Cram down is a legal term used in bankruptcy cases to describe the process of reducing or altering the terms of a debtor’s secured debt without the consent of the creditor. It allows the debtor to modify the terms of the loan, such as reducing the interest rate or extending the repayment period, in order to make it more manageable for the debtor to repay. This process is typically used when the debtor is unable to meet the original terms of the loan and is seeking to avoid foreclosure or repossession of the collateral. However, cram down is subject to certain limitations and requirements, and it is often a contentious issue between debtors and creditors in bankruptcy proceedings.
A cram down in bankruptcy refers to the process of a court approving a reorganisation plan over the objections of certain creditors.
A cram down can be used in bankruptcy when a debtor proposes a reorganisation plan that is not accepted by all creditors, but is deemed fair and equitable by the court.
In bankruptcy, secured debts, such as mortgages and car loans, can be crammed down to the value of the collateral, while unsecured debts can be reduced or restructured.
Yes, creditors have the right to object to a cram down in bankruptcy if they believe the proposed reorganisation plan unfairly treats their claim.
A court will consider whether the reorganisation plan is fair and equitable, whether it has been proposed in good faith, and whether it is in the best interest of the creditors.
Yes, a cram down can also refer to the process of a court approving a plan to restructure a company’s debt outside of bankruptcy, such as in a corporate restructuring or debt workout.
A cram down can allow debtors to reduce their debt obligations, lower interest rates, and restructure their payments to make them more manageable.
Creditors may receive less than the full amount owed to them, have their claims restructured, or have their collateral devalued in a cram down.
Yes, a cram down can be used in a Chapter 13 bankruptcy to restructure secured debts, such as mortgages and car loans.
It is important to consult with a qualified bankruptcy attorney to assess your financial situation and determine if a cram down is a viable option for your specific circumstances.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 13th April 2024.
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