In the Matter of Elray and Jean Rash, Debtor. Associates Commercial Corporation v. Elray Rash and Jean E. Rash

JERRY E. SMITH, Circuit Judge,

with whom REYNALDO G. GARZA, DUHÉ, BARKSDALE, EMILIO M. GARZA and DeMOSS, Circuit Judges, join, dissenting:

The majority dismantles 11 U.S.C. § 506 (a) (1994) by combining a question-begging interpretation of the statute’s first sentence with an unreasonably restrictive reading of the second. Having thereby obscured the section’s plain meaning, the majority turns to an inapposite presumption, an incorrect economic analysis, and the last resort of judicial redrafting — selective reading of the legislative history. Not surprisingly, this policy-driven reconstruction of the statute has been squarely rejected by every other circuit that has considered it. I respectfully dissent.

Section 506(a) is not difficult to interpret. Read as a whole, it plainly means that when a reorganizing debtor retains and uses collateral, we must value the property according to its worth to the debtor (the actual user), not to the creditor (a 'purely hypothetical seller).

The section’s first sentence states that an allowed secured claim “is a secured claim to the extent of the value of such creditor’s interest in the estate’s interest in such property.” § 506(a) (emphasis added). This sentence means that the value of a secured claim is simply the value of the collateral. See, e.g., United Sav. Ass’n v. Timbers of Inwood Forest Assocs., 484 U.S. 365, 372 , 108 S.Ct. 626, 630-31 , 98 L.Ed.2d 740 (1988). The sentence’s language is a bit obtuse, as the creditor might have a security interest in only part of the property, or the debtor might have an ownership interest in only part. In such a case, the allowed amount of the secured claim is equal to a portion of the value of the collateral. See PSI, Inc. v. Aguillard (In re Senior-G & A Operating Co.), 957 F.2d 1290, 1301 (5th Cir.1992).

The first sentence of § 506(a), therefore, tells us only that the amount of a secured claim is the value of the collateral; it does not tell us how to determine that value. The section’s second sentence tells us that “[s]uch value shall be determined in light of the purpose of the valuation and of the proposed disposition or use of such property.” In this case, the purpose is cramdown of property to be retained in a chapter 13 reorganization, and the “disposition or use” is continued use by the debtor. Thus, we must “determine[ ]” the value of the property in the hands of the debtor, not on the auction block.

Deducting purely hypothetical costs of sale from the collateral’s value ignores both the purpose of the valuation and the property’s proposed disposition or use. As five circuits understand,

[Wjhere a debtor intends to retain and use the collateral, the purpose of the valuation is to determine the amount an underse-cured creditor will be paid for the debtor’s continued possession and use of the collateral, not to determine the amount such creditor would receive if it hypothetically had to repossess and sell the collateral. Such an interpretation ignores the express dictates of section 506(a).

Metrobank v. Trimble (In re Trimble), 50 F.3d 530, 532 (8th Cir.1995). Thus, we must determine the value of collateral to the debt- *1062 or, as measured by its replacement cost to him. 1

The underlying economic reality — that collateral is worth more in a reorganization than in a liquidation because a liquidation sale understates the property’s true worth — is a familiar one. 2 In fact, we have observed en banc that “[t]he secured creditor benefits from a successful reorganization because its secured claim is valued on a going-concern basis in connection with a plan of reorganization, and the secured creditor is not compelled to liquidate its collateral at forced-sale prices.” United Sav. Ass’n v. Timbers of Inwood Forest Assocs. (In re Timbers of Inwood Forest Assocs.), 808 F.2d 363, 373 (5th Cir.1987) (en banc), aff'd, 484 U.S. 365 , 108 S.Ct. 626 , 98 L.Ed.2d 740 (1988). As the First Circuit explained,

By retaining collateral, a Chapter 11 debt- or is ensuring that the very event [the debtor] proposes to use to value the property — a foreclosure sale — will not take place.... Under such circumstances, a court remains faithful to the dictates of § 506(a) by valuing the creditor’s interest in the collateral in light of the proposed post-bankruptcy reality: no foreclosure sale and economic benefit for the debtor derived from the collateral equal to or greater than its fair market value.

Winthrop Old Farm Nurseries v. New Bedford Inst. for Sav. (In re Winthrop Old Farm Nurseries), 50 F.3d 72, 75 (1st Cir.1995).

In light of these important differences between reorganization and foreclosure, the canon of construction disfavoring displacement of well-established areas of state law is inapposite. The Constitution has prevented states from enacting laws regarding bankruptcy reorganization for the past 207 years, see U.S. Const, art. I, § 8, cl. 4.; thus, there is simply no well-established state law on point. Moreover, both the canon and the ambiguous legislative history are irrelevant, as we may not look beyond § 506’s plain meaning. See United States v. Ron Pair Enters., 489 U.S. 235, 241 , 109 S.Ct. 1026, 1030 , 103 L.Ed.2d 290 (1989).

In short, there are two primary reasons that we must determine the value of collateral in the hands of the debtor, not on the auction block: First, “to do otherwise would be to completely erase the second sentence of the statute”; and second, “it is contradictory to allow the debtor to keep the [collateral] but value the secured portion based upon a hypothetical sale.” Lomas Mortgage USA v. Wiese, 980 F.2d 1279, 1286 (9th Cir.1992), vacated on other grounds, 508 U.S. 958 , 113 S.Ct. 2925 , 124 L.Ed.2d 676 (1993).

I.

Before turning to statutory construction, I emphasize that the other five circuits that have addressed this question all followed the replacement approach. This uniformity of appellate authority is significant both as compelling support for the replacement approach and because, as I explain below, national uniformity is particularly important in this area of law.

*1063 A.

The First and Eighth Circuits interpreted § 506(a) after we issued our panel opinion in this case, 3 and both cited our decision with approval. See Trimble, 50 F.3d at 531 (“We adopt the reasoning of the Fifth Circuit in In re Rash_”); Winthrop, 50 F.3d at 74 (agreeing with “four Circuit Courts, [that] have ... declined to value collateral that a debtor proposes to retain based on a hypothetical foreclosure sale”). The Fourth and Sixth Circuits reached the same result for the same reasons before our panel decision. See Huntington Nat’l Bank v. Pees (In re McClurkin), 31 F.3d 401, 405 (6th Cir.1994) (“[W]e ... hold that, where the debtor proposes to retain the collateral under a reorganization plan, § 506(a) does not require or permit a reduction in the creditor’s secured claim to account for purely hypothetical costs of sale”); Coker v. Sovran Equity Mortgage Corp. (In re Coker), 973 F.2d 258, 260 (4th Cir.1992) (stating that Brown & Co. Sec. Corp. v. Balbus (In re Balbus), 933 F.2d 246 (4th Cir.1991), “controls” its decision that hypothetical costs of sale may not be deducted when a debtor retains collateral).

