing, (d) the state of the company’s builder/dealer network, and (e) the Debtors’ historical numbers,
(Id.
at 37-39, 53-54, 64-65). For example, prior to the ABCO LBO in May 1999 the Debtors’ management projected EBITDA margins of 9.9% in 1999, steadily increasing to 11.9% by 2005.
(Id.
at 39). Logue noted that ABCO’s EBITDA margins in the three years prior to the LBO never topped 10.6% and the EBITDA margin in 1998 was only 9.6% despite this being ABCO’s best production year.
(Id.).
Logue stated without citation that the ABCO LBO “did not replace ABCO’s management, bring the company additional expertise or sales channels, or otherwise create opportunities for cost savings and synergies,” and thus management’s dramatic increases in EBITDA were “simply unreasonable, even before factoring in a possible market downturn, the failure of the Systems Project [a technology initiative], and future impact of poor builder/dealer recruitment.”
(Id.
at 40). Based on these statements, Logue found that the three-year historical annual average EBITDA margin of 9.7% was a conservative estimate of profitability and used this number in his DCF analysis of the Debtors at the time of the ABCO LBO. As a second example, Logue found that managements’ projected growth rates of 8%-15.8% after the Republic LBO were too high because growth rates for the MBMA had begun to moderate from 1996 to 1998; ABCO’s three-year annual growth rate lagged the MBMA’s three-year annual growth rate indicating that ABCO had “little ability to accomplish market share gains;” ABCO was experiencing increased capacity constraints and problems with its technology systems; and ABCO’s neglect of its builder dealer recruiting meant the company was destined to experience a poor sales year.
(Id.
at 52-54). As such, Logue reduced the growth rate to the three-year historical growth rate of 6.1%.
(Id.).
*842
vant, but reliable.” 509 U.S. at 589 , 113 S.Ct. 2786 . The importance of the district court’s gatekeeping requirement is significant and cannot be overstated because an expert’s opinion “can be both powerful and quite misleading because of the difficulty in evaluating it.”
U.S. v. Frazier,
387 F.3d 1244, 1260 (11th Cir.2004). “Indeed, no other kind of witness is free to opine about a complicated matter without any firsthand knowledge of the facts in the case, and based upon otherwise inadmissible hearsay if the facts or data are ‘of a type reasonably relied upon by experts in the particular field in forming opinions or inferences upon the subject.’ ”
Id.
As such the court must engage in a rigorous three-part inquiry of expert testimony and may only admit that testimony if “(1) the expert is qualified to testify on the topic at issue, (2) the methodology used by the expert is sufficiently reliable, and (3) the testimony will assist the trier of fact.”
Club Car, Inc. v. Club Car (Quebec) Import, Inc.,
362 F.3d 775, 780 (11th Cir. 2004) (addressing lost profit expert testimony). This inquiry is a flexible one; many factors will bear on the inquiry and there is no definitive checklist or test.
Maiz v. Virani,
253 F.3d 641 , 665 (11th Cir.2001) (assessing qualifications of lost profits expert under Daubert). The burden of establishing an expert’s qualifications, reliability, and helpfulness rests with the proponent of the expert’s opinion.
Dukes v. Georgia,
428 F.Supp.2d 1298 ,
*841
Logue used his adjusted variables to calculate more than debt free cash flow, and ultimately fair value of equity. Logue also used an adjusted version of the debt free cash flow to calculate the company’s cash available to meet debt payments.
(Id.
at 45). Logue determined the company’s available capital by subtracting the necessary debt payments from the available cash, and making various assumptions about the company’s use of its Revolving Credit Facility.
(Id.
at 46). Based on ABCO/Magnatrax’s available capital, Lo-gue found that it would be in default of various loan covenants beginning in 2000 and it would be unable to pay the sum of its loans if the Lenders chose to call them all in.
(Id.).
Logue found that even if the Lenders did not call the loan, ABCO/Mag-natrax would be unable to make its required debt payment in 2005.
(Id.).
Thus, debt free cash flow was also the basis for Logue’s capital adequacy or “ability to pay debts” analysis.
Finally, Logue used his DCF, with its imbedded debt free cash flow projections, and CompCo analyses to determine whether the Debtors received “reasonably equivalent value” in the ABCO, Republic, and Jannock acquisitions. Logue calculated reasonably equivalent value by comparing the Debtors’ fair value equity at four points in time, May 12,1999; September 1, 1999; March 10, 1999; and May 12, 2002, and the debt the Debtors took on in each transaction.
(Id.
at 50, 75, Ex. 4).
