Expert: Mark J. Markus- California Bankruptcy Attorney - 12/25/2004

Question
-Where can I read more about cram down policy!  Do we need to have a plan in order to use cram down? The only creditor in the plan is owed 60,000 on a secured basis.
We want the lender to let the assumption with the original terms and conditions. ie month payments and maturity in additon all back payments are to be brought current. What do you think.------------------------
Followup To
Question -
The bankrupt business debtor wants a creditor within the case to assume a term loan and acquire the business.  The lender does not want to let anyone assume the loan. This would cause a liquidation. The person who wants to assume the loan has good credit however the loan has a due on sale provision. Will cram down work in this case?
Answer -
There's no way to answer that question without knowing a lot more facts.  Cram down can work if the treatment of an impaired class is "fair and equitable" even though that class hasn't voted for the Plan.  There is, however, a requirement that at least one impaired class have voted for the plan.  I don't know what the proposed plan is, or what other creditors there are, or even if the court would consider such treatment fair and equitable.

Answer
Yes, of course you need a Plan to do a cramdown in a Ch. 11.  You need to do a Plan in order to achieve anything in a Ch. 11.  Have you already filed your case?   Many courts do not allow Ch. 11 cases to be filed where the only creditor is a secured creditor, so you need to consult with an attorney in your area for local practice and procedures.  The lender can possibly be forced to accept an assumption of the lease under 11 USC 365, but that is not a cramdown issue.  Cramdown is a device set forth under 11 USC 1129 which deals with confirmation of a Plan.  Chapter 11 is very complicated and is way beyond the scope of this free service.  I suggest that you consult with a knowledgeable chapter 11 attorney in your area.