Prior to our panel opinion, the Ninth Circuit initially adopted the foreclosure approach, see General Motors Acceptance Corp. v. Mitchell (In re Mitchell), 954 F.2d 557 (9th Cir.), cert. denied, 506 U.S. 908 , 113 S.Ct. 303 , 121 L.Ed.2d 226 (1992), but later refused to deduct hypothetical costs of sale on the ground that “it is contradictory to allow the debtor to keep the [collateral] but

value the secured portion based upon a hypothetical sale,” Lomas Mortgage, 980 F.2d at 1286 . Most recently, that circuit observed that “[t]he growing number of circuits to have considered this issue have all concluded that hypothetical costs of sale should not be deducted,” and chose to “adopt” Lomas Mortgage because “it is especially important not to reverse ourselves and create an inter-circuit conflict.” 4 The court therefore severely limited, if it did not actually overrule, Mitchell in order to avoid a circuit split. See id. at 310 (“Mitchell did not address whether [hypothetical costs of sale] should be deducted when the debtor retained the [property].”). In short, the last two circuits to address this question — the First and the Ninth — found that the circuits were uniform, and the Ninth eviscerated one of its own precedents in order to avoid “creat[ing]” a conflict. 5

B.

The Ninth Circuit is correct that it is particularly important to retain uniformity on this issue, as our decision will affect primarily the relative costs of secured and unsecured credit, not the well-being of bankrupt debtors. A reorganizing debtor must pay all of his disposable income to his creditors for, at most, three to five years. See 11 U.S.C. § 1325 (b)(1)(B) (1994); 11 U.S.C. § 1322 (e) (1994). Thus, he is unaffected by the amount of his income that goes to secured rather than unsecured creditors. 6

*1064 The choice between the foreclosure and replacement approaches does favor either secured or unsecured creditors vis-á-vis the other, however. The foreclosure approach benefits unsecured creditors by reducing the value of secured claims, thereby freeing up more money for unsecured claims; the replacement approach does the opposite. Both types of creditors can largely compensate for either result by adjusting .their interest rates or other lending practices, such as down payment requirements, accordingly. See infra p. 1049. As a result, adoption of either rule will produce counterbalancing effects on the interest rates charged by secured and unsecured creditors, resulting in little net effect on consumers. Thus, the primary impact of the majority opinion will be the creation of an artificial interest rate differential between our states and those in the First, Fourth, Sixth, Eighth, and Ninth Circuits. 7

II.

A.

The first sentence of § 506(a) states that a creditor’s allowed secured claim “is a secured claim to the extent of the value of such creditor’s interest in the estate’s interest in such property” (emphasis added). This sentence means that “[i]n situations involving only one creditor and one debtor, the value of the ... secured claim is simply the value of the underlying collateral.” Sandy Ridge Dev. Corp. v. Louisiana Nat’l Bank (In re Sandy Ridge Dev. Corp.), 881 F.2d 1346, 1349 (5th Cir.1989). Congress used the qualifier “creditor’s interest in the estate’s interest in” only because a creditor or debtor sometimes has an interest in less than the full value of collateral. As the majority recognizes, a creditor may have only a partial lien on collateral, or a debtor may have only a partial ownership interest in it. In such a case, the allowed secured claim is the value of the property reduced by the product of the creditor’s and the debtor’s percentage interests. See Senior-G & A Operating, 957 F.2d at 1301 (interpreting “creditor’s interest in the estate’s interest” as referring to a percentage interest in the value of the collateral).

In fact, the Supreme Court twice has said that the “creditor’s interest in the estate’s interest in such property” means “the value of the collateral.” 8 The first sentence of § 506(a) therefore tells us only that the allowed amount of the secured claim is equal to a portion of the value of “such property”; it tells us what is to be valued, not how to value it. 9

The majority asserts, without even mentioning § 506(a)’s second sentence, that “the creditor’s interest is in the nature of a securi *1065 ty interest, giving the creditor the right to repossess and sell the collateral and nothing more.” Maj. op. at 1043. In doing so, the majority turns a blind eye on the statute it supposedly interprets and simply assumes the answer to its own question.

The section’s second sentence states that we must determine the value of the “creditor’s interest in the estate’s interest in such property” contextually, “in light of the purpose of the valuation and of the proposed disposition or use of such property.” Before even considering those factors, however, the majority arbitrarily decides that the value will always equal that of the right to foreclose.

Obviously, secured creditors have whatever rights the Bankruptcy Code grants them. The majority is correct that the right to foreclose is the primary attribute of a security interest, and in a state-court action, a chapter 7 liquidation, or a chapter 13 reorganization in which the debtor chooses not to retain the property, it may be the creditor’s only recourse. But we cannot simply assume that § 506(a) values all secured claims at foreclosure value.

The majority twists the section’s language by contending that “the estate’s interest in such property” is simply the object of the phrase “creditor’s interest in.” As the majority concedes, however, the parallelism of the terms “creditor’s interest” and “estate’s interest” indicates that they should play similar roles. See maj. op. at 1043. Thus, “such creditor’s interest in the estate’s interest in” qualifies the object “such property.” As explained above, that qualifier determines the portion of “such property” covered by the security interest.

In fact, even isolating “creditor’s interest” as the supposed key term of the paragraph gets the majority nowhere, for the Bankruptcy Code does not define that term. Thus, the majority finds itself where it began— assuming its own conclusion.

In addition, common usage of the term “interest” is hardly limited to foreclosure rights. In construing a similarly-worded section of the Code, the Supreme Court observed that “[t]he term ‘interest in property’ certainly summons up such concepts as ‘fee ownership,’ ‘life estate,’ ‘co-ownership,’ and ‘security interest’ more readily than it does the notion of ‘right to immediate foreclosure.’” Timbers, 484 U.S. at 371 , 108 S.Ct. at 630 (emphasis added). 10

Finally, we must read § 506(a) as a whole:

The purpose of [the phrase “to the extent of the value of such creditor’s interest in the estate’s interest in such property”] appears to care for the problem where the estate’s interest is less than full owner-ship_ If [that phrase] were interpreted to mean that the value must be fixed at the amount which the creditor would receive on foreclosure, then the last sentence of the statute ... would be surplusage. Such an interpretation would mean that the value should always be fixed at the amount which the creditor would receive upon foreclosure regardless of the purpose of the valuation and of the proposed disposition or use of the property.... It is not appropriate for the court to ignore or give no effect to the language of the last sentence of the statute.

