Rethinking Inventory Valuation: Implications for Retail Lenders, The Secured Lender
May 06, 2026Partners Matt Furlong and Chris Carter co-authored an article for The Secured Lender examining a recent bankruptcy court decision that challenges longstanding assumptions regarding inventory valuation in retail finance transactions.
The authors analyze In re JMG Ventures, LLC, in which the court applied a “replacement value” standard based on wholesale cost rather than anticipated retail liquidation proceeds, diverging from typical reliance on net orderly liquidation value. They explain how this approach may reduce the secured portion of inventory-backed claims, heighten cramdown risk, and limit lenders’ ability to recover post-petition interest and fees. The article highlights the decision’s potential implications for borrowing base calculations and underscores the need for retail lenders to reassess valuation assumptions in distressed scenarios.