What is “cramdown” in a Chapter 11 bankruptcy?

Cramdown is an important process within Chapter 11 bankruptcy law. It is used by a debtor to reduce the amount of money borrowed from a particular creditor. In a typical Chapter 11 bankruptcy case, the debtor has to pay back all of their debts over a certain period of time, but the cramdown process allows the debtor to reduce the amount they owe to a particular creditor. Cramdown works by allowing the court to review the value of the debt owed to a particular creditor and determine if the debt is worth the amount that was originally borrowed. If the court deems that the debt is not worth the amount borrowed, it can “cramdown” the amount to a reduced amount. The reduced amount is then paid off over the duration of the bankruptcy rehabilitation process. South Carolina is one of the states in the United States to allow the cramdown process. For creditors to be eligible for the cramdown process, they must be unsecured creditors and they must have substantial equity in the collateral being used to secure the debt. Cramdown can be a great tool for the debtor in South Carolina who is looking to reduce the amount of their debt. It is important for debtors in this state to be aware of the process and the requirements to be eligible for the cramdown process.

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What is “cramdown” in a Chapter 11 bankruptcy?

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