In his recent article, Tools of Ignorance: An Appraisal of Deficiency Judgments, Professor Alan Weinberger accurately identifies both the benefits and detriments of statutory “fair value” limitations on deficiency judgments. The principal benefit of these statutes, of course, is that they stand in the way of a windfall double recovery by mortgage creditors. In many cases there is little or no competitive bidding at foreclosure sales, leaving the way clear for the creditor to bid at a level far below the property’s market value and thus, gain both the full value of the property and the amount of a deficiency measured by the artificially low bid. This is simply an outrage, and the basic principles of fairness demand some means of preventing it. On the other hand, determining what fair value is—indeed, defining what we mean by fair value—is often left ambiguous by fair value statutes. Even if the meaning is clear, determining value by a war of expert appraisal witnesses is a messy, complex, expensive, and often inaccurate process
Washington and Lee Law Review - Bankruptcy
by Alexander D. Flachsbart
Recent scholarship on Chapter 9 of the Bankruptcy Code has focused on everything from the efficacy of municipal bankruptcy to its intersection with pensioner rights and collective bargaining agreements. However, few (if any) writers have addressed the more intricate question of whether, how, and why certain bondholders have claims superior to other bondholders for scarce municipal assets. This Note seeks to fill that void.