In re Courtright, 57 B.R. 495, 497 (Bankr.D.Or.1986). Accordingly, § 506(a)’s first sentence commands us to value a portion of the property, not “such creditor’s interest,” whatever that expression might mean in isolation.

B.

Section 506(a)’s second sentence establishes the method for determining value: “Such value shall be determined in light of the purpose of the valuation and of the proposed disposition or use of such property.” As the majority observes, “[s]uch value” refers to “the value of such creditor’s interest in the estate’s interest in such property.” See maj. op. at 1044.

*1066 1.

The majority correctly notes that valuation for one purpose may differ from that for another because it is necessarily contextual. See id. at 1045. In this case, the actual purpose is to determine the value of property retained in a chapter 13 reorganization, not to determine the value of collateral in a hypothetical liquidation or in a reorganization in which the debtor proposes to sell it.

The majority contends that replacement valuation would destroy the “apparent symmetry” of § 1325(a)(5), which requires that a secured creditor either (1) accept the plan; (2) receive at least “the allowed amount” of his claim, as defined by § 506(a), and a lien over the security; or (3) receive the collateral immediately. See id. at 1046-47. One problem with this assertion is that neither replacement nor foreclosure valuation always renders the latter two options equally appealing to a creditor.

Foreclosure valuation provides a secured creditor with the equivalent of immediate foreclosure only if the debtor makes all scheduled payments over the three-to-five year life of the plan. The vast majority of reorganizations fail, however, see supra note 6, leaving creditors with only a fraction of the compensation due them. In a case such as this, where the collateral depreciates rapidly, the secured creditor may receive far less in a failed reorganization than in a prompt foreclosure. Even with a non-depreciating asset, such as land, its market value may change during the course of a reorganization, subjecting the secured creditor to unwanted speculative risk. Cf. Todd J. Zywicki, Cramdown and the Code, 19 T. Marshall L.Rev. 241, 260 (1994) (noting that cramdown subjects creditors to additional risk by reducing any “equity cushion” intended to protect against depreciation). 11

Moreover, a successful reorganization produces a surplus (relative to liquidation or foreclosure) by allowing the debtor to retain the collateral. The debtor benefits by keeping his property, of course; his creditors benefit from pocketing any income that he generates thereby and from avoiding the transaction costs of resale.

This financial surplus must be divided between secured and unsecured creditors. It makes perfect sense to award much of the surplus to secured creditors, as it exists only because of their collateral. Therefore, even if there were a valuation method that made secured creditors indifferent between foreclosure and reorganization, it is not intuitive that their “secured amount” should be the same in each instance. In short, we must keep our eye on the ball: The purpose of the valuation is to determine the value of property retained by a debtor, not sold by a creditor.

2.

The “proposed disposition or use” of the property is continued use by the debtor, not a sale by the creditor. Accordingly, we must value the collateral “in light of’ its worth to the debtor, not the price it would fetch at a purely hypothetical foreclosure sale. That is to say,

[Sjince the Debtor’s Plan provides for it to retain the Property, the value of Bank’s interest in the Debtor’s interest in the Property should be determined without regard for the hypothetical costs that may be incurred by Bank if it gets the Property back. Why? Because it is not getting the Property back. Valuation under § 506 must be with a view to the proposed disposition of the Property.

In re Spacek, 112 B.R. 162, 164 (Bankr.W.D.Tex.1990).

The majority responds to this remarkably plain — and dispositive — text with an impressive quantity of arguments. Taken together, the majority’s nimble ruminations reduce § 506(a)’s command to determine value in light of the property’s proposed disposition or use to a suggestion that disposition or use will, at most, be somewhat relevant from time to time. This extremely restrictive reading collides with the related canons of statutory construction that we must read a *1067 statute holistically, interpreting each of its portions in light of the others, see Timbers, 484 U.S. at 371 , 108 S.Ct. at 630 , and must construe the entire statute “in such fashion that every word has some operative effect,” United, States v. Nordic Village, Inc., 503 U.S. 30, 36 , 112 S.Ct. 1011, 1015 , 117 L.Ed.2d 181 (1992). In short, the majority’s reconstruction of the statute is too strained to be credible.

a.

The majority contends that replacement valuation would create an “exception” to the first sentence by looking to the value of the estate’s interest, rather than the creditor’s interest. See maj. op. at 1048. Of course, this contention rests upon the majority’s misreading of the first sentence, taking the term “creditor’s interest” out of context and subverting the remainder of the section to an assumed meaning of that term. It is also untrue, for the replacement approach values “such property,” not the creditor’s or estate’s interest. See supra note 9. Finally, observe the majority’s methodology: Instead of taking the statute as a whole, it reads the first sentence in a vacuum and then interprets the second restrictively on the ground that a more natural construction would conflict with its reading of the first.

Similarly, the majority argues that because the second sentence references the phrase “the value of such creditor’s interest in the estate’s interest in such property,” we should consider only those dispositions or uses that detrimentally affect the price that collateral would fetch at a foreclosure sale. See maj. op. at 1049. In doing so, however, the majority again assumes that the first sentence limits the “allowed amount” to hypothetical foreclosure value.

In addition, § 506(a) does not require that only harmful uses be considered. Instead, it states categorically that value shall be determined “in light of ... the proposed disposition or use,” implying that disposition or use is relevant in every case. The majority’s assertion that Congress required consideration of two specific factors, even though one would seldom matter, stretches credulity.

Finally, the majority insists that even though § 506(a) requires that value “shall be determined in light of the purpose of the valuation and of the proposed disposition or use” (emphasis added), courts need only consider the latter factor, and may then set it aside when actually determining value. See maj. op. at 1048-49. To the extent that the majority observes only that disposition or use will not actually affect value in every case, it is undoubtedly right: If the debtor and creditor would each put an asset to the same use, and each would have to pay the same amount to replace it, then it has the same value to them.

The majority attempts to ratchet this common sense observation into an assertion that using foreclosure valuation would not deprive § 506(a)’s second sentence of effect. Of course, “disposition or use” would continue to be relevant for those purposes for which the majority wants it to be, e.g., when the property is actually sold at a foreclosure sale or when a detrimental use would affect a hypothetical foreclosure sale price. In all other cases, however, the majority would have a judge “consider” the proposed disposition or use and then ignore it. In any other context, that would be not only error, but abuse of discretion.

