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How important is it, in a Chapter 11 cramdown plan, for an investment
Listmates,
It is my understanding that in a Chapter 11 case with a cramdown, the
property being crammed down should generate positive cash flow.
As far as I understand, the rationale is that if the property generates a
loss and requires an ongoing investment, money is being siphoned out of the
estate without any benefit to the unsecured creditors who are taking a
haircut. To put it differently, if the unsecured creditors are taking a
loss, debtor should devote all disposable income to paying them and should
not be allowed to invest in ways that will not benefit them.
1. In your experience, in a Chapter 11 case with a cramdown plan, how
important is it for an investment property being crammed down to break
even? What kind of loss might be considered acceptable as de minimis?
2. As with other things, the answer might depend on the judge. Do you
have any experiences with specific judges in CD Cal. that reveal the
judges position on this issue?
Alik Segal
Alik.Segal@gmail.com
310-362-6157
California Central District
Listmates,It is my understanding that
in a Chapter 11 case with a cramdown, the property being crammed down should
generate positive cash flow.
As far as I understand, the
rationale is that if the property generates a loss and requires an ongoing
investment, money is being siphoned out of the estate without any benefit to
the unsecured creditors who are taking a haircut. To put it differently,
if the unsecured creditors are taking a loss, debtor should devote all
disposable income to paying them and should not be allowed to invest in ways
that will not benefit them.
1.
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