Cram-Down Deal


DEFINITION of 'Cram-Down Deal'

1. A situation in which a creditor is forced to accept undesirable terms imposed by a court during a bankruptcy or reorganization.

2. A merger or acquisition with unfavorable terms, in which shareholders or debtors of the target company are forced to accept because no better option exists. This generally occurs when the target company is in a troubled financial state.

BREAKING DOWN 'Cram-Down Deal'

The term "cram-down deal" can be used in several situations in finance, but consistently represents an instance where someone is forced to accept adverse terms because the alternatives are even worse. An example of a cram down deal would be where a bondholder is forced to take equity in a reorganized company in lieu of receiving cash.

  1. Reorganization

    A process designed to revive a financially troubled or bankrupt ...
  2. Cram-Up

    A situation in which junior classes of creditors impose a cram-down ...
  3. Creditor

    An entity (person or institution) that extends credit by giving ...
  4. Cramdown

    A bankruptcy concept that is often employed to obtain a Chapter ...
  5. Bankruptcy

    A legal proceeding involving a person or business that is unable ...
  6. Skinny Down Distribution

    Skinny down distribution is corporate practice of slimming down ...
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