The majority therefore finds itself giving a remarkably strained reading to § 506(a)’s second sentence, permitting judges to “consider” an asset’s “proposed disposition or use” but arbitrarily limiting their ability to base their determinations upon it. This construction becomes possible only if one assumes that (1) § 506(a) only references a Platonic foreclosure remedy rather than defining de novo the value of an allowed secured claim; and (2) the second sentence has only limited meaning, subjugated to a rigid reading of the first. To the contrary: (1) Section 506(a) expressly sets out to define the amount of an allowed secured claim and refers to the value of a portion of “such property,” not foreclosure; and (2) the second sentence plainly requires courts to determine value in light of two specific factors.

To conclude,

Those courts which hold that hypothetical costs should be deducted generally do so *1068 by focusing on the first sentence of § 506(a), virtually ignoring the debtor’s proposed disposition of the collateral and the requirements of the second sentence of § 506(a).

Balbus, 933 F.2d at 251 . Unfortunately, our circuit is now such a court.

b.

By way of a counter-offensive, the majority contends that foreclosure valuation is no more hypothetical than replacement valuation, because both postulate a non-existent transaction. See maj. op. at 1048. In doing so, the majority confuses evidence with substance. As an evidentiary matter, any valuation method must postulate the price at which retained property would be bought or sold. In terms of substance, however, the replacement approach considers the actual value of the property to the person who actually possesses it; replacement cost is simply a measurement of that value. See supra note 1. On the other hand, the foreclosure approach uses a hypothetical transaction to define value, not to measure it.

Finally, the majority argues that even if it were to consider the proposed disposition or use of the collateral, it would not necessarily have to consider the collateral’s value to its possessor. See maj. op. at 1047-48. On first blush, such a construction would once again give remarkably little meaning to the clause, requiring courts to deduct costs that are not incurred in the actual use of property and would turn our consideration of “proposed disposition or use” into a mere formality.

If we were to value property from the perspective of someone with no right to possess it, however, we would still need to determine its value to that person in light of its proposed disposition or use — possession by the debtor. Collateral would then have two types of value to a secured creditor: first, future foreclosure value; and second, secondary benefit from its utility to the debtor, e.g., a share of any income the property enabled the debtor to make.

Because foreclosure valuation considers only the former component of value, it is too stingy, even from this odd perspective. In addition, the amount of the latter component of value would depend in part upon the allowed amount of the secured claim, bringing us back to where we started. Thus, the majority’s reasoning is circular.

C.

The majority asserts that because the text of the Bankruptcy Code must “clearly compel” departures from state law, and the replacement approach modifies the extent of ACC’s security relative to Texas law, Congress may enact replacement valuation only by drafting text that “clearly compel[s]” that result. See maj. op. at 1042. In doing so, the majority stretches a simple canon of construction beyond all recognition.

Interpretation of the Bankruptcy Code is no different from the construction of any other statute. Thus, “where the meaning of the Bankruptcy Code’s text is itself clear, its operation is unimpeded by contrary state law or prior practice.” BFP v. Resolution Trust Corp., 511 U.S. 531 , -, 114 S.Ct. 1757, 1765 , 128 L.Ed.2d 556 (1994) (internal quotation and citation omitted).

The canon of construction relied upon by the majority states that the Bankruptcy Code should not be read to overrule a long-established tradition of state law protecting an important state interest unless Congress’s intent to “displace” state law is “clear and manifest.” Id. at -, 114 S.Ct. at 1764-65 . Thus, we presume that property rights are defined by state law, see Butner v. United States, 440 U.S. 48, 54-55 , 99 S.Ct. 914, 917-18 , 59 L.Ed.2d 136 (1979), for otherwise the legal owner of property under state law could differ from the legal owner under federal law — a patently absurd result. 12

*1069 Replacement valuation would not “displace” a well-established area of state law, for the simple reason that there is no state law regarding the rights of secured creditors in reorganizations. In fact, the Constitution has prevented the states from passing such laws for the past 207 years.

The majority’s reliance upon BFP would have some force if this were a chapter 7 liquidation or a reorganization in which the debtor did not propose to retain the secured property, as those situations generally involve sale of collateral and therefore present a closer analogy to state-law foreclosure. As noted above, however, reorganizations subject secured creditors to risks that are not present in straight foreclosures, and successful reorganizations generate surpluses for creditors. See supra p. 1043. Thus, there is no analogous state law to “displace.” 13 As a result, the Supreme Court has readily interpreted the plain language of § 506 to grant secured creditors rights in reorganizations that they do not have in state-law foreclosures. See Rake v. Wade, 508 U.S. 464 , 113 S.Ct. 2187 , 124 L.Ed.2d 424 (1993) (interpreting plain language of § 506 to grant postpetition interest to oversecured creditors in chapter 13 proceedings).

Finally, even if state law on foreclosure were relevant, foreclosure valuation would displace it as well. As one bankruptcy court explained,

[F]oreelosure is only one way to realize the value of a lien. Other methods include allowing the debtor to discharge the lien over a period of time by making installment payments, awaiting a sale of the collateral by the debtor, or obtaining a deed in lieu of foreclosure. None of these options would require the creditor to “eat” the cost of a forced sale. Thus the deduction of hypothetical sale costs, which ironically is premised on what would happen in the “real world,” ignores the very real possibility that a foreclosure sale could prove unnecessary, and instead assumes a worst-ease scenario from the creditor’s perspective.

In re Jones, 152 B.R. 155, 185 (Bankr.E.D.Mich.1993).

In fact, both Texas law and the Uniform Commercial Code permit a creditor to accept and retain his collateral in satisfaction of the debt. See TexBus. & Com.Code § 9.505(b) (1991). In a reorganization, the creditor loses that right, which is sometimes more valuable than the right to foreclose: The creditor might put the property to productive use, hold onto it for speculative purposes, or desire to take it outright and sell it later without the technical requirements of foreclosure sales. In fact, this retention remedy cannot always be equivalent to the foreclosure one, for if it were, the drafters would have excluded it as redundant.

Consequently, it is the very nature of reorganization, not the choice between valuation methods, that overrides state law. Respect for state law, while laudable, provides no excuse for not reading § 506(a) according to its plain meaning.

D.

