Cramdown
Corporate Credit Analysis glossary · Distressed Debt & Restructuring
Definition
Confirmation of a restructuring plan over the dissent of an impaired creditor class under section 1129(b) of the US Bankruptcy Code, subject to 'fair and equitable' and 'absolute priority' requirements.
Cramdown in plain English
A cramdown is when a bankruptcy court approves a company's plan to reorganize its debts even though a group of creditors voted no. Normally everyone owed money gets a say, but the court can override the holdouts and "cram" the deal down on them — as long as the plan is judged fair and follows the pecking order that senior lenders get paid before junior ones and owners. Think of a group project where most teammates agree on the plan, and the teacher forces the one objector to go along, but only if that person still gets treated fairly. It stops a single stubborn creditor from blocking a rescue that helps everyone else.
Learn these first
Practice Cramdown
Related Corporate Credit Analysis terms
Corporate Credit Analysis practice questions · Corporate Credit Analysis flashcards · Corporate Credit Analysis study guide