Cramdown


Also found in: Dictionary, Wikipedia.

Cramdown

The ability of the bankruptcy court to confirm a plan of reorganization over the objections of some classes of creditors. This often involves resetting the amount of principal that the bond holders are owed. Related is a mortgage cramdown. Here the home owner cannot pay the mortgage because of financial distress and, indeed, the mortgage could be a higher value than the house. A cramdown resets (lower) the principal amount of the mortgage. This may allow the homeowner to stay in the house (avoid foreclosure).

Cramdown

In bankruptcy, the ability of a court to formulate and implement a Chapter 11 reorganization plan over and above the objections of creditors. Generally speaking, unsecured creditors object to a debtor's bankruptcy because they have no recourse for retrieving the debt. The rationale behind a cramdown is the fact that unsecured creditors will usually receive part of the debt back under a Chapter 11 reorganization, but would receive nothing in a Chapter 7 liquidation. Cramdown is therefore thought to be the least negative option for both the debtor and the creditors. Courts are required, however, to formulate a cramdown that is as equitable as possible for all parties.
Mentioned in ?
References in periodicals archive ?
(4) Over the years, secured creditors have pointed out the many risks they face under cramdown plans and have pushed for higher interest rates to compensate for the added risk.
Next, the Fifth Circuit found that applicable case law precedent does not require a specific valuation date in a Chapter 11 cramdown context.
value) and the cramdown power--are aimed at mitigating holdout problems.
unconsented cramdown. The term overridden was not "just
"Bankruptcy Law and the Cost of Credit: The Impact of Cramdown on Mortgage Interest Rates." Journal of Law and Economics 57, no.
(1994) "Cramdown. La transferencia forzosa de la empresa insolvente (Proyecto de reformas a la Ley de Concursos y Quiebras)", La Ley, Tomo 1994-E, pp.
While the "hanging paragraph" took away the tool used to "cramdown" the value of an allowed secured claim to the value of the underlying collateral--section 506(a)--and other BAPCPA provisions protected such creditors (39) the statutory amendments did not change the language of section 1325(a)(5)(B)(ii).
La diferencia que existe entre este tipo de concursos y el ordinario (preventivo) consiste en que (i) no se exigen los pronunciamientos (dictamenes) que debe presentar el deudor emitidos por un contador publico sobre el estado patrimonial del mismo; (ii) la no exigencia de constitucion del comite de acreedores; (iii) no se aplica el cramdown (decision del destino del deudor realizada por un tercero); y, (iv) quien controla el acuerdo es el sindico.
bankruptcy code serves this purpose by giving the bankruptcy judge the authority to bind all creditors to a restructuring plan approved by a majority of creditors--a cramdown provision.
This edition has a new section on how to determine the cramdown interest rate for unsecured claims; discussion of the importance of determining a plan proponent's subjective intent in determining whether a plan has been filed in good faith, the enforceability of lock-up agreements relating to confirmation disputes, and the standard for reviewing a determination of equitable mootness; and updated case law on the payment of legal fees for individual creditors' committee members.
He said the new bill still includes provisions that could allow Puerto Rico to cut repayments to creditors without their consent, known as a cramdown.
En este segundo caso (cramdown) la corte debe velar porque el plan no discrimine injustamente a ninguna clase de acreedores.