One of the requirements for confirmation of a Chapter 11 plan over the objection of an impaired, non-accepting class of creditors.
To pass the fair and equitable test regarding a class of secured claims, the plan must provide, among other things, that (1) each holder of a claim in that class retain its lien and (2) each holder of a claim in that class be paid the present value of its secured claim or, if the lender’s collateral is to be sold, that the lender’s lien attach to the sale proceeds.
The plan may also meet the fair and equitable test with respect to a class of secured claims by providing each of the creditors in the class with the “indubitable equivalent” of its claim (see Indubitable Equivalent).
To satisfy the fair and equitable test regarding a class of unsecured claims, a plan must not violate the absolute priority rule (see Absolute Priority Rule).
Bankruptcy Code § 1129(b)(2). See also Absolute Priority Rule, Confirmation Requirements, Cramdown, Cramdown Interest Rate, Indubitable Equivalent.