Consideration of legislative history is inappropriate, because the language of the statute is plain. See United States v. Barlow, 41 F.3d 935, 942 (5th Cir.1994) (stating that when statutory language is plain or unambiguous, we may not resort to examination of legislative history), cert. denied, — U.S. -, 115 S.Ct. 1389 , 131 L.Ed.2d 241 and cert. denied, — U.S. -, 115 S.Ct. 1804 , 131 L.Ed.2d 730 , and cert. denied, — U.S. -, 115 S.Ct. 1804 , 131 L.Ed.2d 730 (1995). Moreover, as is often the case, different portions of the legislative history can be construed to support divers outcomes.

1.

The Senate report emphasizes the importance of § 506(a)’s second sentence: “While *1070 courts will have to determine value on a case-by-case basis, the subsection makes it clear that valuation is to be determined in light of the purpose of the valuation and the proposed disposition or use of the subject property.” S.Rep. No. 989, 95th Cong., 2d Sess. 68 (1978), reprinted in 1978 U.S.C.C.A.N. 5787, 5854. This passage emphasizes that purpose and proposed disposition or use are the two factors that “elear[ly]” must be considered when “determin[ing] value.”

In addition, the majority correctly notes that the original House bill did not specify that value shall be determined in light of purpose and proposed disposition or use. See maj. op. at 1058 n. 30. The conference, however, chose to include this provision in the final legislation. Thus, legislative history buffs could easily conclude that the sentence is an important one, specifically considered by Congress, and deserving of more than minimal significance.

The majority shrugs these portions of the legislative history aside, noting that the Senate report merely repeats the words of the statute. See maj. op. at 1056. While that is true, the history’s emphasis on § 506(a)’s second sentence undercuts the majority’s insistence that it has little meaning.

On the other hand, the House report’s concern that secured creditors not receive “extraneous, non-financial” leverage, see H.R.Rep. No. 595, 95th Cong., 2d Sess. 124 (1978) (“H.R.Rep. No. 595”), reprinted in 1978 U.S.C.C.A.N. 5963, 6085, is not particularly enlightening. Under older law, some courts allowed secured creditors to refuse to participate in chapter 13 reorganizations, giving them enormous leverage: No matter how little the collateral was worth, a secured creditor could demand repayment of the original purchase price or refuse to participate in the plan. As the report explains, “a few misguided decisions under current law [held that] a secured creditor with a $2000 [sic] secured by household goods worth only $200 is entitled in some cases to his full $2000 claim, in preference to all unsecured creditors.” H.Rep. No. 95-595, 95th Cong. 2nd Sess. at 124, 1978 U.S.Code Cong. & Admin.News pp. 5963, 6085.

The replacement approach deprives secured creditors of this leverage. Such a creditor cannot demand the collateral’s original purchase price — -only its replacement cost in its current condition. To borrow the House report’s illustration, the replacement approach does not permit him to demand the $2000 that the debtor paid for new silverware and china; instead, he can demand only the $200 that the debtor would have to pay for a used set. The replacement approach means only that we cannot further deduct the hypothetical cost of selling the used goods. Thus, the replacement approach does not grant secured creditors the enormous “non-financial” leverage of which the House report complains.

The majority observes that the report implies that a creditor should be entitled only to what he would receive if he were to possess the goods. See maj. op. at 1056. But the report also states that a creditor’s claim is unsecured only “[t]o the extent that his claim ... exceeds the value of his collateral,” H.R.Rep. No. 595, at 124, reprinted in 1978 U.S.C.C.A.N. at 5963, 6085, necessarily implying that he is secured in the full amount of “the value of his collateral.” In any event, the report does not state whether hypothetical costs of sale should be subtracted from that amount. As the authors of the report apparently were focused on the threshold concern that creditors should receive only the erammed-down value of used goods, not the original value of new ones, it is unlikely that they even considered this issue.

2.

The remainder of the legislative history is inapposite. First, redemption of property in a chapter 7 liquidation presents a different question, as the “proposed disposition or use” is a sale by the creditor to the debtor — in other words, both a sale by the creditor and possession by the debtor. Thus, assuming arguendo that foreclosure valuation is appropriate for redemptions, the majority’s attempt to analogize liquidation sales to reorganizations, see maj. op. at 1056-57, serves only to underscore its unwillingness to consider the primary factors relevant to deter *1071 mination of value — purpose and proposed disposition or use.

Second, Congress’s preference for reorganizations rather than liquidations hardly entitles us to rewrite chapter 13 in order to reduce the value of security. “Reorganization is not a Holy Grail to be pursued at any length.” Timbers, 808 F.2d at 374 (Clark, C.J., concurring). The legislative history discussing the superiority of chapter 13 emphasizes that reorganizations are better for both debtors and creditors, and does not distinguish secured from unsecured creditors in this respect. See H.R.Rep. No. 595, at 118, reprinted in 1978 U.S.C.C.A.N. at 6079. Thus, while Congress might have a general preference for reorganizations, nothing in the legislative history suggests that Congress disfavors secured credit or that we should construe the statute to minimize the value of security.

In any event, the majority’s concern that replacement valuation will cause debtors simply to reaffirm secured debt and enter chapter 7 is counter-intuitive. Under any method of valuation, secured debt is erammed-down from the full amount of the debt to the current value of the collateral, and even if that amount is erammed-down only slightly, the debtor still has more money with which to pay his unsecured creditors. As noted by the majority and the House report, debtors generally favor chapter 13 over chapter 7 because it inflicts less damage on their standing with the credit industry. See maj. op. at 1057 (quoting H.R.Rep. No. 595, at 118, reprinted in 1978 U.S.C.C.A.N. at 6079). Thus, debtors still stand to gain from choosing chapter 13 over chapter 7.

Moreover, the Fourth and Ninth Circuits adopted replacement valuation in 1992, and this circuit and the Sixth Circuit followed in 1994. Bankruptcy courts have dutifully followed our holdings, and debtors have continued to file chapter 13 reorganization plans. Simply put, there is no reason to believe that replacement valuation will be the undoing of chapter 13.

3.

The foreclosure approach finds no support in the portions of the legislative history that refer to “case-by-case” adjudication. The replacement approach employs a contextual analysis, valuing property according to who actually possesses it and what it is actually worth to him. The foreclosure approach employs a considerably less case-by-case analysis, deducting purely hypothetical costs of sale regardless of who possesses the property and whether or hot he intends to sell it.

