Glossary
Credit and risk
What is cramdown?
Confirming a plan over a class that voted no.
Needs one impaired class voting yes, a feasible plan, absolute priority and a value the court accepts.
A worked example
Senior lenders vote for the plan and unsecured creditors vote against it. The court can still confirm it over the unsecured class, as long as the plan is feasible, doesn't discriminate unfairly and respects absolute priority for that class.
Where it catches you in the game
- An option in the plan negotiations room when the vote splits.
It comes up most on the restructuring desk.
Related terms
Learn it by using it
Definitions stick once they've cost you money. Take a seat, make three calls a year and watch what cramdown does to your returns.