Emory Bankruptcy Developments Journal


Anthony Sexton


Chapter 11 of the Bankruptcy Code allows a debtor to confirm a plan over the objection of impaired creditors. This power, commonly known as 'cramdown,' is constrained by the Fair and Equitable Rule. After enactment of the current Bankruptcy Code, one part of that rule has been a general prohibition against cramming down all-equity plans on prepetition secured creditors. But recent case law'specifically Philadelphia Newspapers'provides an opening to debtors who wish to strip away a secured creditor's lien. This Article demonstrates that such all-equity plans should not be confirmed because valuation uncertainty exposes junior and senior creditors alike to unjustifiable risks that are not present in lien retention plans.