Cramdown Interest Under Section 1129(b)(2) of the Bankruptcy Code | Practical Law

Cramdown Interest Under Section 1129(b)(2) of the Bankruptcy Code | Practical Law

A Practice Note addressing the interest rate applicable in a cramdown of a Chapter 11 plan on secured creditors under section 1129(b)(2) of the Bankruptcy Code. This Note discusses the approaches for determining an appropriate discount rate to calculate deferred cash payments for a cramdown for purposes of meeting section 1129(b)(2)(A)(i)'s fair and equitable requirement, including the Till prime-plus approach applied by the Supreme Court in a Chapter 13 case and by many bankruptcy courts in Chapter 11 cases, and the two-part efficient market approach adopted by the Second and Sixth Circuits and many bankruptcy courts in Chapter 11 cases.

Cramdown Interest Under Section 1129(b)(2) of the Bankruptcy Code

Practical Law Practice Note w-013-6207 (Approx. 11 pages)

Cramdown Interest Under Section 1129(b)(2) of the Bankruptcy Code

by Practical Law Bankruptcy & Restructuring
Maintained • USA (National/Federal)
A Practice Note addressing the interest rate applicable in a cramdown of a Chapter 11 plan on secured creditors under section 1129(b)(2) of the Bankruptcy Code. This Note discusses the approaches for determining an appropriate discount rate to calculate deferred cash payments for a cramdown for purposes of meeting section 1129(b)(2)(A)(i)'s fair and equitable requirement, including the Till prime-plus approach applied by the Supreme Court in a Chapter 13 case and by many bankruptcy courts in Chapter 11 cases, and the two-part efficient market approach adopted by the Second and Sixth Circuits and many bankruptcy courts in Chapter 11 cases.