Camisha L. Simmons’s article “Are Valuation Disputes Futile?” was published in the January 2023 issue of the American Bankruptcy Institute Journal. A common dispute that arises in bankruptcy is what value to attribute to a debtor’s assets. Often the dispute is litigated. And the litigating parties introduce into evidence competing valuations. The court then usually ascribes a value to the asset after weighing and considering the competing expert valuations and related evidence. Are many valuation disputes futile? Should bankruptcy courts, in many circumstances, allow unfettered market forces to determine value?
This article discusses Adam Smith’s invisible hand theory of markets, its application by courts, including one bankruptcy court, and the theory’s underpinnings in valuation disputes in bankruptcy. Click here to read more