26
For
*842
example, Logue determined that the Debtors did not receive reasonably equivalent value in the Republic acquisition because the change in their equity between May 12, 1999, and September 1, 1999, was less than the amount of the Republic acquisition loans. Logue determined that the Debtors had not received reasonably equivalent value in any of the acquisitions.
Defendants object to Logue’s report on several grounds: (1) Logue’s analysis of the “zone of insolvency” is unreliable because there is no scientifically accepted meaning for this term or method to calculate it; (2) Logue did not use a reliable methodology in determining the Debtors’ projected revenue growth and the other variables necessary to perform his DCF analysis; and (3) Logue’s testimony on reasonably equivalent value will not assist the trier of fact because it is not relevant to the legal question of whether the Debtors received reasonably equivalent value. The court will address the relevant standards for the admission of expert testimony under Fed.R.Evid. 702 before addressing each of Defendants’ objections.
a. Standards for Admission of Expert Testimony under Rule 702
[18,19] In
Daubert ,
the Supreme Court directed trial judges to exercise their “gatekeeping responsibility” to ensure that all expert testimony admitted under Fed.R.Evid. 702
27
be “not only rele-
*843
1310 (N.D.Ga.) (Forrester, J.),
aff'd,
212 Fed.Appx. 916 (11th Cir.2006).
An expert may be qualified to testify due to his knowledge, skill, experience, training, or education. While “an expert’s training does not always need to be narrowly tailored to match the exact point of dispute in a case,” an expert may not qualify through reading and preparation as an expert in “an entirely different field or discipline,” and a court may exclude an expert’s testimony if it determines the expert is “testifying to an area outside of-but related to-his expertise.”
See Trilink Saw Chain, LLC v. Blount, Inc.,
583 F.Supp.2d 1293, 1304 (N.D.Ga.2008) (Pannell, J.) (collecting cases);
see also Adani Exports Ltd. v. AMCI (Export) Corp.,
No. 2:05-cv-0304, 2008 WL 4925647 , at *6 (W.D.Pa. Nov.14, 2008) (finding that financial expert could not testify on the reasonableness and timing of a business person’s effort to obtain “cover” coal, whether an entity would have used Chinese instead of Australian coal, and cost savings from using Chinese coal over Australian coal where financial expert possessed no expertise regarding coal industry or international coal trading);
28
Williams v. Energy Delivery Servs., Inc.,
No. Civ. A. 1:04CV3101-CC, 2005 WL 5976569 , at *1 (N.D.Ga. Dec.7, 2005) (Cooper, J.) (finding that a civil and structural engineer with no experience constructing power lines over highways was not qualified to testify that cross guard structure was required under industry regulations);
but see Roberds, Inc. v. Broyhill Furniture,
315 B.R. 443 (Bankr. S.D.Ohio 2004) (rejecting argument that expert on credit practices generally could not testify as to “ordinary course of business” because he did not have sufficient knowledge of payment and credit practices in furniture industry).
The Supreme Court lists four factors in
Daubert
that courts should consider when determining whether testimony is reliable: (1) whether the theory or technique can be tested; (2) whether it has been subject to peer review; (3) whether the technique has a known or potential rate of error; and (4) whether the theory has attained general acceptance in the relevant community. 509 U.S. at 593 , 113 S.Ct. 2786 . However, these factors may “neither necessarily nor exclusively appl[y] to all experts in every case.”
Kumho Tire Co. Ltd. v. Carmichael,
526 U.S. 137, 141 , 119 S.Ct. 1167 , 143 L.Ed.2d 238 (1999). “Sometimes the specific
Daubert
factors will aid in determining reliability; sometimes other questions may be more useful.”
Frazier,
387 F.3d at 1262 . “[W]hether
Daubert’s
specific factors are, or are not, reasonable measures of reliability in a particular case is a matter that the law grants the trial judge broad latitude to determine.”
Kumho Tire,
526 U.S. at 153 , 119 S.Ct. 1167 . “Exactly how reliability is evaluated may vary from case to case, but what remains constant is the requirement that the trial judge evaluate the reliability of the testimony before allowing its admission at trial.”
Frazier,
387 F.3d at 1262 . Some courts have found it difficult to apply the technical factors in
Daubert
to experts testifying on financial matters.
