, BFP v. Resolution Trust Corporation :: 511 U.S. 531 (1994) :: US LAW US Supreme Court Center

BFP v. Resolution Trust Corporation :: 511 U.S. 531 (1994) :: US LAW US Supreme Court Center

    USLaw.Site Opinion Summary and Annotations


    Primary Holding
    Under §548(a)(2) of Bankruptcy Code, a "reasonably equivalent fee" for foreclosed actual property is rate in truth acquired at foreclosures sale, as long as all necessities of State's foreclosure law had been complied with.
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    OCTOBER TERM, 1993




    No. ninety two-1370. Argued December 7, 1993-Decided May 23,1994

    Petitioner BFP took title to a California domestic situation to, inter alia, a deed of believe in choose of Imperial Savings Association. After Imperial entered a note of default due to the fact its loan changed into not being serviced, the home changed into purchased by means of respondent Osborne for $433,000 at a properly noticed foreclosure sale. BFP quickly petitioned for bankruptcy and, acting as a debtor in ownership, filed a grievance to set apart the sale to Osborne as a fraudulent switch, claiming that the house changed into really worth over $725,000 whilst bought and hence changed into not exchanged for a "moderately equivalent price" below eleven U. S. C. § 548(a)(2). The Bankruptcy Court granted summary judgment to Imperial. The District Court affirmed the dismissal, and a bankruptcy appellate panel affirmed the judgment, maintaining that attention received in a noncollusive and often conducted nonjudicial foreclosures sale establishes "moderately equivalent value" as a matter of law. The Court of Appeals affirmed.

    Held: A "reasonably equivalent cost" for foreclosed actual belongings is the fee in truth received at the foreclosure sale, so long as all of the requirements of the State s foreclosure law had been complied with. Pp.535-549.

    (a) Contrary to the positions taken by using some Courts of Appeals, honest marketplace price isn't necessarily the benchmark against which determination of fairly equivalent cost is to be measured. It may be presumed that Congress acted deliberately when it used the time period "fair marketplace price" someplace else in the Bankruptcy Code but not in § 548, especially when the omission involves changing popular criminal terminology with a neologism. Moreover, truthful marketplace price presumes marketplace conditions that, by definition, do not obtain in the pressured-sale context, in view that assets sold inside the time and manner strictures of nation-prescribed foreclosure is actually really worth much less than belongings offered with out such regulations. "Reasonably equal cost" additionally cannot be read to mean a "affordable" or "truthful" forced-sale rate, such as a percent of fair marketplace fee. To specify a federal minimum sale charge past what kingdom foreclosures regulation calls for could make bigger bankruptcy law properly beyond the traditional subject of fraudulent transfers and disappointed the coexistence that


    fraudulent switch law and foreclosure regulation have enjoyed for over four hundred years. While, beneath fraudulent switch law, a "grossly inadequate fee" increases a rebuttable presumption of actual fraudulent reason, it's far black letter foreclosure law that, whilst a State s approaches are accompanied, the mere inadequacy of a foreclosures sale price is no basis for setting the sale apart. Absent clearer textual steering than the word "fairly equal fee"-a phrase absolutely like minded with preexisting practice-the Court will not presume that Congress intended to displace traditional country law with an interpretation that could profoundly affect the essential state hobby inside the protection and stability of identify to actual assets. pp. 535-545.

    (b) The end reached here does now not render § 548(a)(2) superfluous. The "moderately equal value" criterion will maintain to have independent which means outside the foreclosures context, and § 548(a)(2) will remain an exceptional means of invalidating foreclosures sales that, while now not intentionally fraudulent, nevertheless fail to comply with all governing state legal guidelines. Pp. 545-546.

    974 F.second 1144, affirmed.

    SCALIA, J., brought the opinion of the Court, wherein REHNQUIST, C. J., and O CONNOR, KENNEDY, and THOMAS, JJ., joined. SOUTER, J., filed a dissenting opinion, wherein BLACKMUN, STEVENS, and GINSBURG, JJ., joined, submit, p. 549.

    Roy B. Woolsey argued the purpose for petitioner. With him on the briefs changed into Ronald B. Coulombe.

    Ronald J. Mann argued the motive for respondent Resolution Trust Corporation. With him at the quick have been Solicitor General Days, Assistant Lawyer General Hunger, Jeffrey P. Minear, Joseph Patchan, Jeffrey Ehrlich, and Janice Lynn Green.

    Michael R. Sment argued the purpose and filed a brief for respondent Osborne et al. *

    *Marian C. Nowell, Henry J. Sommer, Gary Klein, Neil Fogarty, and Philip Shuchman filed a quick for Frank Allen et al. as amici curiae urging reversal.

    Briefs of amici curiae urging affirmance had been filed for the American Council of Life Insurance et al. via Christopher F. Graham, James L. Cunningham, and Richard E. Barnsback; for the California Trustee s Association et al. by Phillip M. Adleson, Patrie J. Kelly, and Duane W Shewaga;

    Full Text of Opinion

    OCTOBER TERM, 1993




    No. 92-1370. Argued December 7, 1993-Decided May 23,1994

    Petitioner BFP took name to a California domestic problem to, inter alia, a deed of believe in favor of Imperial Savings Association. After Imperial entered a note of default because its loan was no longer being serviced, the house turned into bought through respondent Osborne for $433,000 at a nicely noticed foreclosures sale. BFP quickly petitioned for financial disaster and, appearing as a debtor in possession, filed a criticism to set aside the sale to Osborne as a fraudulent transfer, claiming that the house changed into worth over $725,000 when sold and for this reason changed into no longer exchanged for a "moderately equal cost" underneath 11 U. S. C. § 548(a)(2). The Bankruptcy Court granted summary judgment to Imperial. The District Court affirmed the dismissal, and a bankruptcy appellate panel affirmed the judgment, keeping that attention obtained in a noncollusive and regularly performed nonjudicial foreclosures sale establishes "moderately equal value" as a count number of regulation. The Court of Appeals affirmed.

    Held: A "reasonably equivalent cost" for foreclosed real belongings is the price in reality obtained at the foreclosure sale, as long as all the requirements of the State s foreclosure regulation have been complied with. Pp.535-549.

    (a) Contrary to the positions taken with the aid of some Courts of Appeals, honest marketplace fee isn't necessarily the benchmark against which dedication of moderately equal price is to be measured. It can be presumed that Congress acted intentionally whilst it used the term "truthful market price" some other place in the Bankruptcy Code but not in § 548, particularly whilst the omission entails replacing trendy prison terminology with a neologism. Moreover, truthful marketplace cost presumes market situations that, through definition, do not attain in the forced-sale context, considering the fact that assets bought inside the time and manner strictures of state-prescribed foreclosures is virtually well worth much less than property sold without such restrictions. "Reasonably equivalent value" also can not be study to intend a "affordable" or "truthful" compelled-sale rate, which includes a percent of honest marketplace fee. To specify a federal minimum sale fee past what kingdom foreclosure regulation calls for might increase financial ruin law well beyond the conventional area of fraudulent transfers and dissatisfied the coexistence that


    fraudulent transfer law and foreclosure law have enjoyed for over four hundred years. While, below fraudulent transfer regulation, a "grossly insufficient charge" raises a rebuttable presumption of real fraudulent reason, it's miles black letter foreclosures regulation that, whilst a State s processes are followed, the mere inadequacy of a foreclosures sale price is no basis for putting the sale apart. Absent clearer textual steerage than the word "reasonably equal price"-a word absolutely compatible with preexisting practice-the Court will not presume that Congress supposed to displace traditional country regulation with an interpretation that would profoundly have an effect on the crucial kingdom interest inside the safety and stability of title to real property. pp. 535-545.

    (b) The conclusion reached right here does no longer render § 548(a)(2) superfluous. The "moderately equal price" criterion will retain to have impartial that means outside the foreclosures context, and § 548(a)(2) will stay an one of a kind way of invalidating foreclosure sales that, while no longer deliberately fraudulent, nevertheless fail to comply with all governing state legal guidelines. Pp. 545-546.

    974 F.second 1144, affirmed.

    SCALIA, J., brought the opinion of the Court, wherein REHNQUIST, C. J., and O CONNOR, KENNEDY, and THOMAS, JJ., joined. SOUTER, J., filed a dissenting opinion, wherein BLACKMUN, STEVENS, and GINSBURG, JJ., joined, publish, p. 549.

    Roy B. Woolsey argued the motive for petitioner. With him at the briefs was Ronald B. Coulombe.

    Ronald J. Mann argued the cause for respondent Resolution Trust Corporation. With him at the brief were Solicitor General Days, Assistant Lawyer General Hunger, Jeffrey P. Minear, Joseph Patchan, Jeffrey Ehrlich, and Janice Lynn Green.

    Michael R. Sment argued the reason and filed a short for respondent Osborne et al. *

    *Marian C. Nowell, Henry J. Sommer, Gary Klein, Neil Fogarty, and Philip Shuchman filed a short for Frank Allen et al. as amici curiae urging reversal.

    Briefs of amici curiae urging affirmance had been filed for the American Council of Life Insurance et al. via Christopher F. Graham, James L. Cunningham, and Richard E. Barnsback; for the California Trustee s Association et al. by means of Phillip M. Adleson, Patrie J. Kelly, and Duane W Shewaga;


    JUSTICE SCALIA added the opinion of the Court.

    This case offers the question whether the consideration obtained from a noncollusive, real property loan foreclosure sale carried out in conformance with applicable state regulation conclusively satisfies the Bankruptcy Code s requirement that transfers of property through bancrupt debtors inside twelve months previous to the filing of a bankruptcy petition be in alternate for "a fairly equivalent value." 11 U. S. C. § 548(a)(2).


    Petitioner BFP is a partnership, formed by way of Wayne and Marlene Pedersen and Russell Barton in 1987, for the cause of purchasing a home in Newport Beach, California, from Sheldon and Ann Foreman. Petitioner took identify challenge to a primary deed of agree with in choose of Imperial Savings Association (Imperial) 1 to secure fee of a mortgage of $356,250 made to the Pedersens in connection with petitioner s acquisition of the house. Petitioner granted a second deed of consider to the Foremans as protection for a $2 hundred,000 promissory be aware. Subsequently, Imperial, whose mortgage was not being serviced, entered a be aware of default underneath the primary deed of believe and scheduled a nicely observed foreclosures sale. The foreclosures complaints had been quickly not on time by means of the submitting of an involuntary bankruptcy petition on behalf of petitioner. After the dismissal of that petition in June 1989, Imperial s

    for the Council of State Governments et al. through Richard Ruda; for the Federal Home Loan Mortgage Corporation et al. by way of Dean S. Cooper, Roger M. Whelan, David F. B. Smith, and William E. Cumberland; and for Jim Walter Homes, Inc., by using Lawrence A. G. Johnson.

