Following Third Circuit precedent in Moody v. Security Pacific Business Credit, Inc., the Court rejected the Trustee's unreasonably small capital claims (see 971 F.2d 1056 (3d Cir. 1992)). In Moody, the US Court of Appeals for the Third Circuit stated that "unreasonably small capital denotes a financial condition short of equitable solvency." The Third Circuit further reasoned that unreasonably small capital refers to the inability to generate sufficient profits to sustain operations. The Moody analysis required the Third Circuit to consider availability of credit in determining whether the debtor was left with unreasonably small capital after a distribution. Under Moody, the test for unreasonably small capital is "reasonable foreseeability," which requires that courts "strike a proper balance" by taking into account a wide range of reasons for business failure, rather than focus on fraudulent transfers alone.

Noting that neither Moody nor any cases following it addressed facts similar to those in this case, the Court still employed its reasoning to guide its analysis. The Court held, consistent with Moody, that considering the availability of credit was appropriate in determining whether the Debtor was left with an unreasonably small amount of capital after the distributions. Here, there was no dispute that the Debtor had a substantial line of credit at the time of both the 2007 Distribution and the 2008 Distribution.

The Court further rejected the Trustee's argument that it at least raised a genuine issue of material fact sufficient to withstand summary judgment as to whether it was reasonably foreseeable that the Debtor would be unable to sustain its operations due to its massive breach of the Credit Agreement and the likely termination of the credit facility. The Court noted that it was not clear from the record whether the Bank Group was aware of the business activities identified by the Trustee as being inconsistent with the Debtor's obligations under the Credit Agreement. It further noted that it would make no difference if the Bank Group was aware. In rejecting the Trustee's argument, the Court noted that it would be required to engage in a "speculative exercise" by forecasting:

The Court next rejected the Debtor's argument that the 2008 distribution was a fraudulent transfer because the Debtor was insolvent at the time of that distribution.

The Court reasoned that, despite the fact that the burden to prove insolvency was on the Trustee, the Trustee offered very little insight on appeal into its expert's approach. Rather, it focused on the "errors" allegedly committed by Ritchie's expert. The Court noted that the record reflected that the parties' respective experts embraced different assumptions and used different methodologies in reaching their opinions. Ritchie's expert used the income approach to valuation, which the Court preferred to the asset approach used by the Trustee, because the Debtor was a going concern at the time of the 2008 Distribution. Under the income approach, Ritchie's expert valued the Debtor's equity cushion at between $670 million and $2.7 billion at the time of the 2008 Distribution.

The Court noted that, at trial, the trial judge has the exclusive responsibility to judge the credibility and reliability of the witnesses and that the Bankruptcy Court found the opinions offered by Ritchie's experts to be more credible and persuasive. The Court held, given that Ritchie's experts used the preferred valuation method and presented cogent rationales for their conclusions, there was no error in the Bankruptcy Court's judgment in favor of Ritchie on the insolvency claim.