See, e.g., First Tennessee Bank National Association v. Barreto,
268 F.3d 319, 335 (6th Cir.2001) (finding
Daubert
unhelpful to determine whether expert used reliable methodology to determine bank not acting consistent with prudent banking standards);
In re Commercial Financial Ser
*844
vices, Inc.,
350 B.R. 520 (Bankr.N.D.Okla. 2005) (addressing challenge to expert valuation testimony);
In re Joy Recovery Tech. Corp.,
286 B.R. 54, 70 (Bankr.N.D.Ill.2002) (addressing solvency analysis in LBO situation and finding “[accounting is not an exact science. Accountants are therefore required to make judgments about how to communicate financial information. A
Daubert
hearing is not the time to fully test the validity of those assumptions.”).
Even if a court chooses not to apply the technical
Daubert
factors, it must be careful to focus on the reliability of the expert’s principles and methodology rather than the correctness of his conclusions. “[N]othing in either
Daubert
or the Federal Rules of Evidence requires a district court to admit opinion evidence which is connected to existing data only by the ipse dixit of the expert.”
General Elec. Co. v. Joiner,
522 U.S. 136, 146 , 118 S.Ct. 512 , 139 L.Ed.2d 508 (1997). Moreover, “[t]he trial court’s gatekeeping function requires more than simply ‘taking the expert’s word for it.’ ”
McClain v. Metabolife Intern., Inc.,
401 F.3d 1233, 1244 (11th Cir.2005). An expert must be able to explain step by step how and why he reached his given conclusions.
See Lippe v. Baim-co Corp.,
99 Fed.Appx. 274, 279 (2d Cir. 2004) (finding valuation testimony unreliable where expert could not “explain a number of variables and assumptions used in his analysis” and failed to account for differences between companies). Under
Daubert ,
“any step that renders the analysis unreliable ... renders the expert’s testimony inadmissible. This is true whether the step completely changes a reliable methodology or merely misapplies that methodology.”
In re Paoli R.R. Yard PCB Litigation,
35 F.3d 717, 745 (3d Cir. 1994).
The final requirement for admissibility under Rule 702 is whether the expert’s testimony will assist the trier of fact. In order to ensure that expert testimony will assist the trier of fact, the court must ensure that the “proposed expert testimony is ‘relevant to the task at hand,’ ..., i.e., that it logically advances a material aspect of the proposing party’s case.”
Dukes,
428 F.Supp.2d at 1309 . The Supreme Court has described this test as one of “fit,” and “scientific validity for one purpose is not necessarily scientific validity for other related purposes.”
Daubert,
509 U.S. at 591 , 113 S.Ct. 2786 . Further, “[pjroffered expert testimony generally will not help the trier of fact when it offers nothing more than what lawyers for the parties can argue in closing arguments.”
Frazier,
387 F.3d at 1262-63 .
b. Logue’s “Zone of Insolvency” Testimony
Logue testified that ABCO/Mag-natrax was in a “zone of insolvency” at the time of the ABCO and Republic acquisitions. Plaintiff references this testimony when discussing its fraudulent transfer and breach of fiduciary duty claims. Defendants contend that this testimony is inadmissible, in part, because there is no scientifically accepted definition of, or methodology for calculating, the “zone of insolvency” among financial experts or legal scholars.
Logue does not define “zone of insolvency” in his report. Logue testified extensively to his understanding of “zone of insolvency” in his deposition. (P.R.A. 62 at 155-162). Logue defined the “zone” as “an inability to pay your bills when they’re due, the probability of running afoul of the bank covenants, pretty small equity capital for the size of the company that you have.”
(Id.
at 155:11-15). Logue could not identify any financial valuation textbook, article, or treatise defining the term “zone of insolvency,” rather he claimed that it was a
*845
term of art that he has seen develop in the last year or two in contexts like this case.
(Id.
at 155:24-156:12). Logue had not personally seen the term used in any contemporaneous solvency valuation, but he claimed other people told him they had used it in such valuations.
(Id.
at 156:17-158:6). Logue testified that he had never used the term in a solvency evaluation before and that he had never been a part of a case where an expert had done so.
(Id.
at 158:7-17). Logue identified the “zone” as “subjective” and “a judgment call.”
(Id.
at 158: 21-23). He stated that if “solvency” was a snapshot, then one should think of the “zone” as a video camera or “a general landscape.”
(Id.
at 161:7-11). The zone was a “mosaic” in which one “must consider not only today but what might happen in the not too distant future.”
(Id.
at 162:22-25). Logue explained the “zone” as a range, but he admitted that he had not quantified that range in his report and he could not give a specific range.
(Id.
at 159:25-161:3, 163:10-15). When asked how close to the line a company must be to be in the “zone” in a quantifiable way, Logue testified that it would differ depending on the company and the investment opportunity.
