The Cramdown on Secured Creditors: An Impetus Toward Settlement

The American Bankruptcy Law Journal, Vol. 60, No. 1, p. 69, 1986

40 Pages Posted: 7 Jan 2010 Last revised: 12 Feb 2010

See all articles by Charles D. Booth

Charles D. Booth

Institute of Asian-Pacific Business Law, William S. Richardson School of Law, University of Hawaii at Manoa; University of Hawaii at Manoa - William S. Richardson School of Law

Date Written: 1986

Abstract

Chapter 11 of the Bankruptcy Code sets forth the procedures for the confirmation of a reorganization plan. Section 1129(a) includes the criteria for the most frequently used method of confirmation- that of settlement by the debtor, creditors, and equity holders. Section 1129(b) sets forth an alternative method of confirmation called the “cramdown,” which is often written about and discussed but which has occurred in relatively few cases since the Code has been in effect. The cramdown option permits the confirmation of a plan notwithstanding the failure of one or more classes of impaired claims or interests to accept the plan under section 1129(a)(8). The cramdown is one of the new provisions included in the Code to facilitate the confirmation of a plan in the face of opposition by one or more classes. The first part of the article provises a history of the cramdwon. The article then discusses the cramdown on secured creditors under sections 1129(b)(1) and (2)(A) and some of related provisions including sections 1124, 1126(f), and 1111(b). Where relevant, reference is made to cases that involve the cramdown on unsecured creditors. The article also considers the valuation problems that are involved in a cramdown on secured creditors. The Addendum includes a fact situation and related problems to elucidate the valuation risks that arise in a cramdown and to demonstrate why the cramdown provisions loom as a threat and lead parties to reach settlement.

Suggested Citation

Booth, Charles D., The Cramdown on Secured Creditors: An Impetus Toward Settlement (1986). The American Bankruptcy Law Journal, Vol. 60, No. 1, p. 69, 1986, Available at SSRN: https://ssrn.com/abstract=1532388

Charles D. Booth (Contact Author)

Institute of Asian-Pacific Business Law, William S. Richardson School of Law, University of Hawaii at Manoa ( email )

University of Hawai'i at Manoa
2515 Dole Street
Honolulu, HI 96822-2328
United States

University of Hawaii at Manoa - William S. Richardson School of Law ( email )

2515 Dole Street
Honolulu, HI 96822-2350
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
161
Abstract Views
1,585
Rank
327,356
PlumX Metrics