    1 Respondent Resolution Trust Corporation (RTC) acts in this example as receiver of Imperial Federal Savings Association (Imperial Federal), which turned into organized pursuant to a June 22, 1990, order of the Director of the Office of Thrift Supervision, and into which RTC transferred positive assets and liabilities of Imperial. The Director previously had appointed RTC as receiver of Imperial. For convenience we discuss with all respondents apart from RTC and Imperial because the private respondents.


    foreclosures proceeding become completed at a foreclosure sale on July 12, 1989. The domestic become purchased by respondent Paul Osborne for $433,000.

    In October 1989, petitioner filed for bankruptcy underneath Chapter 11 of the Bankruptcy Code, 11 U. s. C. §§ 1101-1174. Acting as a debtor in ownership, petitioner filed a complaint in Bankruptcy Court looking for to set aside the conveyance of the home to respondent Osborne when you consider that the foreclosure sale constituted a fraudulent switch beneath § 548 of the Code, eleven U. s. C. § 548. Petitioner alleged that the home became sincerely well worth over $725,000 on the time of the sale to Osborne. Acting on separate motions, the Bankruptcy Court brushed off the complaint as to the private respondents and granted precis judgment in desire of Imperial. The Bankruptcy Court discovered, inter alia, that the foreclosures sale were carried out in compliance with California regulation and turned into neither collusive nor fraudulent. In an unpublished opinion, the District Court affirmed the Bankruptcy Court s granting of the non-public respondents movement to disregard. A divided financial ruin appellate panel affirmed the Bankruptcy Court s entry of summary judgment for Imperial. 132 B. R. 748 (1991). Applying the analysis set forth in In re Madrid, 21 B. R. 424 (Bkrtcy. App. Pan. CA9 1982), affirmed on different grounds, 725 F.2d 1197 (CA9), cert. denied, 469 U. S. 833 (1984), the panel majority held that a "non-collusive and frequently carried out nonjudicial foreclosure sale ... can not be challenged as a fraudulent conveyance because the consideration received in the sort of sale establishes reasonably equal cost as a matter of law." 132 B. R., at 750.

    Petitioner sought overview of both decisions within the Court of Appeals for the Ninth Circuit, which consolidated the appeals. The Court of Appeals affirmed. In re BFP, 974 F.2nd 1144 (1992). BFP filed a petition for certiorari, which we granted. 508 U. S. 938 (1993).



    Section 548 of the Bankruptcy Code, 11 U. S. C. § 548, sets forth the powers of a trustee in financial disaster (or, in a Chapter 11 case, a debtor in possession) to avoid fraudulent transfers.2 It allows to be set apart now not handiest transfers inflamed by way of actual fraud however certain different transfers as properly-so-called constructively fraudulent transfers. The optimistic fraud provision at difficulty in this example applies to transfers by means of insolvent borrowers. It lets in avoidance if the trustee can establish (1) that the debtor had an hobby in belongings; (2) that a transfer of that hobby befell within one year of the submitting of the financial ruin petition; (3) that the debtor turned into insolvent at the time of the transfer or became bancrupt as a result thereof; and (4) that the debtor acquired "less than a reasonably equivalent price in exchange for such switch." 11 U. S. C. § 548(a)(2)(A). It is the remaining of these four factors that offers the issue in the case earlier than us.

    Section 548 applies to any "switch," which includes "foreclosures of the debtor s fairness of redemption." eleven U. S. C. § a hundred and one(54) (1988 ed., Supp. IV). Of the 3 essential phrases "fairly equivalent price," handiest the remaining is described: "fee" method, for purposes of § 548, "assets, or satisfaction or securing of a ... debt of the debtor," 11 U. S. C.

    2 Title eleven U. S. C. § 548 gives in relevant part:

    "(a) The trustee can also avoid any switch of an hobby of the debtor in belongings, or any duty incurred by using the debtor, that become made or incurred on or inside three hundred and sixty five days before the date of the filing of the petition, if the debtor voluntarily or involuntarily-

    "(1) made such switch or incurred such duty with actual intent to restrict, put off, or defraud any entity to which the debtor become or have become, on or after the date that such transfer changed into made or such responsibility become incurred, indebted; or

    "(2)(A) received less than a fairly equal cost in exchange for such switch or duty; and

    "(B)(i) changed into bancrupt at the date that such switch became made or such responsibility became incurred, or have become insolvent due to such transfer or obligation .... "


    § 548(d)(2)(A). The question supplied right here, consequently, is whether the amount of debt (to the first and 2nd lienholders) satisfied at the foreclosure sale (viz., a complete of $433,000) is "fairly equivalent" to the really worth of the real property conveyed. The Courts of Appeals have divided on the meaning of these undefined phrases. In Durrett v. Washington Nat. Ins. Co., 621 F.2d 201 (1980), the Fifth Circuit, decoding a provision of the old Bankruptcy Act analogous to § 548(a)(2), held that a foreclosure sale that yielded fifty seven% of the property s fair marketplace cost might be set apart, and indicated in dicta that such a sale for much less than 70% of truthful market fee have to be invalidated. Id., at 203-204. This "Durrett rule" has endured to be carried out by way of a few courts under § 548 of the brand new Bankruptcy Code. See In re Littleton, 888 F.second ninety, 92, n. 5 (CAll 1989). In In re Bundles, 856 F.2d 815, 820 (1988), the Seventh Circuit rejected the Durrett rule in choose of a case-through-case, "all records and situations" method to the query of reasonably equivalent fee, with a rebuttable presumption that the foreclosures sale rate is sufficient to face up to attack below § 548(a)(2). 856 F. 2d, at 824-825; see additionally In re Grissom, 955 F.second 1440, 1445-1446 (CAll 1992). In this case the Ninth Circuit, agreeing with the Sixth Circuit, see In re Winshall Settler s Trust, 758 F.2d 1136, 1139 (CA6 1985), followed the position first put forward in In re Madrid, 21 B. R. 424 (Bkrtcy. App. Pan. CA9 1982), affirmed on other grounds, 725 F.2nd 1197 (CA9), cert. denied, 469 U. S. 833 (1984), that the consideration acquired at a noncollusive, often performed real property foreclosures sale constitutes a reasonably equal cost below § 548(a)(2)(A). The Court of Appeals stated that it "always part[ed] from the positions taken by way of the Fifth Circuit in Durrett ... and the Seventh Circuit in Bundles." 974 F. second, at 1148.

    In contrast to the method adopted by means of the Ninth Circuit in the gift case, both Durrett and Bundles refer to truthful market fee because the benchmark in opposition to which willpower


    of moderately equal value is to be measured. In the context of an otherwise lawful loan foreclosures sale of real property,three such reference is in our opinion no longer regular with the textual content of the Bankruptcy Code. The time period "honest market fee," even though it is a properly-set up concept, does not appear in § 548. In comparison, § 522, dealing with a debtor s exemptions, mainly provides that, for purposes of that segment, " price manner fair market fee as of the date of the submitting of the petition." 11 U. S. C. § 522(a)(2). "Fair marketplace fee" additionally seems within the Code provision that defines the volume to which indebtedness with admire to an equity protection isn't always forgiven for the motive of determining whether the debtor s estate has found out taxable earnings. § 346(j)(7)(B). Section 548, alternatively, apparently is going out of its manner to avoid that widespread term. It might conveniently have stated "acquired much less than truthful marketplace fee in exchange for such transfer or responsibility," or perhaps "much less than a reasonable equal of fair market price." Instead, it used the (as far as we're aware) absolutely novel word "moderately equal price." "[I]t is typically presumed that Congress acts deliberately and purposely while it includes specific language in a single section of a statute but omits it in some other," Chicago v. Environmental Defense Fund, ante, at 338 (internal citation marks ignored), and that presumption is even more potent when the omission involves the substitute of general legal terminology with a neologism. One need to suspect the language way that fair marketplace cost can't-or at the least can not constantly-be the benchmark.

    That suspicion becomes a certitude whilst one considers that marketplace value, as it is generally understood, has no applicability inside the forced-sale context; certainly, it's far the very antithesis of compelled-sale fee. "The marketplace value of ... a

    3We emphasize that our opinion nowadays covers only loan foreclosures of actual property. The considerations bearing upon different foreclosure and forced sales (to fulfill tax liens, as an example) can be exceptional.


    piece of assets is the fee which it might be expected to carry if supplied on the market in a honest market; now not the rate which might be acquired on a sale at public public sale or a sale compelled via the requirements of the proprietor, but this type of charge as might be constant with the aid of negotiation and mutual settlement, after sufficient time to discover a patron, as between a dealer who is willing (but now not forced) to sell and a patron who goals to shop for however isn't forced to take the precise ... piece of belongings." Black s Law Dictionary 971 (sixth ed. 1990). In quick, "honest marketplace fee" presumes marketplace conditions that, by means of definition, definitely do not obtain within the context of a forced sale. See, e. g., East Bay Municipal Utility District v. Kieffer, ninety nine Cal. App. 240, 255, 278 P. 476, 482 (1929), overruled on different grounds through County of San Diego v. Miller, thirteen Cal. 3d 684, 532 P. 2d 139 (1975) (in financial institution); Nevada Nat. Leasing Co. v. Hereford, 36 Cal. 3d 146, 152, 680 P. 2d 1077, 1080 (1984) (in bank); Guardian Loan Co. v. Early, 47 N. Y. 2d 515, 521, 392 N. E. second 1240, 1244 (1979).

