Cram Down

Feature of the bankruptcy law that allows a debtor to force confirmation of a plan over the objections of dissenting classes if certain tests are met. When junior classes impose a cram-down on a senior class, the term cram-up is used.

In Bankruptcy, the reduction of various classes of Debt to a lower amount, with acceptance by the bankruptcy court. For real estate assets, the loan may be reduced (crammed down) to the property value.

In Bankruptcy the reduction of various classes of Debt to a lower amount, with acceptance by the bankruptcy court.
Example: The bankruptcy judge considered the $100,000 property value that was encumbered by a $90,000 first mortgage and $25,000 unsecured debt. He allowed $90,000 to the first mortgage holders, and crammed down the $25,000 unsecured debt to $10,000.