Fall/Winter 1993, Vol 18, No 2

Abstract: This article develops a foundation for determining discount rates in the bancruptcy petition of real estate ventures, surveys current case law and examines the expanded use of alternative approaches to rate determination for coerced loans precipitated by the current lack of debt-capital. The appropriate rate in a cram-down may be constructed by establishing a base rate and adding a rational risk premium. These rates are determined by examining alternative debt instruments. This avoids speculation or hypothetical rates and facilitates the determination of a more accurate, empirically based rate.