    Neither petitioner, petitioner s amici, nor any federal court adopting the Durrett or the Bundles evaluation has come to grips with this obvious discrepancy between the factors relevant to an appraisal of a assets s marketplace cost, on the one hand, and the strictures of the foreclosure system on the alternative. Market price cannot be the criterion of equivalence in the foreclosure-sale context.four The language of § 548(a)(2)(A) ("acquired much less than a reasonably equal

    4 Our discussion assumes that the phrase "moderately equal" method "approximately equivalent," or "roughly equal." One ought to, we think, torture it into which means "as near equivalent as can fairly be expected"-wherein event even a big divergence from equal value would be permissible so long as there is good cause for it. On such an analysis, truthful marketplace value can be the criterion of equivalence, even in a compelled-sale context; the pressured sale would be the purpose why gross inequivalence is despite the fact that reasonable equivalence. Such phrase-gaming would deprive the criterion of all meaning. If "fairly equal price" method only "as close to equivalent cost as is reasonable," the statute may as properly have said "moderately countless fee."


    value in trade") requires judicial inquiry into whether the foreclosed assets became offered for a charge that approximated its well worth on the time of sale. An appraiser s reconstruction of "honest market value" may want to display what similar assets could be worth if it did now not must be bought in the time and way strictures of state-prescribed foreclosure. But assets that should be offered inside those strictures is definitely really worth much less. No one could pay as a great deal to own such property as he would pay to own actual estate that would be bought at leisure and pursuant to normal marketing strategies. And it's far no more practical to ignore that feature of the belongings (the truth that nation foreclosure regulation allows the mortgagee to sell it at compelled sale) than it's miles to ignore different charge-affecting characteristics (together with the reality that country zoning law lets in the proprietor of the neighboring lot to open a gas station).five Absent a clear statutory requirement to the contrary, we need to anticipate the validity of this nation-regulation regulatory historical past and take due account of its impact. "The existence and pressure and function of hooked up

    5We are baffled through the dissent s belief of a "patent" distinction among zoning and foreclosures laws insofar as effect upon property fee is involved, put up, at 557-558, n. 10. The simplest distinction we perceive is that the previous represent permanent restrictions upon use of the subject property, even as the latter apply for a short time frame and restriction simplest the manner of its sale. This distinction says nothing approximately how notably the respective regimes have an effect on the belongings s fee whilst they may be operative. The dissent characterizes foreclosures regulations as "merely procedural," and asserts that this renders them, not like "substantial" zoning rules, inappropriate in financial disaster. We aren't certain we accept as true with the characterization. But in any occasion, the cases trusted for this distinction all deal with creditors tries to say the gain of nation guidelines of regulation (whether or not procedural or important) as belongings rights, in a bankruptcy intending. See United Sav. Assn. of Tex. v. Timbers of Inwood Forest Associates, Ltd., 484 U. S. 365, 370-371 (1988); Owen v. Owen, 500 U. S. 305, 313 (1991); United States v. Whiting Pools, Inc., 462 U. S. 198, 206207, and nn. 14, 15 (1983). None of them pronounces or even intimates that nation laws, procedural or otherwise, are irrelevant to pre financial ruin valuation questions such as that provided with the aid of § 548(a)(2)(A).


    establishments of nearby authorities are usually within the cognizance of lawmakers and, at the same time as their weight may additionally vary, they may in no way be completely left out in the challenge of interpretation." Davies Warehouse Co. v. Bowles, 321 U. S. a hundred and forty four, 154 (1944). Cf. Gregory v. Ashcroft, 501 U. S. 452, 460-462 (1991).

    There is every other artificially constructed criterion we'd appearance to rather than "honest marketplace price." One would possibly decide there to be this sort of factor as a "reasonable" or "truthful" forced-sale price. Such a conviction have to lie at the back of the Bundles inquiry into whether or not the nation foreclosure court cases "were calculated ... to go back to the debtor-mortgagor his fairness inside the property." 856 F. 2nd, at 824. And possibly that is what the courts that comply with the Durrett rule have in thoughts once they pick 70% of honest marketplace price because the outer limit of "fairly equal value" for forecloseable property (we have no idea wherein else such an arbitrary percentage should have come from). The trouble is that such judgments represent policy determinations that the Bankruptcy Code gives us no obvious authority to make. How intently the charge obtained in a forced sale is probable to approximate fair market value relies upon upon the terms of the compelled sale-how speedy it could be made, what kind of public notice should be given, etc. But the phrases for foreclosures sale aren't widespread. They vary substantially from State to State, depending upon, among different things, how the unique State values the divergent pastimes of debtor and creditor. To specify a federal "reasonable" foreclosure-sale fee is to increase federal financial ruin law nicely beyond the conventional field of fraudulent transfers, into geographical regions of coverage wherein it has now not ventured earlier than. Some experience of records is wanted to appreciate this.

    The contemporary regulation of fraudulent transfers had its starting place within the Statute of 13 Elizabeth, which invalidated "covinous and fraudulent" transfers designed "to put off, hinder or defraud creditors and others." 13 Eliz., ch. five (1570). English courts


    quickly advanced the doctrine of "badges of fraud": evidence by a creditor of certain objective records (as an example, a transfer to a close relative, a secret transfer, a switch of name with out switch of ownership, or grossly inadequate attention) might increase a rebuttable presumption of actual fraudulent purpose. See Twyne s Case, three Coke Rep. 80b, 76 Eng. Rep. 809 (K. B. 1601); O. Bump, Fraudulent Conveyances: A Treatise upon Conveyances Made by using Debtors to Defraud Creditors 31-60 (3d ed. 1882). Every American financial ruin regulation has integrated a fraudulent switch provision; the 1898 Act specifically followed the language of the Statute of 13 Elizabeth. Bankruptcy Act of July 1, 1898, ch. 541, § sixty seven(e), 30 Stat. 564-565.

    The history of foreclosures regulation also starts in England, wherein courts of chancery developed the "fairness of redemption"-the equitable proper of a borrower to buy back, or redeem, belongings conveyed as security via paying the secured debt on a later date than "law day," the unique due date. The courts persisted expansion of the length of redemption left creditors in a catch 22 situation, in view that identify to forfeited belongings could stay clouded for years after law day. To meet this hassle, courts created the equitable remedy of foreclosure: after a sure date the borrower could be forever foreclosed from exercising his equity of redemption. This treatment became known as strict foreclosure because the borrower s complete hobby in the belongings became forfeited, irrespective of any gathered fairness. See G. Glenn, 1 Mortgages three-18, 358-362, 395406 (1943); G. Osborne, Mortgages one hundred forty four (2nd ed. 1970). The next principal alternate befell in 19th-century America, with the improvement of foreclosures by means of sale (with the surplus over the debt refunded to the debtor) as a method of averting the draconian results of strict foreclosures. Id., at 661663; Glenn, supra, at 460-462, 622. Since then, the States have created various networks of judicially and legislatively crafted guidelines governing the foreclosures technique, to achieve what every of them considers the proper balance among the


    wishes of creditors and borrowers. All States permit judicial foreclosures, performed under direct judicial oversight; approximately 1/2 of the States also permit foreclosure via workout a non-public energy of sale furnished inside the mortgage documents. See Zinman, Houle, & Weiss, Fraudulent Transfers According to Alden, Gross and Borowitz: A Tale of Two Circuits, 39 Bus. Law. 977, 1004-1005 (1984). Foreclosure laws typically require word to the defaulting borrower, a extensive lead time earlier than the graduation of foreclosure proceedings, guide of a notice of sale, and strict adherence to prescribed bidding rules and auction processes. Many States require that the public sale be performed by way of a government legitimate, and some forbid the assets to be sold for much less than a particular fraction of a obligatory presale truthful-marketplace-fee appraisal. See identity., at 1002, 1004-1005; Osborne, supra, at 683, 733-735; G. Osborne, G. Nelson, & D. Whitman, Real Estate Finance Law nine, 446-447, 475-477 (1979). When these methods have been accompanied, but, it's far "black letter" law that mere inadequacy of the foreclosures sale price isn't any basis for setting the sale apart, though it can be set apart (below country foreclosure law, instead of fraudulent switch law) if the rate is so low as to "surprise the judgment of right and wrong or enhance a presumption of fraud or unfairness." Osborne, Nelson, & Whitman, supra, at 469; see additionally Gelfert v. National City Bank of N. Y., 313 U. S. 221, 232 (1941); Ballentyne v. Smith, 205 U. S. 285, 290 (1907).

    Fraudulent transfer regulation and foreclosures regulation enjoyed over 400 years of non violent coexistence in Anglo-American jurisprudence until the Fifth Circuit s unheard of 1980 selection in Durrett. To our information no prior decision had ever carried out the "grossly inadequate price" badge of fraud under fraudulent switch law to set aside a foreclosures sale.6 To say that the "reasonably equivalent fee" language in

    6 The simplest case stated via Durrett in aid of its extension of fraudulent switch doctrine, Schafer v. Hammond, 456 F.2d 15 (CAlO 1972), worried a direct sale, not a foreclosures.


    the fraudulent transfer provision of the Bankruptcy Code requires a foreclosures sale to yield a certain minimal charge past what nation foreclosures regulation requires, is to say, in essence, that the Code has followed Durrett or Bundles. Surely Congress has the strength pursuant to its constitutional provide of authority over financial disaster, U. S. Const., Art. I, § 8, cl. four, to disrupt the ancient harmony that foreclosure regulation and fraudulent conveyance regulation, those two pillars of debtorcreditor jurisprudence, have heretofore loved. But absent clearer textual steering than the word "moderately equivalent price"-a word entirely like minded with preexisting exercise-we will not presume the sort of radical departure. See United Sav. Assn. of Tex. v. Timbers of Inwood Forest Associates, Ltd., 484 U. S. 365, 380 (1988); Midlantic Nat. Bank v. New Jersey Dept. of Environmental Protection, 474 U. S. 494, 501 (1986); cf. United States v. Texas, 507 U. S. 529, 534 (1993) (statutes that invade not unusual regulation should be study with presumption favoring retention of longestablished principles absent evident statutory reason to the opposite).7

    7We are unpersuaded by using petitioner s argument that the 1984 amendments to the Bankruptcy Code codified the Durrett rule. Those amendments accelerated the definition of "switch" to consist of "foreclosures of the debtor s equity of redemption," 11 U. S. C. § one zero one(54) (1988 ed., Supp. IV), and added the phrases "voluntarily or involuntarily" as modifiers of the time period "switch" in § 548(a). The first of these provisions establishes that foreclosures sales fall in the widespread definition of "transfers" that can be avoided beneath several statutory provisions, consisting of (but now not confined to) § 548. See § 522(h) (transfers of exempt property), § 544 (transfers voidable beneath country law), § 547 (preferential transfers), § 549 (postpetition transfers). The second of them establishes that a switch may be averted as fraudulent even though it changed into towards the debtor s will. See In re Madrid, 725 F.2d 1197, 1199 (CA9 1984) (pre amendment choice protecting that a foreclosures sale is not a "transfer" below § 548). Neither of those outcomes has any bearing upon the meaning of "fairly equal price" in the context of a foreclosure sale.

    Nor does our studying render these amendments "superfluous," as the dissent contends, publish, at 555. Prior to 1984, it changed into at the least open to ques-


    Federal statutes impinging upon crucial nation pastimes "can't ... be construed without regard to the consequences of our twin system of government .... [W]hen the Federal Government takes over ... nearby radiations within the full-size community of our country wide monetary organization and thereby notably readjusts the stability of kingdom and countrywide authority, the ones charged with the duty of legislating [must be] moderately specific." Frankfurter, Some Reflections at the Reading of Statutes, forty seven Colum. L. Rev. 527, 539-540 (1947), quoted in Kelly v. Robinson, 479 U. S. 36, 49-50, n. eleven (1986). It is beyond question that an essential kingdom hobby is at problem right here: We have said that "the general welfare of society is worried within the safety of the titles to real property" and the strength to make certain that security "inheres within the very nature of [state] government." American Land Co. v. Zeiss, 219 U. S. forty seven,60 (1911). Nor is there any doubt that the interpretation urged via petitioner would have a profound effect upon that hobby: The identify of every piece of realty bought at foreclosures might be beneath a federally created cloud. (Already, title insurers have reacted to the Durrett rule by means of which includes specifically crafted exceptions from insurance in lots of rules issued for properties bought at foreclosures income. See, e. g., L. Cherkis & L. King, Collier Real Estate Transactions and the Bankruptcy Code, pp. five-18 to five-19 (1992).) To displace traditional state law in the sort of manner, the federal statutory reason ought to be "clear and take place," English v. General Elec. Co., 496 U. S. 72, 79 (1990). Cf. Gregory v. Ashcroft, 501 U. S., at 460-461.eight Otherwise, the Bankruptcy

    tion whether § 548 might be used to invalidate even a collusive foreclosures sale, see Madrid, supra, at 1204 (Farris, J., concurring). It is not any superfluity for Congress to make clear what had been at excellent doubtful, that is what it did right here by using making the supply observe to involuntary in addition to voluntary transfers and by including foreclosure inside the definition of "transfer." See infra, at 545-546.