(Id.
at 161:12-17).
The court has researched the term “zone of insolvency” or “vicinity of insolvency” and finds that it arose out of a footnote in
Credit Lyonnais Bank Nederland, N.V. v. Bathe Communications Corp.,
No. 12150, 1991 WL 277613 , *34 n. 55 (Del.Ch. Dec.30, 1991) addressing the decision-making process of directors in a financially strained company. The court can find no opinion written since
Credit Lyonnais
which has explicitly defined “zone of insolvency,” and rather repeatedly sees this term referred to as “hazy,” “ill defined,” or “confusing.”
In re Teleglobe Communications Corp.,
493 F.3d 345 , 356 n. 9 (3rd Cir.2007);
Production Resources Group, L.L. C. v. NCT Group, Inc.,
863 A.2d 772 , 790 n. 56 (Del.Ch.2004).
The court finds that Logue’s testimony that ABCO/Magnatrax was in the “zone of insolvency” at the time of the ABCO and Republic acquisitions is unreliable. Logue has admitted that his conclusions as to the “zone” cannot be tested because they are based upon a subjective judgment call. Logue further admits that he has never seen the term in an article or treatise related to valuations and that he has not personally seen his peers use it in valuations. Logue contends that he is aware of other professionals using it but cannot point specifically to any work by other experts that he has reviewed. Logue cannot quantify the term in any way, and although he appears to contend in parts of his testimony that the zone is “a range,” he admits in later portions that he is unable to provide Defendants with such a range or indicate any particular rate of error in calculating such a range. Aside from Lo-gue’s testimony, the court’s own exploration of the case law makes clear that there is no generally accepted meaning for the term “zone of insolvency.”
The court finds that any testimony regarding a “zone of insolvency” is unreliable and will not allow Plaintiff to rely on any testimony by Logue that the Debtors were in a “zone of insolvency.” This holding does not prevent Plaintiff from offering testimony that the Debtors could not pay their debts when due, were statutorily “insolvent,” or that they had unreasonably small amount of capital in which to operate their business; it merely prevents Plaintiff from using the term “zone of insolvency.”
c. Logue’s Methodology for Calculating DCF Variables
Logue rejected the Debtors’ management’s projections regarding the Debt
*846
ors’ projected sales and revenue growth, EBITDA, changes in working capital, capital expenditures, and taxes in the years 2000 through 2005 and used his own estimates of these values as variables in his DCF, CompCo, and capital adequacy analysis. Specifically, Logue used three-year historical annual average numbers for projected sales growth, EBITDA, and capital expenditures. The court finds that (1) Lo-gue provided no scientific or reasoned explanation for his decision to use three-year historical averages, and (2) Logue was not qualified to quantify the effect a poor builder/dealer recruitment and other conditions as he perceived them would have on the Debtors’ revenue growth, EBITDA, working capital and capital expenditures. Logue’s unreliable and unqualified estimate of these variables tainted the reliability of his entire DCF analysis, and by extension his conclusions based on that analysis.
Logue utilized a DCF analysis to reach his conclusions. The court recognizes that DCF is “the preeminent valuation methodology” among experts for determining a company’s value.
Neal v. Alabama ByProducts Corp.,
Civ. A. 8282, 1990 WL 109243 , *7 (Del.Ch. Aug.1, 1990),
aff'd,
588 A.2d 255 (Del.1991).
See also Matrix Group Ltd., Inc. v. Rawlings Sporting Goods Co.,
477 F.3d 583, 594 (8th Cir.2007) (referring to method as preeminent);
Kool, Mann, Coffee & Co. v. Coffey,
300 F.3d 340, 362 (3d Cir.2002) (affirming use of discounted cash flow analysis and noting that “[a] number of courts have commented on the propriety of the discounted cash flow methodology for certain valuation situations, particularly where valuing stock and other securities of a company”);
In re Valley-Vulcan Mold Co.,
Civ. No. 99-4129, 2001 WL 224066 , *3 (6th Cir. Feb.26, 2001) (affirming use of discounted cash flow analysis and noting that it is “a well-recognized methodology for determining a business’s going-concern values.”). It is not enough, however, for an expert to select a well accepted and scientifically valid methodology; he must also apply that methodology correctly to the facts of the case.
Logue testified that the Debtors’ three-year average historical revenue growth rates and EBITDA margins were conservative estimates of the Debtors’ condition. In explaining why he chose a three-year average of revenue growth, as opposed to a two- or a four-year average, Logue stated:
Q Why didn’t you use a 2-year historical average?
