One of the methods that bankruptcy courts use to set the cramdown interest rate that a bankruptcy plan must pay to a secured creditor that does not accept the plan. Under this approach, the rate established by the pre-bankruptcy loan documents is presumed to be the appropriate cramdown interest rate. The secured creditor is permitted to rebut the presumptive rate by showing that interest rates or other costs have increased since the making of the contract. The debtor may rebut the presumptive rate by showing that interest rates or costs have decreased.
See also Coerced Loan Approach, Cost of Funds Approach, Cramdown, Cramdown Interest Rate, Forced Loan Approach, Formula Approach, Market Rate Approach, Prime Plus Formula Approach, Treasury Plus Formula Approach.