Second Circuit Requires Consideration of Efficient Market for Chapter 11 Cramdown Interest Rates

Ruling overturns New York decision rejecting market-based approach.

Key Points:

- Court of Appeals for the Second Circuit requires courts to consider efficient market interest rate, if available, for purposes of chapter 11 “cramdown.”

- Second Circuit decision overturns lower court ruling that used “formula approach” to determine appropriate chapter 11 cramdown interest rate.

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