A Two years, you know, it’s like prunes, six is too many, three is too few. In my looking at the data, it seemed that a 3-year average would, took away — I mean, they had a bad year in there, they had two good years in there, and I thought this would be a pretty good estimate of what would happen going forward.
Q Why didn’t you use a 4-year average?
A The 4-year average would have — I forget what that earliest year was, but that was coming out of the IPO, and it would have — I don’t remember what the number was — but I took a number that seemed to be, you know, consistent with the construction industry, the MBA forecasts which I think was 6.3 percent, which is a little bit higher. I mean, every other forecast that we’ve seen suggests the company is going to grow around the rate of the economy-even your experts when they do their Gordon growth model assume that the company will grow at either 3 percent or 4 percent.
*847
They don’t have these astronomical growth rates embedded there. In my sense, I thought 3 years was just right.
(P.R.A. 62 at 340:7-341:14).
Logue provided no explainable reason why the three-year rate was “just right.” Logue did not refer to other experts who had used a three-year rate or a treatise which had done so. Logue did not argue that using a three-year rate is generally accepted or produces a low rate of error. Logue did not explain that three years was the necessary time period to avoid creating a rate which relied too heavily on an outlying number, for example. Rather Logue appears to have selected the three-year rate because it produced a revenue growth outcome closest to the MBMA industry numbers.
The MBMA industry numbers represent growth rates specific to metal buildings manufacture. Defendants contend that metal buildings manufacture was 55% of ABCO’s business at the time of the first LBO. Logue does not indicate what percentage of the Debtors’ business was metal buildings manufacture in either his expert report or his deposition. Logue admits in his deposition that he did not examine industry growth statistics for these other industries, and he does not explain in his initial expert report why he believes these other industries are correlated with the metal buildings industry. (P.R.A. 62 at 262:9-20, 265:7-9). In explaining why he relied upon the MBMA growth statistics, Logue stated, “I know that many of these other industries or other product activities are correlated with the metal buildings business, but that was one indicator, and that was just a pass a smell test kind of thing.”
(Id.
at 263:9-14). He further admitted that he did not value ABCO/Magna-trax’s metal buildings division separately to determine whether it was consistent with MBMA growth rates, and he was unaware of the fact that management’s projections for the metal buildings division
were
consistent with MBMA statistics. (P.R.A. 62 at 259:4-260:10, 263:21-264:7, 264:25-265:6).
Logue did not provide any scientific explanation in his report as to why the MBMA statistics were an adequate bench mark for the Debtors’ statistics. Logue did not discuss how the MBMA statistics were compiled, whether they were subject to peer review, whether they were known to have a certain error range, or whether they are , generally used by financial experts looking at the metal buildings industry. The court also notes Logue’s use of the three-year historical growth rate for the MBMA in selecting a three-year rate for revenue growth. Logue provided no explanation for why he looked at the three-year MBMA rate of 6.5% when deciding that three years was appropriate for the Debtors’ revenue growth rate because it yielded a rate of 6.3%. For example, had Logue used a two-year, four-year, or five-year average to calculate the MBMA growth rate in his 1999 analyses of value at the time of the ABCO and Republic acquisitions, the rate would have been 9.8%, 9.4%, or 12.8%, respectively, rather than 6.5%. (P.A. 52 at Exs. 7 and 9(b)). Because Logue provided no reasoned explanation for his use of the MBMA statistics as a benchmark, he has no reasoned explanation for his use of three years to calculate the Debtors’ historical revenue growth rate.
Logue also uses a three-year historical annual EBITDA margin and a three-year historical average for capital expenditures as a substitute for management’s projected EBITDA margins and capital expenditures during each of the relevant time periods.
(Id.
at 40-41, 55, 57, 68, 70; P.R.A. 62 at 312:26-315:7). Logue provides no explanation of any kind as to why he chose a
*848
three-year historical annual average for these numbers. Logue did testify in his deposition that “[everything [wa]s driven off revenues.” (P.R.A. 62 at 318:16). Lo-gue’s decision to use three-year growth rates as opposed to a two- or four-year growth rates had a significant impact on the ultimate numbers used. For example, had Logue used a two-year, four-year, or five-year rate rather than a three-year rate to calculate the growth rate in his 1999 analyses of the ABCO and Republic acquisitions, the rate would have been 10.9%, 14.1%, or 15.8%, respectively, rather than 6.3%. (P.A. 52 at Ex. 9(b)). When an expert testifies that he is providing a “conservative estimate” but he provides no principled model or methodology from which that estimate was produced, his testimony is pure
ipse dixit.
