Bankruptcy Section 1111(b)(2) Elections and Cramdown Interest Rate Strategies

Understand when, how, and why secured creditor clients can (or cannot) elect treatment under Section 1111(b)(2).

Since becoming effective in February 2020, Subchapter V of Chapter 11 has eliminated certain strategies that secured creditors often utilize to challenge plans of reorganization and to seek larger recoveries. One strategy that remains in place in all Chapter 11 cases, however, is to elect treatment of an undersecured claim under Section 1111(b)(2) of the Bankruptcy Code. Many commercial bankruptcy practitioners do not fully comprehend how electing treatment under Section 1111(b)(2) can enhance their secured creditor clients' rights and recoveries or how debtors can respond if or when secured creditors make that election. Practitioners also may not fully understand what evidence and methodology they and their witnesses should - or should not -- advance in order to establish a favorable discount (interest) rate that a debtor must pay on allowed secured claims, and how valuation of collateral and the applicable interest rate can affect the feasibility of a contested chapter 11 plan. This presentation will help bankruptcy professionals to understand when, how, and why their secured creditor clients can (or cannot) elect treatment under Section 1111(b)(2), what impact doing so may have on a chapter 11 plan's feasibility and a secured creditor's recovery, and how debtors may respond tactically to any such election. Where a debtor seeks to "cram-down" court approval of a chapter 11 plan over dissenting creditors' opposition, this live webinar also explains the methodology and evidence that the debtor or its secured creditors should use to establish an appropriate discount (interest) rate for repayment of allowed secured claims.

Faculty

Kirk B. Burkley, Esq.

Bernstein-Burkley, P.C.

Sarah E. Wenrich, Esq.

Bernstein-Burkley, P.C.