“Only when the tide goes out do you discover who’s been swimming naked” – Warren Buffet

The tide has gone out on the municipal finance market.

While much of the discussion about the financial fall-out of the COVID-19 virus has focused on the massive wealth destruction in stock markets and pressure on corporates around the world, the impact on the largest financial market in the world- the $3 trillion US municipal finance market- cannot be ignored. Simply put, the market is imploding.

In a recent decision, Heritage Home Group LLC, et al., Case No. 18-11736-KG, 2018 WL 4684802 (Bankr. D. Del. Sept. 27, 2018), Judge Kevin Gross, U.S. Bankruptcy Judge for the District of Delaware, held that a consultant tasked with liquidating the debtors’ assets under a store closing and asset disposition agreement (“Disposition Agreement”) is not a professional, and consequently, not required to be retained under Section 327(a) of the Bankruptcy Code.