An expert who applies a principled model but uses unprincipled variables in that model is akin to a magician who creates a distraction so the audience cannot see what he is really doing.
Logue testified in his deposition that he utilized three-year historical averages in his models rather than management projections, or the projections of the Debtors’ lenders and investors, because (1) management’s projections were inconsistent with the twenty-year average sales growth of 5.7% for the MBMA; (2) communications among the Debtors’ management indicated that the Debtors had technology system problems that created capacity and service constraint; (3) communications among the Debtors’ management indicated that the Debtors had struggled to secure enough dealer agreements and the lack of these agreements could affect sales down the road; (4) management’s strategic plans did not indicate how they were going to fix these problems or how they were going to beat industry numbers and their own historical numbers; and (5) investor and lender analyses seem to suffer from the same problems as management analyses. (P.R.A. 62 at 178:20-183:5). Logue does not provide any explanation as to why the Debtors’ three-year historical averages account for these concerns (while management projections do not) and why the historical averages account for these concerns to the appropriate degree. For example, Logue has provided no testimony or explanation such as builder netwoi'k concerns should decrease a company’s sales by “x” percent or a range of percentages. Logue appears to have concluded that the perceived “problems” of the Debtors will prevent them from growing and hold them at historical levels, as articulated by a arbitrary three-year average. Logue’s conclusion that the impact of the Debtors’ problems is the difference between the Debtors’ three-year historical averages and management’s estimates is as much flagrant wand waving as his selection of a three-year average as a “conservative estimate.”
Even if Logue had provided a scientific basis for the amount of his modifications, the court would have concerns about his qualifications to make them. Logue has written and taught on issues of valuation and served on numerous loan committees addressing credit analysis and solvency. Logue has taught on and claims to be familiar with principles of business administration. The court does not dispute that Logue is a learned man or that he is an expert in the area of business valuation. The court can say with some certainty that Logue’s general corporate experience would make him competent to evaluate the impact of technological system problems on a firm, the likelihood that a firm would outperform its historical numbers, and the correlation between a firm’s numbers and industry averages. However, Logue’s decision to modify management numbers was based on dealer network concerns as well.
*849
Logue has testified that he is not an expert in the metal buildings or construction industries. (P.R.A. 62 at 97:14-20). Lo-gue’s only experience in the metal buildings industry is a stint as a business conditions and forecasting consulting for AMCA, the predecessor to United Dominion, in the early eighties.
(Id.
at 93:15-94:5). AMCA had a subsidiary involved in the metal buildings industry, and Logue investigated a metal buildings company as an acquisition for AMCA.
(Id.
at 94:6-17). Defense counsel asked Logue, “Other than the work that you did for AMCA, any other experience that comes to mind in the metal buildings industry?”
(Id.
at 97:21-98:2). Logue responded, “Only that my son played hockey in a metal building, Yarco-Prudin building for years.”
(Id.).
The court finds that Logue’s limited experience in the metal buildings industry does not qualify him to quantify the effect that the Debtors’ managements’ concerns about its dealer network would have on projected revenue, sales, and capital expenditures.
The court finds that Logue’s determination of revenue growth, EBITDA margin, and capital expenditures had a tremendous impact upon his ultimate DCF conclusions. The court cannot determine exactly what the equity value for the Debtors would have been had Logue applied different numbers because Logue did not provide his exact DCF formula in his expert report. Logue’s DCF valuations had a disproportionate 75% impact upon his determinations as to the Debtors’ value. The court finds that Logue employed an unreliable methodology in determining revenue growth, EBITDA margin, and capital expenditures, and this methodology renders his asset valuation analysis unreliable. The court likewise finds that Logue used the numbers derived in his DCF debt free cash flow analysis to calculate projected free cash flows and perform his capital adequacy analysis. The court’s concerns with Logue’s methodology also render this analysis unreliable. The court cannot allow Logue to testify as to debt fee cash flow. As such the court cannot allow Lo-gue to offer any conclusions with respect to “solvency,” or capital adequacy, or ability to pay debts.
d. Logue’s Calculation of Reasonably Equivalent Value
As stated above, Logue calculated “reasonably equivalent value” by comparing the equity value of the Debtors on May 12, 1999; September 1, 1999; March 10, 2000; and May 12, .2002. (P.A. 52 at Ex. 4). Defendants contend that Logue’s reasonably equivalent value analysis is (1) unreliable because it relies upon equity figures improperly calculated using an unreliable DCF methodology as discussed above, and (2) irrelevant and unhelpful to the trier of fact because it wrongly conflates an insolvency analysis with reasonably equivalent value analysis.
