In the realm of commercial litigation, the validity of a secured creditor’s actions often hinges on a single, flexible standard: “commercial reasonableness.” Under Article 9 of the Uniform Commercial Code (UCC), courts are tasked with determining if a foreclosure sale was conducted in a manner consistent with industry norms. Because the code avoids rigid procedural rules, the testimony of a qualified expert becomes the primary vehicle through which a court understands the “custom and practice” of a given market. However, not every professional with a background in valuation is fit for this role. Courts apply a rigorous practical standard to ensure that an expert’s testimony is grounded in transactional reality rather than mere theory.
The Practical Standard of Real-World Experience
When evaluating whether a witness is qualified to testify in a UCC foreclosure case, courts prioritize extensive, real-world experience over academic credentials. The fundamental question a judge asks is whether the witness has personally conducted UCC foreclosure sales and can explain the customary procedures of that specific market. This “hands-on” requirement ensures that the expert understands how foreclosure conditions such as time pressure and distressed status affect buyer behavior. Professionals who have participated in specialized asset transactions are uniquely positioned to meet this standard because their insights are developed through “doing, not theorizing”.
Evaluating the Expert’s Ability to Define Custom and Practice
Courts distinguish between professionals who have simply held auctions and those who can clearly articulate and defend commercial custom under the pressure of litigation. An effective expert must be able to educate the trier of fact on several technical benchmarks:
- Marketing Timelines: Determining if the duration of the advertisement period was sufficient for the specific asset type.
- Advertising Channels: Identifying the industry-standard platforms used to reach the appropriate “buyer universe”.
- Auction Formats: Assessing whether a public or private format was more appropriate for the collateral in question.
- Inspection Practices: Evaluating if potential buyers were given reasonable access to the collateral. By demonstrating a deep exposure to these patterns across numerous transactions, the expert provides testimony that reflects established market behavior rather than isolated events. To understand the background of specialists who provide this testimony, you can learn more about our team.
The Boundries of Admissible Testimony
A critical factor in how courts evaluate an expert is the witness’s discipline in staying within their permitted role. Experts are hired to explain “what is done” in an industry, not to interpret “what the law is”. A witness who attempts to offer a legal conclusion such as explicitly stating that a sale was “commercially reasonable” may have their testimony discounted or struck. Courts consistently favor experts who frame their opinions in factual, industry-based terms and remain objective rather than acting as a partisan advocate. For a consultation on maintaining these boundaries in your case, connect with our advisors.
Pro-Tip: When vetting an expert, review their history of surviving cross-examination. A witness who can ground their testimony in documented commercial practices while remaining composed during aggressive questioning is a significant asset to any legal team.
Addressing the “Price vs. Process” Debate
One of the most common challenges in UCC litigation is a debtor’s claim that a sale was unreasonable because the price achieved was too low. Courts rely on experts to counter these claims with market reality. A qualified expert can explain the technical difference between “theoretical value” and “realizable value” in a forced-sale environment. They provide the context of how market depth and time constraints naturally limit bidder participation for specialized assets. This allows the court to evaluate the sale through the lens of process and exposure the true intent of Article 9 rather than just the final dollar amount. You can review our firm’s approach to these complex valuation challenges.
Independence as a Credibility Benchmark
A court’s evaluation of an expert also looks at their perceived objectivity. Witnesses who demonstrate independence by working with a wide range of secured creditors, fiduciaries, and bankruptcy trustees are viewed as more credible. This broad experience suggests that the expert’s opinions are based on documented market behavior rather than a desire to please a specific client. Leadership roles in insolvency organizations, such as the Turnaround Management Association (TMA), further validate an expert’s standing as a neutral authority in the field. For assistance with a compliant asset disposition, our team is available for professional guidance.
Pro-Tip: Retain an expert who can provide opinions both before and after a dispute arises. An expert who helped design the sale procedures is often the most persuasive witness when those same procedures are later challenged in court.
Conclusion
The evaluation of a UCC foreclosure expert by a court is a practical inquiry into transactional competence and testimonial discipline. By focusing on real-world experience and the ability to define commercial custom, courts ensure that their rulings are aligned with the realities of the marketplace. An expert who brings a combination of “doing” and “defending” provides the credibility necessary to uphold the results of a foreclosure sale. Whether you are a creditor looking to execute a defensible auction or a legal team in the midst of commercial litigation, the right expert is the key to proving commercial reasonableness. To discuss your specific litigation needs, contact our regional office.
Frequently Asked Questions
- How do courts define an “expert” in a UCC case? Courts look for individuals with extensive, “hands-on” experience conducting UCC foreclosure sales and a deep understanding of market custom.
- Why is an auctioneer often preferred over other professionals? Auctioneers are at the center of the practices courts evaluate; they translate legal rights into actual market transactions.
- Can an expert witness provide legal definitions? No. Experts must avoid legal conclusions and instead focus on educating the trier of fact about industry norms and “what is done” in the market.
- What technical factors does a court look for in a sale? Courts examine marketing timelines, the choice of advertising channels, the auction format used, and the level of buyer access provided.
- How does an expert defend a low sale price? By explaining how foreclosure conditions, time constraints, and market depth differ from traditional “going-concern” or retail environments.
- What makes an expert’s testimony credible? Credibility is built through independence, objectivity, and the ability to ground every opinion in documented commercial practices.
- Why is the “doing, not theorizing” standard important? It ensures the expert understands the practical nuances of how bidders react in distressed auction settings.
- What role does the Turnaround Management Association (TMA) play? Leadership in organizations like the TMA, as seen with our leadership team, signals high standing and expertise in the insolvency industry.
- Can a former attorney serve as a UCC expert? Yes, especially if they have since gained significant auction experience. Our partner Joshua Olshin, for example, combines a legal background with transactional expertise.
- How do I engage an expert for my litigation? You can start by contacting a specialist to review the specifics of the foreclosure and the current state of the dispute.
