What is the impact of the court's "equity test" when it comes to determining the equity of a company?

MultiRegion, United States of America

The following excerpt is from In re United Medical Research, Inc., 12 BR 941 (Bankr. C.D. Cal. 1981):

It is poor policy for courts to upset legitimate business transactions because of some vague concept of equity. We tend to forget that these decisions affect future commercial transactions. Advantageous and proper loans to corporations may be frustrated because shareholders would be fearful of having their personal assets marshaled for corporate creditors should they guarantee a corporate debt. As stated by the court in Rowan v. United States (CA 5th 1955), 219 F.2d 51 at 54, in connection with a taxation problem,

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