    8 The dissent criticizes our partial reliance on Gregory due to the fact the States authority to "defin[e] and adjus[t] the members of the family between borrowers and lenders ... [cannot] fairly be referred to as vital to their indepen-


    Code can be construed to undertake, in place of to displace, pre-present kingdom regulation. See Kelly, supra, at 49; Butner v. United States, 440 U. S. 48, fifty four-fifty five (1979); Vanston Bondholders Protective Comm. v. Green, 329 U. S. 156, 171 (1946) (Frankfurter, J., concurring).

    For the reasons described, we decline to examine the phrase "reasonably equivalent price" in § 548(a)(2) to intend, in its application to mortgage foreclosure sales, both "truthful marketplace price" or "fair foreclosure charge" (whether or not calculated as a percent of truthful market fee or in any other case). We deem, because the regulation has always deemed, that a truthful and right fee, or a "fairly equal fee," for foreclosed property, is the fee in reality acquired on the foreclosure sale, so long as all of the requirements of the State s foreclosures law had been complied with.

    This conclusion does now not render § 548(a)(2) superfluous, for the reason that "reasonably equal price" criterion will preserve to have unbiased that means (frequently a which means just like truthful market value) outdoor the foreclosure context. Indeed, § 548(a)(2) will even continue to be an special approach of invalidating a few foreclosure income. Although collusive foreclosures sales are in all likelihood problem to assault below § 548(a)(1), which authorizes the trustee to keep away from transfers "made ... with real purpose to preclude, put off, or defraud" creditors, that provision might not reach foreclosure sales that, while not intentionally fraudulent, though fail to conform with all governing kingdom laws. Cf. four L. King, Collier on Bankruptcy 548.02, p. 548-35 (fifteenth ed. 1993) (contrasting subsections (a)(l) and (a)(2)(A) of § 548). Any irregularity in the behavior of the sale that could permit judicial invalidation of the sale below relevant nation regulation deprives the sale

    dence." Post, at 565, n. 17 (inner citation marks overlooked). This ignores the fact that it isn't always state authority over debtor-creditor law in trendy this is at stake in this situation, but the vital sovereign hobby in the protection and stability of name to land. See American Land Co. v. Zeiss, 219 U. S. 47, 60 (1911).


    price of its conclusive force beneath § 548(a)(2)(A), and the transfer may be avoided if the price obtained turned into not reasonably equivalent to the belongings s actual cost at the time of the sale (which we suppose will be the price that might have been obtained if the foreclosure sale had proceeded according to law).


    A few phrases may be added in general response to the dissent. We don't have any quarrel with the dissent s announcement that where the "that means of the Bankruptcy Code s text is itself clear," put up, at 566, its operation is unimpeded by contrary country law or earlier practice. Nor will we contend that Congress must override historical kingdom exercise "expressly or never." Post, at 565. The Bankruptcy Code can of direction override by way of implication whilst the implication is unambiguous. But where the reason to override is doubtful, our federal gadget needs deference to lengthy-installed traditions of country regulation.

    The dissent s insistence that here absolute confidence exists-that our reading of the statute is "in derogation of the straightforward language utilized by Congress," publish, at 549 (emphasis brought)-does not resist scrutiny. The problem isn't that we disagree with the dissent s proffered "undeniable which means" of § 548(a)(2)(A) ("[T]he bankruptcy courtroom ought to examine the fee received by way of the bancrupt debtor and the worth of the item whilst bought and set aside the transfer if the previous was appreciably ( [un]reasonabl[yJ ) much less than the latter," post, at 552)-which indeed echoes our very own framing of the query offered ("whether the amount of debt ... glad on the foreclosure sale ... is fairly equal to the really worth of the real property conveyed," supra, at 536). There is no doubt that this provision directs an inquiry into the connection of the fee obtained through the debtor to the well worth of the property transferred. The problem, but, as any "everyday speaker of English would haven't any difficulty grasping," put up, at 552, is that this quite generalized re-


    formulation of the "undeniable that means" of "moderately equivalent price" continues to depart unanswered the only question critical to this example, wherein the ambiguity lies: What is a foreclosed property really worth? Obviously, till this is decided, we cannot understand whether or not the fee acquired in alternate for foreclosed belongings is "moderately equal." We have considered 3 (now not, because the dissent insists, handiest two, see post, at 549) possible solutions to this question-truthful marketplace cost, supra, at 536-540, affordable compelled-sale rate, supra, at 540, and the foreclosures-sale fee itself-and feature settled on the final. We would have anticipated the dissent to opt for one of the different , or possibly even to concoct a fourth; however one searches JUSTICE SOUTER S opinion in useless for any opportunity response to the query of the transferred property s really worth. Instead, the dissent actually reiterates the "unmarried which means" of "fairly equal value" (with which we absolutely agree): "[A] court docket should figure the value of the property transferred and decide whether or not the fee paid became, underneath the circumstances, less than reasonabl[e]. " Post, at 559. Well and good. But what's the "cost"? The dissent has no response, naturally questioning that, that allows you to set up that the law is clear, it suffices to show that "the eminent experience of the natural reading," put up, at 565, provides an unanswered query.

    Instead of answering the question, the dissent offers us hope that someone else will answer it, exhorting us "to consider that [bankruptcy courts], familiar with those instances (and with nearby conditions) as we are not, will deliver ["reasonably equivalent value"] sensible content material in evaluating particular transfers on foreclosures." Post, at 560. While we percentage the dissent s self assurance inside the talents of the US Bankruptcy Courts, it's miles the right characteristic of this Court to provide "sensible content material" to the provisions of america Code. It is surely the case that financial disaster "courts regularly make ... determinations approximately the moderately equivalent price of belongings transferred through different


    means than foreclosures sales." Post, at 560. But within the tremendous majority of those cases, they could confer with the traditional common-law notion of fair market value as the benchmark. As we have verified, this commonly useful concept in reality has no software inside the foreclosures-sale context, supra, at 536-540.

    Although the dissent s conception of what constitutes a belongings s "value" is unclear, it does seem to take account of the fact that the property is difficulty to pressured sale. The dissent refers, for instance, to an inexpensive fee "underneath the circumstances," submit, at 559, and to the "well worth of the object whilst offered," submit, at 552 (emphasis delivered). But simply as we're by no means instructed how the broader question of a property s "worth" is to be responded, neither are we informed how the lesser blanketed inquiry into the effect of compelled sale is to be performed. Once once more, we're referred to as upon to have faith that bankruptcy courts can be capable of decide whether a assets s foreclosures-sale price falls unreasonably short of its "optimum value," publish, at 559, something that may be. This, the dissent tells us, is the statute s simple that means.

    We take problem with the dissent s characterization of our interpretation as carving out an "exception" for foreclosures income, publish, at 549, or as giving "two different and inconsistent meanings," post, at 557, to "fairly equal cost." As we have emphasized, the inquiry beneath § 548(a)(2)(A)whether the debtor has received cost this is appreciably comparable to the really worth of the transferred property-is the same for all transfers. But as we've got also defined, the truth that a bit of belongings is legally situation to forced sale, like any other truth bearing upon the belongings s use or alienability, always affects its well worth. Unlike maximum other criminal regulations, but, foreclosures has the effect of completely redefining the marketplace in which the property is offered on the market; normal free-marketplace rules of alternate are replaced by the a long way extra restrictive rules governing pressured income. Given this altered fact, and the concomitant inutil-


    ity of the everyday tool for figuring out what assets is worth (fair market cost), the simplest legitimate evidence of the property s value at the time it is offered is the foreclosure-sale fee itself.


    For the foregoing reasons, the judgment of the Court of Appeals for the Ninth Circuit is


    JUSTICE SOUTER, with whom JUSTICE BLACKMUN, JusTICE STEVENS, and JUSTICE GINSBURG be a part of, dissenting.

    The Court these days holds that by means of the phrases of the Bankruptcy Code Congress meant a peppercorn paid at a noncollusive and procedurally regular foreclosure sale to be treated as the "reasonabl[e] equal" of the cost of a California beachfront property. Because the Court s reasoning fails each to conquer the implausibility of that proposition and to justify engrafting a foreclosures-sale exception onto eleven U. S. C. § 548(a)(2)(A), in derogation of the trustworthy language utilized by Congress, I respectfully dissent.

    I A

    The majority provides our undertaking of gIVIng meaning to § 548(a)(2)(A) in this example as basically entailing a preference among two provisions that Congress would possibly have enacted, but did now not. One could allow a bankruptcy trustee to keep away from a recent foreclosure-sale transfer from an insolvent debtor each time anything much less than honest market value became obtained, while the second could restriction the avoidance electricity to cases where the foreclosures sale changed into collusive or had failed to observe state-prescribed tactics. The Court then argues that, given the unexceptionable proposition that compelled income hardly ever yield as high a price as income held underneath perfect, "market" situations, Congress s "omission" from


    § 548(a)(2)(A) of the phrase "truthful marketplace cost" manner that the latter, narrowly procedural reading of § 548(a)(2)(A) is the optimum one.

    If those in fact had been the interpretive options, the bulk s choice might be a defensible one.1 The first, equating "fairly equivalent value" at a foreclosure sale with "truthful market fee" has little to advise it. Forced-sale prices won't be (as the bulk calls them) the "very antithesis" of marketplace fee, see ante, at 537, but they fail to herald what voluntary sales recognise, and rejecting this type of

    1 I notice, but, preliminary embarrassments: first, the gloss on § 548(a)(2)(A) the Court embraces is less than entirely hypothetical. In the direction of amending the Bankruptcy Code in 1984, see infra, at 554, Congress taken into consideration, but did not enact, an modification that said precisely what the bulk now says the present day provision means, i. e., that the avoidance power is limited to foreclosures regarding collusion or procedural irregularity. See S. 445, 98th Cong., 1st Sess., § 360 (1983). Even if one is cautious not to connect an excessive amount of significance to the sort of legislative nonoccurrence, it clearly cautions against undue reliance on a unique, entirely speculative congressional "omission." See ante, at 537 (the statute "seemingly goes out of its way to keep away from" using "honest market price"); however cf. ante, at 545 (reasonably equivalent fee will "maintain" to have a meaning "similar to honest marketplace cost" out of doors the foreclosures-sale context).

