Alerts

Second Circuit Affirms Designation of Secured Lender’s Vote and Effective Cram Down of Its Claim

December 17, 2010

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. In re DBSD North America, Inc., __ F.3d__, 2010 WL 4925878 (2d Cir. Dec. 6, 2010). As a result, the lender who bought all of the debtor’s senior first-lien secured debt at par will be paid only interest over a period of four years before its loan matures. See In re DBSD North America, Inc., 419 B.R. 179, 207-08 (Bankr. S.D.N.Y. 2009) (confirming debtor’s proposed plan). According to the Second Circuit, an “opinion” explaining its reasoning “will follow in due course.”