What happens to secured creditors in a Chapter 11 bankruptcy?

In a Chapter 11 bankruptcy in Alaska, secured creditors typically have priority in receiving payment. This means that the debtors in a Chapter 11 bankruptcy must first pay secured creditors before they can pay unsecured creditors. Secured creditors have a lien on collateral that is used to secure a debt, meaning that they hold the right to repossess the collateral if the debt is not paid. In a Chapter 11 bankruptcy, secured creditors may choose to be "secured with junior liens," meaning that if the collateral is repossessed, they will receive lesser payment than other secured creditors. Secured creditors with claims that are completely secured by collateral may also participate in a Chapter 11 plan, but they must be treated in a way that is consistent with their position as secured creditors. Under Chapter 11 bankruptcy law, debtors have the option of renegotiating their debt with secured creditors. This type of agreement is known as a "cramdown" and it allows the debtor to pay only a portion of the debt that is secured by the collateral. By agreeing to a reduced payment, the debtor can often avoid giving up their collateral. In summary, secured creditors in a Chapter 11 bankruptcy in Alaska usually receive priority in receiving payment from the debtors. They can also renegotiate their debt with the debtor, allowing them to receive a reduced form of payment.

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What happens to secured creditors in a Chapter 11 bankruptcy?

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