Cramdown
A cramdown is a court-ordered reduction of the amount owed to creditors during bankruptcy proceedings. This process allows the debtor to modify the terms of the debt, often reducing the principal balance, interest rate, or extending the repayment period to facilitate reorganization.
Key Takeaways
- Cramdown reduces the amount owed to creditors by court order.
- Used during bankruptcy proceedings to facilitate reorganization.
- May involve reducing the principal balance, interest rate, or extending the repayment period.
- Helps debtors manage obligations and restructure effectively.
