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.

RELATED TERMS
  1. Cramdown

    A cramdown is the imposition of a bankruptcy reorganization plan ...
  2. Reorganization

    Reorganization is a process designed to revive a financially ...
  3. Cram-Up

    A situation in which junior classes of creditors impose a cram-down ...
  4. Crammed Down

    1. A situation in which venture capitalists refuse to invest ...
  5. Chapter 11

    Named after the U.S. bankruptcy code 11, Chapter 11 is a form ...
  6. Voluntary Bankruptcy

    A type of bankruptcy where an insolvent debtor brings the petition ...
Related Articles
  1. Financial Advisor

    Corporate bankruptcy: An overview

    When public company files for corporate bankruptcy, the bondholders are first in line to receive their share back. Equity holders on the other hand, are second in line to bondholders when a corporate ...
  2. Small Business

    Taking Advantage Of Corporate Decline

    A bankrupt company can provide great opportunities for savvy investors.
  3. Trading

    Discovering the Force Index

    Learn how to measure the power of bulls behind rallies and bears behind declines.
  4. Personal Finance

    Banker's Acceptance 101

    A banker's acceptance, or a negotiable time draft a bank guarantees to pay at a predetermined date, is a common way of financing international trade activity.
  5. Investing

    Don't Go Broke Buying Bankrupt Stocks

    Don't be tricked by bankrupt companies' low stock prices; they're low for a reason.
  6. Taxes

    When To Declare Bankruptcy

    When is bankruptcy the best or only route– and when is it better to look at alternative solutions? And should you always hire a lawyer?
  7. Personal Finance

    Should You File for Bankruptcy?

    Find out how to determine whether bankruptcy will help or hurt your financial situation.
  8. Small Business

    What Merger And Acquisition Firms Do

    The merger or acquisition process can be intimidating. This is why merger and acquisition firms step in to facilitate the process.
RELATED FAQS
  1. What effect did the Bankruptcy Abuse Prevention and Consumer Protection Act of 2 ...

    Credit card companies and banks hate deadbeats who take from their bottom lines. They especially dislike the Chapter 7 bankruptcy ... Read Answer >>
  2. What is the difference between a merger and an acquisition?

    Learn about the legal differences between a corporate merger and corporate acquisition – terms used when companies are either ... Read Answer >>
  3. What's the Differences Between Chapter 7 and Chapter 11?

    Chapter 7 bankruptcy is sometimes called liquidation bankruptcy, while Chapter 11 bankruptcy is called rehabilitation bankruptcy. Read Answer >>
Hot Definitions
  1. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by companies seeking the capital to expand ...
  2. Cost of Goods Sold - COGS

    Cost of goods sold (COGS) is the direct costs attributable to the production of the goods sold in a company.
  3. Profit and Loss Statement (P&L)

    A financial statement that summarizes the revenues, costs and expenses incurred during a specified period of time, usually ...
  4. Monte Carlo Simulation

    Monte Carlo simulations are used to model the probability of different outcomes in a process that cannot easily be predicted ...
  5. Price Elasticity of Demand

    Price elasticity of demand is a measure of the change in the quantity demanded or purchased of a product in relation to its ...
  6. Sharpe Ratio

    The Sharpe ratio is the average return earned in excess of the risk-free rate per unit of volatility or total risk.
Trading Center