Formailzing Chapter 9's Experts

Abstract

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 com-munity—to help overcome this problem in chapter 9. These experts often per-form 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 proce-dures surrounding experts in municipal bankruptcy. After exploring the bene-fits and pitfalls associated with using experts in chapter 9 and elsewhere, this Article provides detailed guidance for designing formal procedures for select-ing, appointing, and using experts in chapter 9.