Recognizing this weakness, the majority claims that its rule is less rigid than the replacement approach because it permits departures based upon “equitable considerations arising from the facts of the case.” Maj. op. at 1059. Whatever the latter phrase might mean, it does not distinguish the foreclosure approach from the replacement one — we could adopt either approach as a starting point and then permit ad hoc departures. In fact, given that the replacement approach provides a more case-specific baseline, the most case-by-case approach would be replacement valuation with alterations for “equitable considerations.” Thus, the desirability of ad hoc adjudication is a separate sideshow. Cf infra part IV (discussing the majority’s “equitable considerations” exception). 14

*1072 III.

A.

Of course, we may reject a statute’s plain meaning in rare instances where failure to do so would lead to a result that Congress could not reasonably have intended. See Ron Pair, 489 U.S. at 242-43 , 109 S.Ct. at 1030-32 . This is not such a case, however, for the plain meaning of § 506(a) makes good, fair economic sense.

When a reorganization succeeds, it produces a surplus that must be divided between secured and unsecured creditors. See supra p. 1066. It is perfectly reasonable to award much of this surplus, which the majority pejoratively calls a “windfall,” to secured creditors. The surplus exists only because of their collateral, and even if the replacement approach caused them to receive the entire surplus, unsecured creditors would be no worse off than if they had foreclosed immediately.

This straightforward analysis is consistent with the Bankruptcy Code’s general treatment of secured creditors. The Supreme Court routinely construes the Code’s plain language to provide significant protection to secured creditors, 15 and we have repeatedly protected creditors against attempts to reduce their security. 16

In Timbers, for example, the Court found that the Code strikes a sensible balance: “[T]he creditor’s ‘interest in property’ obviously means his security interest without taking account of his right to immediate possession of the collateral on default.... The phrase ‘value of such creditor’s interest’ in § 506(a) means ‘the value of the collateral.’ ” Timbers, 484 U.S. at 372 , 108 S.Ct. at 631 (emphasis added). In other words, a creditor’s secured claim is valued according to the value of his collateral, not the limited amount that he would net in a hypothetical foreclosure. At the same time, the secured creditor is not further entitled to interest payments for the debtor’s continued use of the collateral: After all, confirmation of the plan vests title of the property in the debtor, not the creditor. See 11 U.S.C. § 1327 (b) (1994). Therefore, the panel opinion in this ease is within a well-established line of Supreme Court and Fifth Circuit precedent recognizing that a creditor’s security interest is equal to the actual value of his collateral and is not subject to judicial tampering.

B.

The majority asserts that replacement valuation would give secured creditors a “bonus” by twice compensating them for loss of the right to foreclose immediately. See maj. op. at 1052-53. This criticism misses the mark, as the question is not whether replacement or foreclosure valuation best approximates the right to foreclose immediately, but whether the Bankruptcy Code arbitrarily limits the value of a secured claim to that amount.

In addition, it is hardly apparent that the foreclosure approach fully compensates creditors for loss of their right to foreclose. As discussed above, risks unique to reorganization can cause secured creditors to fare worse in reorganizations than in liquidations or foreclosures. See supra p. 1066.

The majority notes that secured creditors can protect themselves against the risk of bankruptcy by charging higher interest rates and varying other terms of credit. In fact, *1073 the terms of credit between debtors and creditors — both secured and unsecured — will undoubtedly adjust to compensate for either legal rule, replacement or foreclosure.

When creditors lend, they account for a variety of contingencies: A debtor might pay his debt in full, a default might force the creditor to repossess collateral under either state law or chapter 7, or a debtor might seek to reorganize under chapter 13. Until now, the bargain between debtor and creditor in this circuit has reflected uncertainty about the value of collateral in a reorganization. In the future, of course, creditors’ calculations will simply reflect the majority’s holding. 17

If there is any opportunity for a windfall, it occurs under the foreclosure approach. It is not hard to imagine a debtor cramming down a secured creditor’s claim to wholesale value, waiting until his plan is confirmed, and then either selling the property for its full market value or destroying it for insurance proceeds. The debtor could then pocket the difference. See § 1327(b) (stating that confirmation vests all property of estate in debtor). If the sale or destruction occurred prior to confirmation, however, the full amount of the proceeds would belong to the creditors.

The majority correctly responds that there is no evidence in the record before us that the Rashes could net more from a sale of their truck than could ACC. In fact, ACC trumpets its ability to resell at well above wholesale. It is not, however, hard to envision an individual debtor’s finding a buyer willing to pay close to full market value while a large bank would accept less in order to move one of many foreclosed vehicles, thereby reducing storage and other transaction costs. How often that scenario will actually play out is impossible to determine on the record in this case. The lesson to be learned from this hypothetical, however, is simply that foreclosure valuation understates the value of collateral.

C.

As an accounting matter, the majority contends that replacement valuation overstates the value of collateral by including the cost of services provided by a retailer, such as storage and marketing. See maj. op. at 1051-52. In doing so, the majority fails to comprehend the nature of “value.” As a starting point, value is a subjective concept: An item is worth different amounts to different people, depending upon a variety of factors, including one’s other possessions, ability to use it, and so on. In fact, an individual generally derives more “value” from a good than he pays for it, because market prices do not target specific buyers. See Paul A. Samuelson & William D. NoRdhaus, Economics 82-84 (15th ed. 1995) (discussing disparity between price and worth). We need not determine the actual utility that a debtor derives from collateral, however, because any particular piece of property is worth no more to him than the cost of replacing it. Thus, an asset’s value is the amount “a person in the market would be willing to pay for [it].” Marmolejo, 86 F.3d at 413; see also supra note 1.

It is therefore irrelevant that retail prices include markups above the costs of production and shipping. The replacement approach looks to a debtor’s replacement cost not as a reflection of value inherent in the property, but as a measurement of the value of the collateral to him. In short, it values property from the debtor’s perspective. 18

*1074 D.

To conclude, the majority’s economic analysis does not come close to demonstrating that the plain language of § 506(a) leads to a result that Congress could not reasonably have intended. Thus, we are not at liberty to rewrite the statute.

rv.

Turning to the case-by-case rationale, the meaning of the majority’s “equitable considerations” exception is murky at best. The only example provided by the majority — valuation for the purpose of determining whether unsecured claims fall below the floor of 11 U.S.C. § 109 (e) (1994) — is not an equitable consideration that a court may take into account; instead, that example invokes only “the purpose of the valuation,” a factor that § 506(a) requires the court to consider. If the majority means only to convert the mandatory § 506(a) factors into permissive ones, then its exception is at least understandable, albeit wrong. If it means to replace § 506(a) altogether with ad hoc adjudication, then it has abdicated its responsibility to declare what the law is.