    In this example, such caution might be rewarded. While the assertedly "general," ante, at 537, word "honest market fee" appears in extra than 150 wonderful provisions of the Tax Code, it figures in only Bankruptcy Code provisions, one among which is entitled, suggestively, "Special tax provisions." See eleven U. S. C. § 346. The term of preference in the financial disaster placing appears to be "fee," unadorned and undefined, which seems in greater than 30 sections of the Bankruptcy Code, however that is, with respect to many of them, examine to intend "truthful marketplace price." See also § 549(c) ("present honest equivalent cost"); § 506(a) ("value [is to] be determined in mild of the purpose of the valuation and of the proposed disposition or use of such property"); S. Rep. No. ninety five-989, p. 54 (1978) ("[M]atters [of valuation under § 361] are left to case-through-case interpretation and improvement .... Value [does not] imply, in every case, forced sale liquidation cost or full going problem cost. There is wide latitude among the ones two extremes ... "). To the quantity, therefore, that this poor implication supplies floor to "suspect," see ante, at 537, that Congress couldn't have supposed what the statute says, such suspicion is misplaced.


    studying of the statute is as easy as statutory interpretation is possibly to get. On the bulk s view, laying waste to this straw guy necessitates accepting as adequate fee some thing consequences from noncollusive adherence to country foreclosures necessities. Because properties are "genuinely well worth less," ante, at 539, on foreclosures sale, the Court posits, they should were "well worth" something fee was paid. That, however, is neither a possible interpretation of the statute, nor its best last opportunity studying.2

    2 The majority s statutory argument relies upon further heavily on the fulfillment of its attempt to relegate "honest market value" to finish pariah fame. But it's far no short bounce from the (completely accurate) observation that a belongings s honest market cost will no longer be dispositive of whether or not "less than a reasonably equal fee" became acquired on foreclosure to the announcement that market fee has "no applicability," ante, at 537, or is not "valid evidence," ante, at 549 (emphasis delivered), of whether or not the statutory preferred become met. As is explored extra absolutely infra, the assessed price of a parcel of actual property at the time of foreclosures sale isn't always to be not noted. On the opposite, that discern evidently is relevant to the Bankruptcy Code determination, each as it offers a right measure of the rights obtained by means of the transferee and because it's miles indicative of the volume of the debtor s equity inside the assets, an asset which, however for the pre financial ruin transfer beneath evaluation, might have been available to the financial disaster estate, see infra, at 562-565.

    It is likewise rather deceptive, in addition, to suggest that "[n]o one could pay as a great deal," ante, at 539, for a foreclosed property as he might for the equal real property bought below leisurely, market situations. Buyers no doubt wish for deals at foreclosures income, however an investor with a million bucks cash in his pocket might be geared up to pay "as tons" for a preferred parcel of property on compelled sale, as a minimum if a rival, similarly decided millionaire had been to seem at the same public sale. The foremost motive such sales yield low costs is not a lot that the houses come to be momentarily "worth much less," ibid. (on the contrary, foreclosures-sale customers acquire a bundle of rights basically just like what they get when they purchase in the marketplace) or that foreclosing mortgagees are below the compulsion of kingdom regulation to make no more than the maximum desultory efforts to inspire better bidding, but alternatively that such loose-spending millionaires are in quick supply, and those who do exist are not likely to study the pleasant print which fills the "criminal word" columns in their morning newspaper. Nor, further, is market value justly referred to as the "antithesis" of


    The query before the Court is whether or not the charge received at a foreclosures sale after compliance with kingdom procedural regulations in a noncollusive sale have to be handled conclusively as the "reasonably equivalent fee" of the mortaged assets and in answering that query, the words and which means of § 548(a)(2)(A) are plain. See Patterson v. Shumate, 504 U. S. 753, 760 (1992) (celebration searching for to defeat undeniable meaning of Bankruptcy Code textual content bears an "particularly heavy burden") (inner quotation marks ignored); Perrin v. United States, 444 U. S. 37, forty two (1979) (statutory words need to receive their everyday meaning). A trustee is authorized to keep away from positive recent pre financial ruin transfers, together with the ones on foreclosures income, that a financial ruin court docket determines have been now not made in exchange for "a fairly equivalent price." Although this formula makes no pretense to mathematical precision, an regular speaker of English would don't have any trouble grasping its basic thrust: the financial disaster court docket should compare the charge acquired through the insolvent debtor and the really worth of the item when bought and set aside the transfer if the former became drastically ("[un]reasonabl[y]") "less than" the latter.three Nor could any ordinary English speaker, involved to decide whether or not a foreclosure sale become collusive or procedurally irregular (an enquiry going completely to the procedure by using which a transaction became consummated), direct an adjudicator, because the Court now holds Congress did, to check whether the sale had found out "less than a fairly equal fee" (an enquiry described in quintessentially noticeable phrases).four

    foreclosures-sale rate, for the critical (if intuitive) cause that homes with higher marketplace values may be expected to promote for more on foreclosure.

    3 Indeed, it is putting that that is what the Court says the statute (likely) does imply, with recognize to nearly each switch aside from a sale of property upon foreclosure. See ante, at 545.

    4 The Court protests, ante, at 546, that its formulation, see ante, at 536, deviates handiest subtly from the studying advanced right here and purports no longer to disagree that the statute compels an enquiry "into the connection of the


    Closer familiarity with the textual content, structure, and records of the disputed provision (and applicable amendments) confirms the steadiness of the plain analyzing. Before 1984, the question whether or not foreclosures income fell inside financial ruin courts power to set aside transfers for "too little in return" turned into, doubtlessly, a hard one. Then, it might plausibly were contended that § 548 changed into maximum concerned with "fraudulent" conduct with the aid of debtors on the brink of financial ruin, misbehavior not going to be afoot whilst an insolvent debtor s belongings is bought, in opposition to his needs, at foreclosure.5 Indeed, it could similarly have been argued, once more consonantly with the text of the sooner model of the Bankruptcy Code, that Congress had not understood foreclosures to contain a "switch" inside the ambit of § 548, see, e. g., Abramson v. Lakewood Bank & Trust Co., 647 F.second 547, 549 (CA5 1981) (Clark, J.,

    price acquired and the well worth of the property transferred," ante, at 546. Reassuring as such cautiously chosen phrases can also sound, they can not difficult to understand the truth that the "assessment" the majority envisions is an empty ritual. See n. 10, infra.

    5 The Court notes effectively that fraudulent conveyance laws had been directed first in opposition to bancrupt debtors passing assets to pals or family, so as to preserve them beyond their creditors reach (the proverbial "Elizabethan deadbeat who sells his sheep to his brother for a pittance," see Baird & Jackson, Fraudulent Conveyance Law and Its Proper Domain, 38 Vand. L. Rev. 829, 852 (1985)), after which later towards behavior said to hold the "badges" of such misconduct, but bankruptcy regulation had, well earlier than 1984, grew to become decisively faraway from the belief that the debtor s nation of thoughts, and no longer the objective outcomes on creditors, need to decide the scope of the avoidance strength. Thus, the 1938 Chandler Act, Bankruptcy Revision, furnished that a switch can be set apart with out proving any cause to "preclude, delay, or defraud," furnished that the bancrupt debtor received much less than "honest attention" in return, see 11 U. S. C. § 107(d)(2) (1976), and the 1978 Bankruptcy Code eliminated scrutiny of the transacting events "excellent religion." Cf. 11 U. S. C. § 107(d)(1)(e) (1976). At the time while financial disaster regulation was extra narrowly involved with debtors turpitude, furthermore, the to be had "remedies" have been strikingly specific, as nicely. See, e. g., 21 J ac. I., ch. 19, § 6 (1623), 4 Statutes of the Realm 1228 (insolvent debtor who fraudulently conceals property is issue to have his ear nailed to pillory and cut off).


    dissenting) (Bankruptcy Act case), cert. denied, 454 U. S. 1164 (1982), at the principle that the "transfer" from mortgagor to mortgagee occurs, once and for all, while the security interest is first created. See typically In re Madrid, 725 F.2d 1197 (CA9), cert. denied, 469 U. S. 833 (1984).

    In 1984, but, Congress pulled the rug out from under those formerly severe arguments, through amending the Code in applicable respects. See Bankruptcy Amendments and Federal Judgeship Act of 1984, §§ 401(1), 463(a), 98 Stat. 366, 378. One modification provided expressly that "involuntar[yJ" transfers are not any much less inside the trustee s § 548 avoidance powers than "voluntar[yJ" ones, and another furnished that the "foreclosure of the debtor s equity of redemption" itself is a "switch" for purposes of bankruptcy regulation. See eleven U. S. C. § 101(54) (1988 ed., Supp. IV).6 Thus, whether or not one believes (as the bulk reputedly does now not) that foreclosure income rightfully belong in the historical area of "fraudulent conveyance" law, this is exactly where Congress has now positioned them, cf. In re Ehring, 900 F.2nd 184, 187 (CA9 1990), and our obligation is to present effect to those new amendments, along side every other clause of the Bankruptcy Code. See, e. g., United States v. Nordic Village, Inc., 503 U. S. 30, 36 (1992); United Sav. Assn. of Tex. v. Timbers of Inwood Forest Associates, Ltd., 484 U. S. 365, 374-375 (1988); see additionally Dewsnup v. Timm, 502 U. S. 410, 426 (1992) (SCALIA, J., dissenting). The Court s try to break out the

    6 As cited at n. 1, supra, an in advance model of the Senate bill contained a provision that could have delivered to § 548 the conclusive presumption the Court implies here. See S. 445, 98th Cong., 1st Sess., § 360 (1983) ("A secured birthday party or 0.33 birthday party purchaser who obtains title to an interest of the debtor in property pursuant to an amazing faith prepetition foreclosures, energy of sale, or other intending or provision of nonbankruptcy law permitting or supplying for the belief of security upon default of the borrower under a loan, deed of agree with, or different safety settlement takes for fairly equivalent price within the that means of this section"). The provision became deleted from the law enacted with the aid of Congress.


    plain effect of § 548(a)(2)(A) opens it to some equally undeniable objections.

