Cram Down
A bankruptcy court's power to confirm a reorganization plan over the objection of certain creditor classes, provided the plan meets statutory requirements.
Encyclopedia entry: Cram Down
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cram-down
Cram-down refers to a court forcing a creditor to accept new terms of a loan in bankruptcy proceedings. The tool is most often used in Chapter 13 proceedings to reduce the debt owed to a creditor to the value of the collateral . For example, if someone bought a car worth $25,000 with a loan, the loan could accrue interest and the overall loan size would increase. Cram-down would reduce the debt above $25,000 down to $25,000. Cram-down cannot be used for a mortgage on a person’s dwelling, but cram-down can be used in Chapter 11 bankruptcy in some situations.
[Last reviewed in June of 2021 by the Wex Definitions Team
]
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Encyclopedia content from Cornell LII Wex (CC-BY-NC-SA 2.5).
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.