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Product ID: 407019EAU
 
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Bankruptcy Section 1111(b)(2) Elections and Cramdown Interest Rate Strategies

OnDemand Webinar (93 minutes)

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.

Authors

Kirk B. Burkley, Esq., Bernstein-Burkley, P.C. Sarah E. Wenrich, Esq., Bernstein-Burkley, P.C.

Agenda

Cram-Down: Interplay Between Sections 506(a) and 1129(b)(2)

• Oversecured Claims as Compared to Undersecured Claims

• Bifurcation of Undersecured Claims Under Section 506(a) - Secured and Unsecured Components

• Treatment of Secured Claims in a Plan Under Section 1129(b)(2)(A)

• Treatment of Unsecured Claims in a Plan Under Section 1129(b)(2)(B)

• Collateral Valuation Issues and Impact on Plan Feasibility

Impact of Electing Treatment Under Section 1111(b)(2)

• No Bifurcation of Undersecured Claims Notwithstanding Section 506(a) - Entire Claim Is Treated as Being Secured (Section 1111(b)(2))

• Treatment of Underecured Claims in a Plan Following Election Under Section 1111(b)(2)

• Risks of Electing Treatment Under Section 1111(b)(2)

Reasons to Elect Treatment as a Fully-Secured Creditor Under Section 1111(b)(2)

Method, Timing, and Exceptions to Elect Treatment Under Section 1111(b)(2)

Interest Rate Issues

• Present Value (Discount Rate) Required by Section 1129(b)(2)(A) for Deferred Cash Payments on Allowed Secured Claims

• Supreme Court's Till Decision - Applicability in Chapter 11 Cases and How It Has Been Applied

• Whether an Efficient Market Exists to Establish the Appropriate Discount Rate, and Strategies If One Does Not Exist

• Evidentiary and Proof Issues to Consider When Seeking to Establish an Appropriate Discount Rate

• Impacts of the Discount Rate Decision on Total Recovery and Plan Feasibility