Appraisers' Wake Up Call
The new appraisal standards mandated in the Pension Protection Act of 2006 and in subsequent guidance could not have come soon enough for one Judge in New York State.
Appalled by the lack of qualifications and professional discipline demonstrated by the business appraiser for the defendant in a $7.5 million fraudulent transfer case, the Judge barred the appraiser's testimony, "because he did not employ the same level of intellectual rigor that characterizes the practice of an expert in the field of business valuation."
Good news for the plaintiff, one would assume. Subsequently however, the Judge issued another opinion stating the plaintiff's business appraiser was also "fundamentally unreliable." "A pox on both your houses," wrote one legal commentator, who concluded, regardless of whether you think the judge went too far, "all would agree that his two disqualification opinions in one litigation are a must read for every bankruptcy litigator."
The last word here goes to the Judge, who lamented: "I have a discreet understanding of my limitations, but I also have an understanding of what my experience tells me having listened for the past 30 years to appraisers. I have yet to find an appraiser of non-real estate that ever says anything that's cogent and persuasive. Go ahead, I'm always willing to be persuaded. I'd love to finally have found an appraiser who convinces me that through a rigorous application of a methodology, that person can effectively value... several have tried."
To read more on this case see Chartwell Litigation Trust v. Addus Healthcare, Inc. (In re: Med Diversified, Inc) 334 B.R. 89 (Bankr. E.D.N.Y. 2005).