The U.S. Court of Appeals for the Second Circuit, on Dec. 6, 2010, summarily affirmed a bankruptcy court's designation of a secured lender's vote on a reorganization plan in a two-page order, effectively enabling the debtor to cram down the lender's claim.
Second Circuit Affirms Designation of Secured Lender's Vote and Effective Cram Down
The Second Circuit's ruling in <i>In re DBSD North America, Inc., </i> is important to would-be acquirers of Chapter 11 debtors. A lender's so-called "loan to own" strategy may still be valid, but acquirers cannot overreach. Consistent with other decisions, <i>DBSD</i> means that a competitor's manipulating the reorganization process to block a reorganization or to destroy the debtor's business will not work.
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