    The first and maximum apparent of those objections is the very enigma of the Court s analyzing. If a belongings s "value" is conclusively presumed to be some thing it sold for, the "much less than reasonabl[e] equivalen[ce]" query will in no way be well worth asking, and the bankruptcy avoidance energy will apparently be a lifeless letter in reviewing actual estate foreclosure. Cf. 11 U. s. C. § 361(three) ("indubitable equal").7 The Court answers that the phase is not absolutely moribund: it nevertheless furnishes a way to assault collusive or procedurally poor real assets foreclosures, and it enjoys a vital role in authorizing demanding situations to other transfers than the ones happening on actual estate foreclosure. The first answer, but, simply runs up in opposition to a new objection. If certainly the statute fails to reach noncollusive, procedurally accurate real property foreclosures, then the latest amendments discussed above had been probable superfluous. There is a persuasive case that collusive or severely irregular real property sales had been already problem to avoidance in financial disaster, see, e. g., In re Worcester, 811 F.2d 1224, 1228, 1232 (CA9 1987) (decoding § 541(a)), and neither the Court nor the respondents and their amici identify any specific case wherein a court docket pronounced itself powerless to avoid a collusive foreclosures sale. But cf. Madrid, supra, at 1204 (Farris, J., concurring). It would appear peculiar,

    7 Evidently, many States take a much less Panglossian view than does the bulk about the prices paid at income conducted in accordance with their prescribed methods. If foreclosures-sale prices in reality represented what houses are "worth," ante, at 539, or their "honest and proper fee," ante, at 545, it'd stand to cause that deficiency judgments would be awarded simply through calculating the distinction among the debt owed and the "fee," as established by means of the sale. Instead, in the ones jurisdictions permitting creditors to are looking for deficiency judgments it's miles quite not unusual to require them to expose that the foreclosures fee more or less approximated the property s (appraised) price. See, e. g., Tex. Prop. Code Ann. §§ 51.00351.1/2 (Supp. 1992); see usually Gelfert v. National City Bank of N. Y., 313 U. S. 221 (1941); cf. identification., at 233 ("[T]he fee which assets commands at a pressured sale may be infrequently even a tough degree of its cost").


    then, that for no sound reason, Congress might have tinkered with those intently watched sections of the Bankruptcy Code, for the sole motive of endowing bankruptcy courts with authority that had now not been located looking inside the first vicinity.eight

    The Court s 2nd answer to the objection that it renders the statute a lifeless letter is to remind us that the statute applies to all kinds of transfers, no longer simply to real estate foreclosures, and as to all of the others, the provision enjoys wonderful vitality, calling for authentic comparison between fee received for the belongings and its "reasonably equivalent value." (Indeed, the Court has no problem acknowledging that some thing "just like" honest market cost might also deliver the benchmark of reasonable equivalence whilst this type of sale isn't always initiated by means of a mortgagee, ante, at 545.) This solution, however, is much less tenable than the first. A commonplace rule of con-

    8 That is not the best component of the majority s approach that is difficult to rectangular with the amended text. By redefining "transfer" in § one zero one, Congress authorized the trustee to avoid any "foreclosures of the fairness of redemption" for "much less than a fairly equal cost." In light of the truth, see, e. g., Lifton, Real Estate in Trouble: Lender s Remedies Need an Overhaul, 31 Bus. Law 1927, 1937 (1976), that most foreclosures residences are offered (at noncollusive and procedurally unassailable income, we might also presume) for the right quantity of the first-rate indebtedness, whilst some (but in no way all) are worth more, see normally Wechsler, Through the Looking Glass: Foreclosure by means of Sale as De Facto Strict ForeclosureAn Empirical Study of Mortgage Foreclosure and Subsequent Resale, 70 Cornell L. Rev. 850 (1985), it appears mainly curious that Congress might amend a statute to apprehend that a debtor "transfers" an "interest in belongings," when the equity of redemption is foreclosed, completely intending that the "moderately equal cost" of that hobby could, within the majority of instances, be presumed conclusively to be 0.

    To the extent that the Court believes the amended § 548(a)(2)(A) to be addressed to "collusive" sales, meanwhile, a exceptionally oblique way was chosen. Cf. eleven U. S. C. § 363(n) (authorizing trustee avoidance of postpetition sale, or, in the opportunity, healing of the distinction among the "value" of the belongings and the "sale rate," whilst the "sale rate was managed by an settlement"). Cf. ante, at 537 (bringing up Chicago v. Environmental Defense Fund, ante, at 338).


    struction calls for a unmarried definition of a commonplace term happening in several places within a statute, see Bray v. Alexandria Women s Health Clinic, 506 U. S. 263, 283 (1993); Dewsnup v. Timm, 502 U. S., at 422 (SCALIA, J., dissenting) (" [N]ormal rule[s] of statutory production " require that "identical phrases [used] within the equal section of the same enactment" should take delivery of the same effect) (emphasis in unique), and the case for exclusive definitions inside a single textual content is hard to make, cf. Bray, supra, at 292 (SouTER, J., concurring in element). But to offer a unmarried term distinctive and inconsistent meanings (one procedural, one noticeable) for a single incidence is an offense so not going that no not unusual prohibition has ever been concept necessary to protect against it.9 Cf. Owen v. Owen, 500 U. S. 305, 313 (1991) (declining to "create a difference [between state and federal exemptions] that the words of the statute do not include"); Union Bank v. Wolas, 502 U. S. 151, 162 (1991) (the "statutory textual content ... makes no difference among short-time period debt and lengthy-term debt"). Unless whimsy is attributed to Congress, the term in query can not be exclusively procedural in one class of instances and completely major in all others. To make sure, there are actual variations among sales on loan foreclosure and different transfers, as Congress no question understood, but those differences may be addressed truly and continually with the statute s plain which means.10

    nine Indeed, the Court candidly recognizes that the proliferation of meanings won't forestall at : not best does "reasonably equivalent value" mean one aspect for foreclosure sales and another for different transfers, however tax sales and different transactions may additionally require nonetheless other, unspecified "benchmark[s]." See ante, at 537, and n. 3.

    10 The Court s incredibly mischievous efforts to dress its narrowly procedural gloss in decent, sizeable garb, see ante, at 537-538,546-547, make little feel. The majority indicates that despite the fact that the statute have to be study to require a contrast, the one it compels dooms the trustee continually to come up quick. A belongings s "price," the Court would have us agree with, have to be determined with regards to a State s regulations governing creditors enforcement in their rights, within the same fashion that it would encom-


    The "neologism," ante, at 537, "reasonably equivalent fee" (examine in light of the amendments confirming that foreclosure are to be judged beneath the identical popular as are

    skip a zoning rule governing (as a count of kingdom regulation) a neighboring landowner s entitlement to build a gas station. But the analogy proposed ignores the patent distinction between those two elements of the "regulatory background," ante, at 539: whilst the zoning ordinance would lessen the value of the belongings "to the world," foreclosures policies have an effect on not the rate any client "might pay," ibid., but instead the manner by which the mortgagee is allowed to extract its entitlement from the whole "price" of the belongings.

    Such differences are a mainstay of financial disaster law, where it's miles generally said that creditors "noticeable" nation-regulation rights "live to tell the tale" in financial disaster, while their "procedural" or "remedial" rights underneath state debtor-creditor regulation give way, see, e. g., United Sav. Assn. of Tex. v. Timbers of Inwood Forest Associates, Ltd., 484 U. S. 365, 370-371 (1988) (refusing to treat "right to instantaneous foreclosures" as an "hobby in property" underneath relevant nonbankruptcy regulation); Owen v. Owen, 500 U. S. 305 (1991) (financial ruin exemption does not include nation law with admire to liens); United States v. Whiting Pools, Inc., 462 U. S. 198, 206-207 (1983); see also Gelfert v. National City Bank of N. Y., 313 U. S., at 234 ("[T]he advantages of a pressured sale" are not "a ... property proper" beneath the Constitution). And even as state foreclosure guidelines replicate, inter alia, an understandable judgment that lenders should no longer be forced to attend indefinitely as their defaulting borrowers waste the value of loan collateral, financial disaster law presents mortgagees wonderful and possibly good enough protections for their hobby, see eleven U. S. C. §§ 548(c), 550(d)(1), 362(d); Wright v. Union Central Life Ins. Co., 311 U. S. 273, 278-279 (1940), along side the general promise that the debtor s property will, efficiently, be maximized inside the interest of lenders.

    The majority professes to be "baffled," ante, at 539, n. five, by means of this common sense distinction between country zoning laws and country foreclosures processes. But a zoning rule is not merely "rate-affecting," ante, at 539: it impacts the belongings s price (i. e., the rate for which any transferee can anticipate to resell). State-mandated foreclosure processes, by means of assessment, is probably known as "rate-affecting," inside the sense that adherence completely to their minimum requirements will no doubt hold sale fees low. But country rules hardly ever forbid mortgagees to make efforts to encourage extra robust bidding at foreclosures sales; they definitely fail to provide dealers any purpose to do so, see infra.


    different transfers) has a single that means within the one provision wherein it figures: a court docket ought to parent the "cost" of the belongings transferred and determine whether or not the charge paid changed into, below the circumstances, "less than reasonabl[e]." There is for that reason no motive to rebuke the Courts of Appeals for having didn't "come to grips," ante, at 538, with the consequences of the reality that foreclosures income cannot be anticipated to yield honest market fee. The statute has performed so for them. As courts considering nonforeclosure transfers frequently acknowledge, the qualification "moderately equivalent" itself embodies both an recognition that the belongings of insolvent borrowers are commonly transferred beneath conditions so as to yield much less than their top-quality price and a judgment that avoidance in financial ruin (unsettling because it does the expectations of parties who can also have handled the debtor in top religion) need to most effective occur whilst it's far clear that the financial ruin estate might be notably augmented. See, e. g., In re Southmark Corp., 138 B. R. 820, 829-830 (Bkrtcy. Ct. ND Tex. 1992) (court ought to examine "the value of what went out with the fee of what came in," but the equivalence need no longer be "greenback for dollar") (citation left out); In re Countdown of Conn., Inc., one hundred fifteen B. R. 18, 21 (Bkrtcy. Ct. Conn. 1990) ("[S]ome disparity among the fee of the collateral and the fee of debt does not always lead to a finding of lack of reasonably equal price").l1

    11 Indeed, it isn't clean from its opinion that the Court has "come to grips," ante, at 538, with the fact that "involuntary" transfers occur outside the real assets placing, that legally voluntary transfers can be involuntary in truth, and that, where bancrupt debtors on the brink of financial disaster are worried, transfers for full, "honest market" rate are more likely the exception than the guideline. On the Court s studying, as an instance, not anything would prevent a debtor who deeded assets to a mortgagee "in lieu of foreclosure" previous to financial ruin from having the transaction set apart, underneath the "ordinar[y]," ante, at 545, considerable popular.



