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Bankruptcy Section 1111(b)(2) Elections and Cramdown Interest Rate Strategies

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.

93 minutes
Course Exam
Certificate of Completion
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Over 34 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

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
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Why Lorman?

Over 34 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Credits

MP3 Download

  • Arizona CLE 1.5
     
  • CA MCLE 1.5
     
  • CT CLE 1.5
     
  • HI CLE 1.5
     
  • NJ CLE 1.8
     
  • VT CLE 1.5
     
  • WV MCLE 1.8
     
The CLE Code is ONLY a requirement when applying for CLE Credit in California (for participatory credit), Kansas, New Jersey or New York. Other states do not need to supply the CLE Code to apply for CLE credit.

This program does NOT qualify, nor meet the National Standard for NASBA accreditation.

OnDemand Course

Applications have not yet been submitted for Delaware, Idaho, Kentucky, Maine, Ohio, Oklahoma, South Carolina, and Wyoming CLE for this course. However, if you are interested in obtaining CLE for any of the listed states or have any additional credit questions please email us at [email protected] or call us at 866-352-9540.

This course was last revised on May 10, 2021.

Call 1-866-352-9540 for further credit information.

  • AK CLE 1.5
     
  • Alaska attorneys may receive 1.5 hours of continuing legal education for completing this program. Please contact the Alaska Bar Association or go to www.alaskabar.org for details regarding reciprocity with other states.
     
  • AL CLE 1.6
     
  • This course or a portion thereof has been approved by the Alabama State Mandatory Continuing Legal Education Commission for a maximum of 1.6 hours credit.
     
  • AR CLE 1.5
     
  • This course has been approved for 1.5 hours of CLE by the Arkansas CLE Board.
     
  • Arizona CLE 1.5
     
  • The Arizona State Bar does not pre-approve or pre-certify MCLE programs. However, records of this program and attendance will be maintained by Lorman Education Services for auditing purposes. This activity may qualify for up to 1.5 hours toward your annual CLE requirement for the State Bar of Arizona.
     
  • CA MCLE 1.5
     
  • Lorman Business Center, LLC. is a State Bar of California approved MCLE sponsor and this course qualifies for 1.5 CLE hours of participatory credit.
     
  • CT CLE 1.5
     
  • Neither the Connecticut Judicial Branch nor the Commission on Minimum Continuing Legal Education approve or accredit CLE providers or activities. This course has been approved for CLE credit in jurisdictions aside from CT and therefore it automatically meets the content and delivery requirements in Connecticut. Credit is based on a 60 minute credit hour and shall be awarded as follows: 1.5 CLE credit(s).
     
  • HI CLE 1.5
     
  • This program was approved by the Hawaii State Board of Continuing Legal Education for 1.5 CLE credit hours.
     
  • IL CLE 1.5
     
  • This course was approved for a total of 1.5 hours of MCLE Credit by the Illinois MCLE Board.
     
  • ND CLE 1.5
     
  • North Dakota CLE policy does not allow for pre-approval of any self-study courses. This course may qualify for up to 1.5 hours of CLE credit.
     
  • NH MCLE 1.6
     
  • NH MCLE does not approve or accredit CLE activities for the NH Minimum CLE requirement. Lorman Education Services believes this Ondemand course meets the requirement of NH Supreme Court Rule 53 and may qualify for CLE credit(s). Program Length: 93 Minutes.
     
  • NJ CLE 1.8
     
  • This program has been approved by the Board on Continuing Legal Education of the Supreme Court of New Jersey for 1.8 hours of total CLE credit.
     
  • PA CLE 1.5
     
  • This Distance Learning program has been approved by the Pennsylvania Continuing Legal Education Board for 1.5 hours of substantive law, practice and procedure CLE credit.
     
  • RI CLE 1.5
     
  • This program has been approved by the Rhode Island Mandatory Continuing Legal Education Commission for 1.5 hours of CLE credit.
     
  • VT CLE 1.5
     
  • This self-study program has been approved by the Mandatory Continuing Legal Education Board of Vermont for 1.5 hour(s) of CLE credit. Please note: Attorneys may only claim 6 credits per compliance period in this format. This course is considered "Non-Moderated Programming without Interactivity".
     
  • WI CLE 1.5
     
  • This program qualifies for 1.5 hour(s) of ondemand CLE through the WI Board of Bar Examiners.
     
  • WV MCLE 1.8
     
  • This program has been approved by the West Virginia State Bar MCLE Commission for 1.8 MCLE hours.
     

To earn each credit Lorman offers through the OnDemand learning platform, you need to watch 100% of the program. Also, for certain credits you will need to fulfill additional requirements which will be displayed on the "credits" tab when viewing the course.

This program does NOT qualify, nor meet the National Standard for NASBA accreditation.

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Why Lorman?

Over 34 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Faculty

Kirk B. Burkley, Esq.

Kirk B. Burkley, Esq.

Bernstein-Burkley, P.C.

  • Managing Partner of Bernstein-Burkley, P.C.
  • Practice emphasizes all aspects of bankruptcy and restructuring, creditors’ rights, business and corporate transactions, litigation, real estate, and oil and gas
  • Conducts regular seminars/live webinars and workshops on bankruptcy, creditors’ rights, and oil and gas
  • Author of several publications related to bankruptcy field, with work appearing in ABI Journal, Equipment Leasing Newsletter, Pennsylvania Association of Credit Managers Newsletter The Creditor, and more
  • President of the American Board of Certification (2020), past president of Turnaround Management Association, member of Allegheny County Bar Association, American Bankruptcy Institute
  • J.D. degree, University of Pittsburgh School of Law; B.S. degree, Ohio University
  • Can be contacted at 412-456-8108 or [email protected]
Sarah E. Wenrich, Esq.

Sarah E. Wenrich, Esq.

Bernstein-Burkley, P.C.

  • Bankruptcy & restructuring associate at Bernstein-Burkley, P.C.
  • Practice focuses on commercial bankruptcy
  • Served as an extern for the Honorable Kevin R. Huennekens of the United States Bankruptcy Court for the Eastern District of Virginia, where she gained significant exposure to complex bankruptcy cases and issues, and had the opportunity to assist in drafting and editing opinions
  • J.D. degree, cum laude, University of Richmond; B.A. degree, cum laude, University of Pittsburgh
  • Contact 412-456-8106 or [email protected]
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Why Lorman?

Over 34 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

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Product ID: 407019
Published 2021
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