I say cash loosely speaking. You at least cannot pledge income from debt that is presently being negotiated down or cancelled. That kind of thing isn't "value" because it's imaginary.

but you can pledge the debt itself.

> I say cash loosely speaking

Is this a legal term or something? Not to be rude, but who cares what you mean by it? It's totally besides the point

If you're talking to me or reading my comment then you should care what I mean. Otherwise you're wasting your time.

Obviously "loosely speaking" is not a legal term but I'm sure there is one that means the same. I mean you need real money to buy things, not bad paper. Bankruptcy does not exist to deliver good feels to people, it exists to settle financial matters as objectively as possible.

Right. The debt owed to the creditors...

One reason to have an actual auction is because the liquidation might more than cover the debt and leave the bankrupt person with excess cash. But that only happens if real cash is generated in a competitive liquidation process. The reasons why this backroom dealing stinks are plentiful...

The actual cash is orders of magnitude less than what the creditors are entitled to... did you read the article?

This is completely false.

Debt can absolutely be sold for whatever it is worth. In this case, the Jones' debt owned by the Sandy Hook families is fairly valuable to Jones' other debtors because it means they get a bigger slice of the bankruptcy estate. Thus the Sandy Hook families can offer enough of their Jones' debt in the sale to make it more valuable. (Edit: more complicated than how I explained it because both sets of debtors include Sandy Hook families)

This isn't any more "imaginary" than money itself.