Cram Down Rate Calculator

Bankruptcy plan must pay secured claim at Till formula rate — compute present value recovery.

Claim principal

Prime rate %

Risk adjustment %

Plan term years

Market rate for comparable %

Creditor NPV shortfall (vs market rate)

$22,434

Cram down rate

0.11%

Plan monthly payment

$8,430

How the math works

Cram down rate = prime + risk adj. Plan pays at cram down; compare NPV at market rate.

8.5%+2% = 10.5% cram down. $500k/7yr = $8,425/mo. NPV @12% = $449k. Gap to creditor = $51k.

How to Use

Enter claim principal.
Enter prime rate %.
Enter risk adjustment %.
Enter plan term years.
Enter market rate for comparison %.
Read plan payment and NPV gap.

Frequently Asked Questions

What is cram down?

In Chapter 11 and 13 bankruptcy, court can approve a plan over secured creditor's objection if plan pays present value of allowed secured claim at a court-approved interest rate. Till v. SCS Credit (2004): Supreme Court adopted 'formula rate' — prime rate plus risk adjustment (typically 1-3%). Allows debtor to extend loan term and reduce monthly payment while still satisfying creditor's secured claim.

Till formula specifics?

Base: national prime rate at confirmation. Risk adjustment: 1% (low-risk, stable company, high coverage), 2% (average), 3% (high-risk, negative trends). Cannot exceed contract rate. Terms: 5-20 year plan typical. Plan can extend maturity, reduce amortization, change rate — as long as NPV of payments ≥ allowed secured claim. Unsecured claims: no cram down; pay pro rata from available equity.

When does cram down not work?

'1111(b) election' — secured creditor elects to treat entire claim as secured (regardless of collateral value). Then plan must pay full claim amount, though at cram down rate over plan term. Creditor typically elects when collateral might appreciate or plan is abusive. Plan still confirmable but creditor extracts more value than unfair-discrimination cram down.

Typical creditor response?

Object to plan, demand market rate. Challenge collateral valuation. Negotiate consensual plan (cheaper than litigation). Challenge feasibility of plan. Make 1111(b) election if advantageous. Counsel cost: $100-500k for contested confirmation. Most secured creditors negotiate consensual plan rate at or near Till formula — litigation rarely profitable.