    I do not percentage in my colleagues apparently severe discomfort at the possibility of vesting financial disaster courts with duty for determining whether "fairly equal fee" changed into received in instances like this one, nor is the concept nicely taken that doing so is an flawed abdication. Those courts often make comparably tough (and contestable) determinations approximately the "moderately equivalent cost" of property transferred through other manner than foreclosures sales, see, e. g., Covey v. Commercial Nat. Bank, 960 F.2d 657, 661-662 (CA7 1992) (rejecting creditor s claim that resale charge may be presumed to be "moderately equal fee" whilst that creditor "seiz[es] an asset and promote[s] it for just enough to cowl its mortgage (even though it might have been worth notably extra as part of an ongoing agency)"); In re Morris Communications NC, Inc., 914 F.2d 458 (CA4 1990) (for "moderately equal price" purposes, really worth of entry in cell telephone license "lottery" need to be discounted to reflect possibility of prevailing); cf. In re Royal Coach Country, Inc., a hundred twenty five B. R. 668, 673-674 (Bkrtcy. Ct. MD Fla. 1991) (warding off trade of 1984 truck worth $2,800 for 1981 vehicle worth $500), and there may be every cause to believe that they, acquainted with these cases (and with neighborhood situations) as we are not, will supply the time period realistic content material in evaluating particular transfers on foreclosure, cf. United States v. Energy Resources Co., 495 U. S. 545, 549 (1990); NLRB v. Bildisco & Bildisco, 465 U. S. 513, 527 (1984); Rosen v. Barclays Bank of N. Y., one hundred fifteen B. R. 433 (EDNY 1990).12 As in different § 548(a)(2) cases, a trustee in search of

    12 It is simplest through renewing, see ante, at 548, its severe declare, but see n. 2, supra, that market value is fully beside the point to the analysis of foreclosures-sale switch (and that bankruptcy courts are debarred from even "referring" to it) that the Court is able to support its declaration that evaluations of such transactions are come what may uniquely past their ken.

    The majority, as part of its final-ditch attempt to salvage some power for the provision, itself could require financial ruin judges to take a position as to the


    avoidance of a foreclosures-sale switch ought to persuade the financial ruin court docket that the fee obtained on pre financial disaster switch turned into "unreasonabl[yJ" low, and as in other cases beneath the provision, the gravamen of one of these declare might be that the challenged transfer substantially and needlessly diminished the financial disaster estate, i. e., that it extinguished a sizable equity interest of the debtor and that the foreclosing mortgagee did not take measures which (always with country law, if not required by it) could have augmented the rate found out. 13

    rate "that might have been obtained if the foreclosure sale had proceeded in line with [state] law." Ante, at 546; cf. ante, at 540 (expressing skepticism about judicial competence to determine "this kind of component" as a "fair" compelled-sale price).

    thirteen In this regard and in its professions of deference to the procedures of local self-authorities, the Court wrongly elides any difference between what kingdom regulation instructions and what the States allow. While foreclosures sales "beneath country regulation" may additionally generally be sparsely attended and yield low costs, see infra, at 564, these are possibly less the end result of nation law "strictures," ante, at 538, than of what country regulation fails to supply, incentives for foreclosing creditors to seek higher prices (by way of availing themselves of advertising and marketing or brokerage services, for instance). Thus, in judging the reasonableness of an reputedly low price, it's going to actually make sense to remember (as the Court holds a bankruptcy courtroom is forbidden to) whether a mortgagee who directly resold the belongings at a massive profit answers, "I did the maximum that could be expected of me" or "I did the least I turned into allowed to."

    I also do now not join my colleagues of their special scorn for the "70% rule" associated with Durrett v. Washington Nat. Ins. Co., 621 F.second 201 (CA5 1980), which they decry, ante, at 540, as less an workout in statutory interpretation than one in every of "coverage determinatio[n]." Such, of route, it may be, in the confined experience that the statute s textual content no more mentions the 70% figure than it singles out procedurally everyday foreclosures sales for the unique treatment the Court accords them. But the Durrett "rule," as its expositor has lengthy made clean, claims simplest to be a description of what foreclosure expenses have, in exercise, been found "reasonabl[e]," and as such, it's far constant (as the bulk s "coverage determination" isn't), with the textual directive that one price be in comparison to every other, the transfer being set apart whilst one is unreasonably "less than" the opposite. To the quantity, moreover, that Durrett is stated to have introduced a "rule," it's miles higher


    Whether that enquiry is defined as a search for a benchmark" honest pressured-sale rate," ante, at 540, or for the rate that become reasonable under the circumstances, cf. ante, at 538, n. four, is ultimately, because the Court itself appears to acknowledge, see ante, at 540, of no greater second than whether the guideline the Court discerns in the provision is styled an "exception," an "irrebuttable presumption," or a rule of according to se validity. The majority appears to invoke these in large part synonymous terms in provider of its thesis that the supply s textual content is "ambiguous" (and therefore ripe for application of policybased creation guidelines), but the question provided here, whether or not the time period "less than fairly equal price" can be examine to stop all enquiry past whether statelaw foreclosures tactics have been adhered to, admits handiest solutions, and best such a, inside the negative, is in the "obvious authority," ibid., conferred on courts by using the text of the Bankruptcy Code.14


    What plain that means requires and courts can offer, indeed, the regulations underlying a countrywide financial disaster regulation fully

    understood as recognizing a "secure harbor" or affirmative protection for bidding mortgagees or different transferees who paid 70% or extra of a assets s appraised fee at the time of sale.

    14 The Court s criticism, ante, at 546-548, deftly conflates two wonderful questions: is the price on procedurally correct and noncollusive sale presumed irrebuttably to be reasonably equal fee (the query before us) and, if no longer, what are the criteria (a question now not raised right here however explored with the aid of courts that have rejected the irrebuttable presumption)? What is "plain" is the answer to the first query, thanks to the apparent language, whose that means is confirmed by way of coverage and statutory history. The answer to the second won't be simple inside the feel that the standards might be self-evident, see n. 13, supra, but want of self-proof rarely justifies retreat from the plain answer to the first query. Courts routinely derive criteria, unexpressed in a statute, to put into effect standards that are statutorily expressed, and in a right case this Court should (however for almost all s choice) weigh the relative merits of the subtly extraordinary processes taken via courts which have rejected the irrebuttable presumption.


    support. This case is a much cry from the uncommon one in which the effect of implementing the everyday which means of the statutory text would be "patent absurdity," see INS v. GardozaFonseca, 480 U. S. 421, 452 (1987) (SCALIA, J., concurring in judgment), or "demonstrably at odds with the intentions of its drafters," United States v. Ron Pair Enterprises, Inc., 489 U. S. 235, 244 (1989) (internal citation marks overlooked).15 Permitting avoidance of procedurally normal foreclosure income for low costs (and thereby returning a precious asset to the financial ruin property) is evidently consistent with the ones regulations of acquiring a most and equitable distribution for lenders and making sure a "fresh begin" for man or woman borrowers, which the Court has regularly said are on the center of federal financial ruin regulation. See Stellwagen v. Glum, 245 U. S. 605, 617 (1918); Williams v. United States Fidelity & Guaranty Go., 236 U. S. 549, 554-555 (1915). They aren't, of direction, any less the rules of federal bankruptcy regulation without a doubt due to the fact country courts will no longer, for a mortgagor s advantage, set aside a foreclosures sale for "price inadequacy" alone.16 The unwill-

    15 Tellingly, whilst the Court s opinion celebrates fraudulent conveyance regulation and state foreclosures regulation because the "dual pillars" of creditor-debtor regulation, it evinces no special appreciation of the reality that this case arises underneath the Bankruptcy Code, which, in preserving the national gadget of credit and trade, embodies policies wonderful from those of nation debtor-creditor regulation, see usually Stellwagen v. Clum, 245 U. S. 605, 617 (1918), and which accordingly endows trustees with avoidance energy beyond what nation law provides, see Board of Trade of Chicago v. Johnson, 264 U. S. 1, 10 (1924); Stellwagen, supra, at 617; 11 U. S. C. §§ 541(a), 544(a).

    sixteen Although the bulk accurately states this " black letter " law, it additionally recognizes that courts will keep away from a foreclosure sale for a charge that "surprise[s] the moral sense," see ante, at 542 (internal quotation marks left out), a trendy that has been invoked to justify putting apart income yielding as a good deal as 87% of appraised value. See typically Washburn, The Judicial and Legislative Response to Price Inadequacy in Mortgage Foreclosure Sales, 53 S. Cal. L. Rev. 843, 862-870 (1980). Moreover, at the same time as fee inadequacy "by myself" may not be sufficient to set aside a sale, such inadequacy will often result in a court docket to adopt a form of "strict scrutiny" of a sale s compliance with country techniques. See, e. g., identification., at 861.


    ingness of the kingdom courts to dissatisfied a foreclosure sale for this reason does now not cope with the question of what "moderately equal price" means in bankruptcy regulation, any more than the refusal of those identical courts to set aside a settlement for "mere inadequacy of consideration," see Restatement (Second) of Contracts § 79 (1981), could outline the scope of the trustee s strength to reject executory contracts. See eleven U. S. C. § 365 (1988 ed. and Supp. IV). On the contrary, a critical premise of the financial disaster avoidance powers is that what kingdom law it appears that evidently permits as suited or "truthful," as between a debtor and a selected creditor, may be set apart because of its impact on different creditors or on the debtor s possibilities for a clean start.

    When the prospect of such avoidance is absent, indeed, the economic pursuits of a foreclosing mortgagee often stand in stark opposition to those of the debtor himself and of his other lenders. At an average foreclosures sale, a mortgagee has no incentive to bid any more than the quantity of the indebtedness, for the reason that any "surplus" would be grew to become over to the debtor (or junior lienholder), and, in a few States, it can also be fine for the creditor to bid much less and seek a deficiency judgment. See generally Washburn, The Judicial and Legislative Response to Price Inadequacy in Mortgage Foreclosure Sales, 53 S. Cal. L. Rev. 843, 847-851 (1980); Ehrlich, Avoidance of Foreclosure Sales as Fraudulent Conveyances: Accommodating State and Federal Objectives, 71 Va. L. Rev. 933, 959-962 (1985); G. Osborne, G. Nelson, & D. Whitman, Real Estate Finance Law § eight.three, p. 528 (1979). And in which a property is obviously well worth extra than the amount of the indebtedness, the lending mortgagee s interests are served high-quality if the foreclosure sale is poorly attended; then, the lender is much more likely to take the property by bidding the quantity of indebtedness, preserving for itself any income from resale. While nation foreclosures procedures may additionally truly mitigate the capacity for this form of opportunism (through requiring for ebook of word, as an example), it actually


    is plausible that Congress, in drafting the Bankruptcy Code, might locate it intolerable that a debtor s assets be wasted and the bankruptcy property dwindled, totally to speed a mortgagee s recuperation.


