Crammed Down


DEFINITION of 'Crammed Down'

1. A situation in which venture capitalists refuse to invest in a new project unless the preceding investors of the company lower the value of their original investment.

2. A bankruptcy procedure that allows a bankruptcy court to initiate a reorganization plan for a company despite objections from creditors. The creditors will still maintain collateral on the company as long as the firm offers repayment of the "secured portion" or fair market value of the collateral in their repayment plan.

BREAKING DOWN 'Crammed Down'

1. If the earlier investors of the company don't pony up new cash for the next round of financing, then their interest in the company is "crammed down."

2. Creditors usually don't like this because they would rather liquidate the company's assets and get back some of the money owed to them.

  1. Absolute Priority

    A rule that stipulates the order of payment - creditors before ...
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    A legal proceeding involving a person or business that is unable ...
  4. U.S. Savings Bonds

    A U.S. government savings bond that offers a fixed rate of interest ...
  5. Coupon

    The annual interest rate paid on a bond, expressed as a percentage ...
  6. Interest

    The charge for the privilege of borrowing money, typically expressed ...
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