Assuming that the truth is somewhere in the middle, the court has created a fine mess. Courts engage in true “case-by-case” adjudication by applying legal standards to the facts of the case before them. When valuing collateral, we must consider a variety of facts: who owns the collateral, how he intends to use or dispose of it, his ability to do so, the effect of that disposition or use on the collateral, and so on. In conducting this analysis, however, we need a legal standard to apply.

Take, for example, Clark Pipe. In that chapter 7 liquidation, we needed to value collateral in order to determine whether a secured creditor had improved its position vis-a-vis other creditors during the 90 days preceding the debtor’s filing for bankruptcy. We held that because the purpose of the valuation was to determine whether the creditor had improved its position, the value should be determined from the perspective of the creditor, not the debtor, and it was therefore necessary to deduct the creditor’s hypothetical costs of sale. Id. at 698-99. We also found that the collateral should be valued according to its liquidation value, because the debtor was liquidating its inventory during the period in question. Id. at 698. In short, we determined that foreclosure valuation was appropriate in light of the purpose of the valuation and the actual use of the property, and then applied that standard to the facts of the case.

Similarly, we now need to determine how to value collateral when a debtor proposes to retain it in a chapter 13 reorganization. The majority tells us only that the legal standard is ordinarily the amount a creditor would net from a hypothetical sale of the property, but will sometimes differ. Without even an example of a true “equitable consideration,” however, we are left in the dark as to when to apply that legal standard.

The majority may or may not be correct that its refusal to settle the law will encourage the settling of individual lawsuits. See maj. op. at 1059 n. 32. I am inclined to believe that “[t]he greater the uncertainty in the legal rule, the harder it is to settle pending cases,” see Ebbler, 804 F.2d at 91 (Easterbrook, J., concurring), but either way, bringing darkness to light is hardly the job of an appellate court.

V.

In summary, I agree with the recent statement of one bankruptcy court:

[Djuring cramdown ..., a creditor’s rights of foreclosure, sale, bidding-in and the like are not being delayed; rather they are being extinguished and replaced forever (if the plan is successfully completed) with lesser rights. For that purpose, the proper measure of value is not what the creditor would net in a hypothetical sale, but rather the value of the collateral “in the hands of the Debtor.”

In re Freudenheim, 189 B.R. 279, 280 (Bankr.W.D.N.Y.1995). Here, the majority eloquently explains how it believes the federal bankruptcy scheme should work. That is the role of Congress, however. Adhering to *1075 the statute’s plain meaning, I respectfully dissent.

. In one sense, of course, an asset is often “worth” more than its cost. We need not determine the actual utility a debtor derives from collateral, however, as any particular piece of property is worth no more than its replacement cost. For example, having a truck to drive might be worth far more to an individual than it would cost him to purchase one, but any particular truck is worth no more than it would cost him to buy its equivalent. Thus, the value of retained collateral is equal to its replacement cost. See United States v. Marmolejo, 86 F.3d 404, 412-14 (5th Cir.1996) (holding that value of item equals price willing buyer would pay willing seller for it); A. Mitchell Polinsky, An Introduction to Law and Economics 135 (2d ed. 1989) (observing that value to individual of standardized good sold in market is good's market price); infra part III.C (discussing meaning of "value”).

In general, replacement cost equals an asset’s retail price, and foreclosure value equals its wholesale price, which is equivalent to the retail price less hypothetical costs of sale. There are, however, instances in which an individual debtor could acquire replacement property for less than retail, or a creditor could resell property for greater than wholesale. Thus, the terms "retail” and "wholesale” value only loosely describe the replacement and foreclosure approaches.

. See Senior-G & A Operating, 957 F.2d at 1301 (valuing well according to revenues to be derived from future production); Brite v. Sun Country Dev. (In re Sun Country Dev.), 764 F.2d 406, 409 (5th Cir.1985) (valuing notes given to secured creditor in light of promised payments rather than resale value).

. See Associates Commercial Corp. v. Rash (In re Rash), 31 F.3d 325 (5th Cir.1994) (employing replacement valuation), modified, 62 F.3d 685 (5th Cir.), reh’g en banc granted, 68 F.3d 113 (5th Cir.1995).

. Taffi v. United States (In re Taffi), 68 F.3d 306, 309-10 (9th Cir.1995), reh’g en banc granted, 86 F.3d 147 (9th Cir.1996).

. The majority attempts to distinguish four of the circuit court authorities — McClurkin, Lomas Mortgage, Coker, and Balbus — by observing that the debtors in those cases argued that the "creditor's interest in the estate’s interest” includes a reduction for hypothetical costs of sale, rather than arguing that the value of "[the] property” includes such a reduction. See maj. op. at 1059-60. That conceptual distinction is irrelevant: All four cases hold that we may not reduce the value of security by considering purely hypothetical costs of sale. See McClurkin, 31 F.3d at 405 ; Lomas Mortgage, 980 F.2d at 1286 ; Coker, 973 F.2d at 260 (discussing Balbus). Absent unusual circumstances, replacement value equals the property’s full market value, while foreclosure value equals market value reduced by hypothetical costs of sale. See supra note 1.

.Decreasing the value of collateral might make an otherwise infeasible reorganization feasible, but only rarely. A plan must provide all secured creditors with either their collateral or the allowed amounts of their secured claims, see § 1325(a)(5), and a debtor’s disposable income might occasionally be sufficient to cover the allowed amounts after, but not before, deduction of hypothetical costs. Such a reorganizing debtor could simply surrender the collateral, see § 1325(a)(5)(C), but if he uses it to produce in *1064 come, the loss might prevent him from meeting other obligations. (Coincidentally, this might be such a case. See maj. op. at 1055 n. 24.).

Needless to say, it is unlikely that this scenario will recur frequently. In addition, most chapter 13 reorganizations fail, see William C. Whitford, The Ideal of Individualized Justice, 68 Am.Bankr. L.J. 397, 4 10-11 (1994); Teresa A. Sullivan et al„ As We Forgive Our Debtors 215-17 (1989), and a reorganization that is so marginal from the beginning is not likely to be among the few that succeed.

Moreover, decreasing the value of collateral could actually prevent compliance with another Chapter 13 requirement: that total unsecured debt not exceed a prescribed statutory amount. See 11 U.S.C. § 109 (e) (1994). As a secured creditor’s claim is unsecured to the extent that it is not secured, see § 506(a), decreasing the value of security increases the amount of unsecured claims, pushing the debtor closer to the statutory cap. Thus, replacement valuation thwarts few, if any, reorganizations that would otherwise succeed, and might even enable others to do so.