    Confronted with the eminent experience of the natural analyzing, the Court seeks ultimately to region this situation in a line of selections, e. g., Gregory v. Ashcroft, 501 U. S. 452 (1991), wherein we've held that something extra than mere undeniable language is needed. 17 Because the stability of title in actual assets may be said to be an "important" country hobby, the Court indicates, see ante, at 544, the statute have to be presumed to include an implicit foreclosures-sale exception, which Congress should override expressly or by no means. Our instances impose no such burden on Congress, however. To be sure, they do offer support for the proposition that when the Bankruptcy Code is without a doubt silent or ambiguous, it need to no longer be

    17The Court dangles the possibility that Gregory itself is one way or the other pertinent to this situation, but that can not be so. There, invoking concepts of constitutional avoidance, we recognized a "plain statement" rule, wherein Congress ought to supplant state powers "reserved below the Tenth Amendment" and "on the coronary heart of representative government," handiest by using making its cause to do so unmistakably clear. Unlike the States authority to "decide the qualifications of their most essential government officers," 501 U. S., at 463 (e. g., to implement a retirement age for kingdom judges mandated by means of the State Constitution, at issue in Gregory), the authority of the States in defining and adjusting the family members between debtors and lenders has never been plenary, nor could it pretty be known as "vital to their independence." In making the implausible contrary declaration, the Court converts a stray phrase in American Land Co. v. Zeiss, 219 U. S. forty seven (1911), which upheld against great due procedure venture the power of a State to legislate with admire to land titles (California s effort to repair order after title data were destroyed within the calamitous 1906 San Francisco earthquake) into a pronouncement approximately the allocation of obligation among the National Government and the States. Cf. Cipollone v. Liggett Group, Inc., 505 U. S. 504, 546 (1992) (SCALIA, J., concurring in judgment in part and dissenting in part) (emphasizing the inapplicability of "clean-assertion" regulations to ordinary pre-emption cases).


    examine as departing from previous practice, see, e. g., Dewsnup v. Timm, 502 U. S. 410 (1992); Butner v. United States, 440 U. S. 48, 54 (1979). But we've got never required Congress to deliver "clearer textual steerage" when the apparent which means of the Bankruptcy Code s textual content is itself clear, as it is here. See Ron Pair, 489 U. S., at 240 ("[I]t isn't always suitable or sensible to count on Congress to have explained with particularity every step it took. Rather, as long as the statutory scheme is coherent and constant, there generally is not any need for a court to inquire past the obvious language of the statute"); cf. Dewsnup, supra, at 434 (SCALIA, J., dissenting) (Court have to no longer "venerat[e] pre-Code law " on the fee of undeniable statutory meaning).18

    We have, on many prior occasions, refused to leave from plain Code that means no matter arguments that doing that would vindicate similar, and possibly equally "important," nation interests. In Owen v. Owen, 500 U. S. 305 (1991), as an example, the Court refused to keep that the kingdom "opt-out" coverage embodied in § 522(b)(1) required immunity from avoidance underneath § 522(f) for a lien binding beneath Florida s exemption guidelines. We emphasised that "[n]othing within the textual content of § 522(f) remotely justifies treating the [state and federal] exemptions otherwise." 500 U. S., at 313. And in Johnson v. Home State Bank, 501 U. S. seventy eight (1991), we trusted simple Code language to permit a debtor who had "stripped" himself of personal mortgage legal responsibility beneath Chapter 7 to reschedule the closing indebtedness below Chapter 13, notwithstanding a conceivable contrary argument based on Code structure and a entire dearth of precedent for the manoeuver under state law and prior bankruptcy exercise.

    18 Even if undeniable language is insufficiently "clear steering" for the Court, in addition guidance is handy right here. The provision to hand changed into amended inside the face of judicial selections pushed by means of the same coverage concerns that animate the Court, to make simple that foreclosure income and different "involuntary" transfers are within the sweep of the avoidance energy.


    The Court has indeed given full impact to Bankruptcy Code terms even in cases wherein the Code would appear to have cut towards the coronary heart of kingdom energy than it does here. No "clearer textual steering" than a widespread definitional provision become required, for example, to maintain that criminal restitution can be a "debt" dischargeable underneath Chapter 13, see Davenport, 495 U. S., at 563-564 (declining to "carve out a wide judicial exception" from statutory time period, even to avoid "impede[ing] the ability of kingdom criminal judges"). Nor, in Perez v. Campbell, 402 U. S. 637 (1971), did we require an specific connection with country motorway safety laws before construing the usually worded discharge provision of the Bankruptcy Act to bar utility of a kingdom statute postponing the motive force s licenses of uninsured tortfeasors.19

    Rather than allow kingdom practice to trump the obvious that means of federal statutes, cf. Adams Fruit Co. v. Barrett, 494 U. S. 638, 648 (1990), our cases describe a contrary rule: whether or not Congress has used any special "pre-emptive" language, kingdom law need to yield to the volume it certainly conflicts with federal law. This isn't any much less proper of laws enacted below Congress s energy to "establish ... uniform Laws with regards to Bankruptcies," U. S. Const., Art. I, § 8, cl. 4, than of these handed under its Commerce Clause electricity. See typically Perez v. Campbell, supra; cf. id., at

    19 Only over vigorous dissent did the Court read the trustee s generally worded abandonment strength, 11 U. S. C. § 554, as now not authorizing abandonment "in contravention of a kingdom statute or law that is reasonably designed to protect the general public health or safety from recognized dangers." Midlantic Nat. Bank v. New Jersey Dept. of Environmental Protection, 474 U. S. 494, 505 (1986); cf. identification., at 513 (REHNQUIST, J., dissenting) ("Congress knew the way to draft an exception covering the exercising of positive police powers whilst it desired to"); cf. also L. Cherkis & L. King, Collier Real Estate Transactions and the Bankruptcy Code, p. 6-24 (1992) (postMidlantic instances recommend that "if the unsafe substances on the belongings do not pose on the spot hazard to the general public, and if the trustee has right away notified nearby environmental authorities of the contamination and cooperated with them, abandonment may be accredited").


    651-652 (rejecting the "aberrational doctrine ... that country law may additionally frustrate the operation of federal regulation so long as the kingdom legislature in passing its law had some purpose in thoughts aside from one in every of frustration"); Cipollone v. Liggett Group, Inc., 505 U. S. 504, 545, 546 (1992) (SCALIA, J., concurring in judgment in component and dissenting in component) (arguing in opposition to a "presumption in opposition to ... pre-emption" of "ancient police powers") (internal quotation marks left out).

    Nor, ultimately, is it appropriate for the Court to look to "field pre-emption" cases, see ante, at 544, to guide the higher responsibility of clarity it seeks to impose on Congress. As written and as implemented by means of the bulk of Courts of Appeals to construe it, the disputed Code provision comes nowhere near running the fundamental displacement of the kingdom law of foreclosure manner that almost all s rhetoric conjures.20

    20 Talk of " radica[l] alter[ments to] the balance of country and countrywide authority, " ante, at 544, notwithstanding, the Court s submission with recognize to "displacement" consists completely of the fact that a few private businesses in Durrett jurisdictions have required customers of name coverage to just accept policies with "specifically crafted exceptions from insurance in many guidelines issued for residences bought at foreclosures income." Ante, at 544 (mentioning Cherkis & King, supra, at five-18 to 5-19). The source stated by means of the Court reports that those exceptions have been demanded when mortgagees are the clients, however have not been required in guidelines issued to 0.33-celebration purchasers or their transferees, Cherkis & King, supra, at 5-18 to 5-19, and that such clauses have neither been confined to Durrett jurisdictions, nor restrained to avoidance underneath federal financial disaster law. See Cherkis & King, supra, at 5-10 (noting one wellknown exclusion from insurance for "[a]new york claim, which arises ... by cause of the operation of federal financial ruin, kingdom insolvency, or comparable lenders rights legal guidelines"). Nothing inside the Bankruptcy Code, moreover, deprives the States of their broad powers to alter directly the phrases and conditions of name coverage guidelines.

    The "federally created cloud" on identify appears hardly to be the Damoclean specter that the Court makes it out to be. In the almost 14 years because the Durrett choice, the financial disaster reports have protected a relative handful of choices in reality setting apart foreclosure income, nor do the States, either internal or out of doors Durrett jurisdictions, appear to have ven-


    To the contrary, construing § 548(a)(2)(A) as authorizing avoidance of an bancrupt s recent foreclosures-sale switch in which "much less than a reasonably equivalent price" become received is no more pre-emptive of kingdom foreclosure tactics than the trustee s strength to set apart transfers through marital dissolution decree, see Britt v. Damson, 334 F.second 896 (CA9 1964), cert. denied, 379 U. S. 966 (1965); In re Lange, 35 B. R. 579 (Bkrtcy. Ct. ED Mo. 1983), "pre-empts" country home relations regulation,21 or the strength to reject executory contracts, see 11 U. S. C. § 365, "displaces" the nation law of voluntary duty. While it's miles virtually proper that if the supply had been accorded its undeniable meaning, a few States (and plenty of mortgagees) would take steps to diminish the chance that precise transactions would be set aside, such voluntary motion ought to now not be reason for dismay: it might develop middle Bankruptcy Code functions of augmenting the financial ruin estate and improving the debtor s prospects for a "sparkling begin," without compromising creditors state-law rights to move expeditiously towards the belongings for the debts. To the extent, in any event, that the respondents and their severa amici are accurate that the "vital" coverage favoring safety of title need to be counted more and the "crucial" bankruptcy rules have to matter less, Congress, and no longer this Court, is the precise body to provide a foreclosures-sale exception. See Wolas, 502 U. S., at 162. See also S. 1358, one centesimal Cong., 1st Sess. (1987) (proposed amendment developing foreclosure-sale exception).


    Like the Court, I recognize this situation to contain a preference among feasible statutory provisions: one authorizing

    tured principal modifications within the "diverse networks of ... rules governing the foreclosure method." See ante, at 541.

    21 But cf. Wetmore v. Markoe, 196 U. S. sixty eight (1904) (alimony is not a "debt" difficulty to discharge beneath the Bankruptcy Act).


    the trustee to keep away from "involuntar[y] ... transfers [including foreclosure sales] ... [for] less than a reasonably equivalent cost," see eleven U. S. C. § 548(a), and any other precluding such avoidance while "[a] secured birthday celebration or 1/3 party consumer ... obtains name to an hobby of the debtor in belongings pursuant to an awesome religion prepetition foreclosures ... intending ... permitting ... the belief of safety upon default of the borrower," see S. 445, 98th Cong., 1st Sess., § 360 (1983). But that preference isn't ours to make, for Congress made it in 1984, with the aid of enacting the previous opportunity into regulation and no longer the latter. Without a few indication that doing so would frustrate Congress s clear goal or yield patent absurdity, our obligation is to use the statute as Congress wrote it. Doing that during this case might produce no frustration or absurdity, but quite the other.

    Oral Argument - December 07, 1993
    Opinion Announcement - May 23, 1994
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