The court has already found that Logue’s reasonably equivalent value analysis is based on an unreliable DCF analysis. The court also agrees with Defendants that Logue’s “reasonably equivalent value” testimony is not relevant to the task at hand — determining whether the Debtors received “reasonably equivalent value” as that term is used in the fraudulent transfer context. Even if the court were to assume that Logue’s equity figures were calculated reliably, the court would still find that Logue’s proffered reasonably equivalent value testimony was a bad “fit” as that term is described in
Daubert .
Under the primary analysis in
Mellon
and its progeny, the court must compare the value of the assets the Debtors received and the value of the assets the Debtors gave in each leverage buyout ac
quisition
— here
the
value of the companies,
*850
assets purchased, and intangible benefits and the amount of the relevant loans and/or cash needed to finance the acquisitions. Logue admits, however, that he never performed
any
independent valuation of the assets of Republic or Jannock or their independent value as companies. (P.R.A. 62 at 142:3-19). He merely valued the Debtors as a whole after the acquisitions which incorporated these companies. Logue’s testimony is also unhelpful under the secondary analysis in
Mellon.
Logue did not “value” ABCO/Magnatrax as a going concern directly before and after each acquisition. Logue compared (1) the value of the Debtors after the ABCO acquisition and the value of the Debtors after the Republic acquisition seven months later; and (2) the value of the Debtors after the Republic acquisition to the value of the Debtors after the Jannock acquisition three months later. Logue does not account for any changes that may have occurred in the Debtors’ value between May 1999 and December 1999, and December 1999 and March 2000 for reasons unrelated to the acquisitions. Further, Logue’s equity analyses of the LBOs are based on “models;” these models did not project the Debtors’ various financial statistics right at the time of the acquisitions, rather they were prepared in May, July, and December 1999 respectively. The court finds that Logue’s testimony about the change in the Debtors’ equity between May 1999 and September 1999, between September 1999 and December 1999, and between March 2000 and the bankruptcy does not “logically advance! ] a[ny] material aspect of the proposing party’s case.” Dukes, 428 F.Supp.2d at 1309 . The court finds that allowing Plaintiff to proffer Logue’s conclusions as to “reasonably equivalent value” would confuse rather than assist the trier of fact.
iv. Showing Insolvency or Lack of Reasonably Equivalent Value
Defendants argue that without Logue’s report, Plaintiff cannot meet its summary judgment burden with respect to insolvency or reasonably equivalent value. Defendants contend that Plaintiff cannot prove that the Debtors were insolvent at the time of the Acquisition Transfers. Defendants insist that (1) the parties involved in the acquisitions believed the Debtors were solvent; (2) ABCO represented in its agreements with its creditors that it was and would continue to be solvent; (3) the Debtors had cash on hand at the time of the Republic Acquisition; (4) the lenders and equity contributors did due diligence and determined that the Debtors were solvent at the time of the transactions; (5) the Debtors made their loan payments under the Credit Agreement until 2002; (6) the Debtors continued to pay their unsecured creditors until a few months before the bankruptcy; and (7) Plaintiffs only potential evidence on insolvency comes from Logue. In response to Defendants’ challenge, Plaintiff argues that (1) insolvency is a factually intensive question that may rarely be decided at summary judgment; (2) Logue’s expert testimony should be admissible; and (3) Logue’s expert testimony creates genuine issues of material fact on the issue of insolvency.
Defendants have identified facts which they believe support solvency and have pointed out a lack of reliable evidence to the contrary. As
Mellon
indicates, a plaintiff does not have to have an expert to present evidence on financial condition. However, Plaintiff has relied exclusively on Logue’s expert report and has not put forth any additional evidence on insolvency. The court has found that Logue’s conclusions with respect to solvency and capitalization are unreliable and inadmissible. The court GRANTS Defendants’ Mo
*851
tion for Partial Summary Judgment as to the remaining Acquisition Transfer claims.
