The Conceptual Foundation of Cross-Class Cramdown

30 Pages Posted: 22 Oct 2024

See all articles by Sarah Paterson

Sarah Paterson

London School of Economics - Law School

Date Written: September 18, 2024

Abstract

This paper is concerned with 'cramdown' in corporate restructuring, in which a plan that impairs the rights of creditors or shareholders against a company is coercively imposed on those who have voted against it by court order. I analyse the development of cramdown in the UK, from cramdown on a dissenting minority, to the introduction of a somewhat thin statutory power to impose a plan on an entire dissenting class (so-called cross-class cramdown). I suggest that the early efforts of judges to put flesh on the bones of the power using real facts have revealed some incorrect assumptions that most scholars, practitioners and policy makers made about the conceptual foundation of cross-class cramdown and offer some suggestions for a course correction. The paper suggests new ways to think about cross-class cramdown normatively and theoretically, and important insights into the process of law reform in complex, modern markets.

Keywords: restructuring, reorganization, reorganisation, bankruptcy, insolvency, Part 26A, schemes of arrangement, company voluntary arrangement, CVA, Chapter 11, Corporate Insolvency and Governance Act 2020

Suggested Citation

Paterson, Sarah, The Conceptual Foundation of Cross-Class Cramdown (September 18, 2024). Available at SSRN: https://ssrn.com/abstract=4959732 or http://dx.doi.org/10.2139/ssrn.4959732

Sarah Paterson (Contact Author)

London School of Economics - Law School ( email )

Houghton Street
London WC2A 2AE, WC2A 2AE
United Kingdom

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