. In addition, creation of a circuit split will undoubtedly aggravate the unpredictability of adjudication in circuits that have not decided the question. Lower court decisions are all over the map, see In re Maddox, 194 B.R. 762, 765-67 (Bankr.D.N.J.1996) (surveying the caselaw), fostering uncertainty and making it difficult for debtors and creditors to assess the cost and value of credit. Maintaining the 6-0 circuit count could have led to greater consistency.

. See Nobelman v. American Sav. Bank, 508 U.S. 324, 328-29 , 113 S.Ct. 2106, 2109-10 , 124 L.Ed.2d 228 (1993) (stating that § 506(a) provides that a claim is secured "to the extent of the value of [the] property”); Timbers, 484 U.S. at 372 , 108 S.Ct. at 631 ("The phrase ‘value of such creditor's interest' in § 506(a) means 'the value of the collateral.' ”).

. The majority's observation that we need not value the “estate's interest” is therefore correct but irrelevant. We must value "such property,” and the question is whether to do so from the debtor's or the creditor's perspective.

. The majority attempts to reconcile its holding with Timbers by implying that it simply modifies the Court’s construction of § 506(a)'s first sentence. See maj. op. at 1044. Changing "the value of the collateral" to “the value of the collateral to the creditor" is akin to slipping the New Testament into the back of the Torah.

. In addition, the state law right to accept and retain collateral in satisfaction of a debt is sometimes more valuable than the right to foreclose. See infra p. 1069. Thus, it is not evident that foreclosure provides an appropriate baseline for valuing the right to immediate possession.

. Cf. BFP , 511 U.S. at -, 114 S.Ct. at 1765 (noting that departure from state fraudulent transfer law would mean that “the title of every piece of realty purchased at foreclosure would be under a federally created cloud”). Similarly, we presume that Congress does not intend to grant trustees exemptions from non-bankruptcy law, i.e., laws of general applicability. See California State Bd. of Equalization v. Sierra Summit, Inc., 490 U.S. 844, 851-52 , 109 S.Ct. 2228, 2233-34 , 104 L.Ed.2d 910 (1989) (taxes); Midlantic Nat’l Bank v. New Jersey Dep't of Envtl. Protection, 474 U.S. 494, 501 , 106 S.Ct. 755, 759-60 , 88 L.Ed.2d 859 (1986) (environmental laws). Such exemp *1069 tions would create a direct conflict, as conduct that is generally illegal under state or federal law — such as abandoning polluted land or not paying taxes — would be permitted, perhaps even required, by the Bankruptcy Code.

. The majority's extension of the canon creates a sort of double-secret preemption: Federal law prohibited the states from passing laws differentiating reorganizations from foreclosures, and the absence of such state laws requires us to assume that Congress did not intend to do so.

. The majority observes that the legislative history does not acknowledge that replacement valuation is a break from pre-Code practice. See maj. op. at 1056 n. 26. Even assuming that the majority's factual assertion is correct, silence in the legislative history is hardly relevant. Congress worked on the Code for nearly a decade, making significant changes in the laws, including those regarding the treatment of secured creditors. Ron Pair, 489 U.S. at 240 , 109 S.Ct. at 1029-30 . As a result, "it is not appropriate or realistic to expect Congress to have explained with particularity each step it took.” Id.

As long as the language of the statute is plain, we must accept changes from pre-Code practice without reference to the legislative history. See id. at 243-44 , 109 S.Ct. at 1031-32. While the Court arguably departed slightly from this directive in Dewsnup v. Timm, 502 U.S. 410 , 112 S.Ct. 773 , 116 L.Ed.2d 903 (1992), it acknowledged that "where the language is unambiguous, silence in the legislative history cannot be controlling.” Id. at 419—20, 112 S.Ct. at 779.

In addition, the majority’s discussion of the history of bankruptcy law is simply inapposite. With only limited and seldom-invoked exceptions, Congress did not authorize reorganization bankruptcies, in which a debtor forces a delayed payment plan on its creditors and the court retains jurisdiction to oversee the repayment, until *1072 the 1930's. See Securities & Exchange Comm’n v. American Trailer Rentals Co., 379 U.S. 594, 603 , 85 S.Ct. 513, 518-19 , 13 L.Ed.2d 510 (1965) (corporate reorganizations); 5 Collier on Bankruptcy V 1300.01 (Lawrence P. King, et al., eds., 15th ed. 1996) (consumer reorganizations). Nonetheless, the majority cites only to cases from the nineteenth century insisting that a secured creditor actually sell the collateral. See maj. op. at 1050-51 n. 18.

. See, e.g., Nobelman (interpreting § 1322(b)(2) to prohibit debtors from using § 506(a) to cram down value of home mortgages); Ron Pair (interpreting § 506(b) to state that over-secured creditors are entitled to interest and costs up to the amount of their extra security).

. See, e.g., Dewsnup (holding that secured creditor is entitled to any increase in the value of collateral after initial § 506(a) valuation); Federal Savings & Loan Ins. Corp. v. D & F Constr., Inc. (In re D & F Constr., Inc.), 865 F.2d 673, 675 (5th Cir.1989) (vacating confirmation of chapter 11 plan because "technical compliance with all the requirements in § 1129(b)(2) does not assure that the plan is 'fair and equitable' [to secured creditors]”).

. The resulting increase in the interest rates charged by secured creditors might have adverse economic consequences, redistributing wealth from responsible debtors to bad credit risks and thereby forcing good risks out of the credit market. See Zywicki, supra, at 263-64.

. Judge Easterbrook's concurrence in Samson v. Alton Banking & Trust Co. (In re Ebbler Furniture & Appliances), 804 F.2d 87 (7th Cir.1986), is consistent with this understanding of value. As he noted, " '[v]alue' is defined for a purpose.” Id. at 91 . In that chapter 7 liquidation, the court valued inventory to determine whether a secured creditor improved its position vis-á-vis other creditors during the 90 days preceding bankruptcy. Thus, the purpose of the valuation required the court to determine value from the creditor’s perspective. See id. at 91-92 ; cf. Smith v. Associates Commercial Corp. (In re Clark Pipe & Supply Co.), 893 F.2d 693, 698-99 (5th Cir.1990) (employing foreclosure valuation for this purpose).