Plaintiff is left with its Credit Agreement and Management Agreement Transfer claims. Defendants insist that the Debtors received reasonably equivalent value for the Credit Agreement Transfers because for each payment made they received a corresponding decrease in antecedent debt. Plaintiff maintains that decreases in antecedent debt cannot serve as a basis for reasonably equivalent value because the antecedent debt obligations are themselves avoidable fraudulent transfers. Defendants argue that the Debtors received reasonably equivalent value for the Management Agreement Transfers because the Debtors received valuable management services. Plaintiff avers that there are material questions of fact about what management services, if any, the Debtors received and the value of those services. The court will address the two types of transfers separately.
a. Credit Agreement Transfers
The court must determine whether the Debtors received reasonably equivalent value for their loan payments in the form of debt forgiveness — the Debtors make a loan payment and they get a reduction in the principal and interest of their loan by an equal amount. As used in § 548, the term “value” includes “satisfaction ... of a present or antecedent debt of the debtor ....” 11 U.S.C. § 548 (d)(2)(A). Antecedent debt is debt preexisting or pri- or to the transfer.
In
re
Cavalier Homes of Georgia, Inc.,
102 B.R. 878, 885-86 (Bankr.M.D.Ga.1989) (finding that debtor received reasonably equivalent value for its payments to bank for collecting accounts receivable because payments reduced balance due on promissory note and bond by same amount). A debtor receives equivalent value as required by section 548 if it makes a transfer to reduce its debt as long as the property conveyed is fairly equivalent in value to the debt satisfied and the transferee is not an officer, director, or major shareholder of the trans-feror.
Id.
at 886 ;
In re Tucker,
2007 WL 1548927 , at * 2.
As stated above, Plaintiff defines the Credit Agreement Transfers as repayments of the Tranche A Loan, the Tranche B Loan, the “revolving credit loan component” of the Credit Agreement, as well as quarterly commitment fees, attorney’s fees, expense reimbursements, and wire transfer fees. (P. 2/22/2008 Resp. at 58). Under this definition, the Credit Agreement Transfers appear to be repayments of antecedent debt and the Credit Agreement transfer appear to be transfers for reasonably equivalent value.
Plaintiff argues, however, that a transfer made on account of an antecedent debt cannot constitute an exchange for reasonably equivalent value if the antecedent debt is itself an obligation subject to avoidance.
See In re Nirvana Rest., Inc.,
337 B.R. 495, 502 (Bankr.S.D.N.Y.2006) (“[I]f [the incurrence of debt] is avoided as a fraudulent obligation, it cannot serve as ‘fair consideration’ for the subsequent [transfers”). The Trustee’s response brief argues that the Trustee seeks to avoid the Debtors’ incurrence of the Credit Agreement obligations as fraudulent obligations in Counts VII and IX; Defendants have not moved for summary judgment on Counts VII and IX; and thus, Plaintiff argues that until the court holds a trial to determine whether the underlying obligations in Counts VII and IX are voidable, the court cannot conclude that the Debtors received reasonably equivalent value. The court is unpersuaded by Plaintiffs argument. Defendants explicitly moved for summary judgment on all of Plaintiffs fraudulent transfer claims including, Counts VII and IX. (D. MSJ, at 15). De
*852
fendants’ arguments regarding the “Acquisition Transfers” clearly address the underlying obligations which caused Plaintiff to have to repay the Tranche A, Tranche B, and revolving loans. As stated above, Plaintiff explicitly defined the “Acquisition Transfers” to include “the additional liens granted to CIBC on the Debtors’ assets that enabled the Debtors to obtain the money to pay the selling shareholders.” (P. Resp. at 18 n. 15). The court has already dismissed Plaintiffs Acquisition Transfer claims. Therefore, the court cannot accept Plaintiffs argument that the Credit Agreement Transfers should be set aside because the obligations which underlie them (the Acquisition transfers) are fraudulent transfers which the court has not yet addressed. Defendants’ Motion for Partial Summary Judgment is GRANTED as to the Credit Agreement Transfers.
b. Management Agreement Transfers
Defendants contend that the Debtors received reasonably equivalent value for the Management Agreement transfers in the form of management services. The Trustee denies this assertion. (P. SMF ¶¶ 136, 141). Both parties identified facts in the record relating to this issue. The court has examined these facts.
It appears that Blackmon testified generally that Defendants provided management services, but he did not specify what services were provided. Ammerman testified that Hilson and Wright performed due diligence and financial modeling in connection with the Jannock acquisition. Defendants also asked Wright specifically what services the Defendants provided.
Q Can you tell me specifically what Onex Corporation did for American Building Company that falls under paragraph 2 [of the Management Agreement]?
A What we did for them?
Q Uh-huh.
A We would be involved in, you know, reviewing and working with the management on corporate and strategic plans, you know, in terms of where to take the company. You know, you saw the list of the other acquisition opportunities that Bob Ammerman had suggested we would work with them in reviewing those, understa

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/1918821. Public record. Not legal advice.