Cramdown in Chapter 13 Bankruptcy
In Chapter 13 bankruptcy, a cramdown is the confirmation of a reorganization plan over the objection of a secured creditor holding a claim in an amount greater than the value of the collateral. The court may "cram down" the creditor's claim to the value of the collateral, and confirm the plan.
A cramdown is not available in Chapter 7 bankruptcy. In a Chapter 7 liquidation, secured creditors are paid first from proceeds of the sale of collateral. Unsecured creditors are paid from any remaining proceeds. If there are no proceeds, unsecured creditors get nothing.
A cramdown may be available in a Chapter 11 reorganization if the debtor can demonstrate that it is not feasible to reorganize without modifying the rights of at least one impaired class of creditors.
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