Formalizing Chapter 9’s Experts
Laura N. Coordes*
Chapter 9 of the U.S. Bankruptcy Code has many shortcomings. One of the most persistent, yet understudied, problems judges face in chapter 9 is also a problem that exists in other areas of bankruptcy law: the sheer difficulty of applying generalized plan confirmation standards to wildly different, highly specialized entities. In practice, judges have turned to experts—individuals well versed in municipal finance, mediation, and the particular debtor community—to help overcome this problem in chapter 9. These experts often perform critical roles in a municipal bankruptcy case, including conducting mediations, investigating the municipality’s finances, and even helping to craft the municipality’s plan of debt adjustment.
Despite the important roles experts play in bankruptcy, their appointment and selection process receives little attention, and the scope of their role is often ill-defined. This Article highlights the concerns that arise due to the lack of procedures surrounding experts in municipal bankruptcy. After exploring the benefits and pitfalls associated with using experts in chapter 9 and elsewhere, this Article provides detailed guidance for designing formal procedures for selecting, appointing, and using experts in chapter 9.
* Associate Professor, Arizona State University Sandra Day O’Connor College of Law. I thank Douglas Baird, Vince Buccola, Tony Casey, Adam Chodorow, Melissa Jacoby, Bob Lawless, Ralph Mabey, Juliet Moringiello, Troy Rule, Erin Scharff, Bijal Shah, and participants at the 2016 Young Bankruptcy Scholars’ Work-in-Progress Workshop and the 2017 National Business Law Scholars Conference for their advice and comments on previous drafts. I also thank Madison Levine for her excellent research assistance.