Issue link: https://mbozikis.ufcontent.com/i/1422521
173 be in a Chapter 11 case, it also implied in dicta that a market approach might make sense in the Chapter 11 context. Id. at 477 n.14. The Second Circuit, adopting the Sixth Circuit's two-step approach (see In re American HomePatient, Inc., 420 F.3d 559, 568 (6th Cir. 2005)), has held that a bankruptcy court should first determine whether there is an efficient market for Chapter 11 cramdown lenders, and only if such a market exists, apply the risk-adjusted market rate described in Till. See Matter of MPM Silicones, L.L.C., 874 F.3d 787, 800 (2d Cir. 2017) (noting that courts have determined markets for financing to be efficient where, for example "they offer a loan with a term, size, and collateral comparable to the forced loan contemplated under the cramdown plan."). On the other hand, if no such efficient market exists, the Second Circuit held that the proper rate should be determined using the "formula approach" endorsed by the Till plurality (i.e., the risk- free rate plus a premium for the risk of nonpayment). Id. at 800. Gifting "Gifting" is the process by which a senior class of creditors allocates some of the value to which it would otherwise be entitled under a plan to a junior class, bypassing intermediate classes, without any additional value being contributed by such recipient junior class. Such action, which is commonly done in order to avoid disruption to the administration of the estate or a contentious plan confirmation process, is oftentimes challenged by the bypassed class(es) as a violation of the fair and equitable requirement. 95 As a counter to this argument, proponents of gifting argue that the absolute priority rule is not being violated as the value being received by the junior class is not a distribution from the debtor, but instead is a "gift" from the senior class out of the value received by it under the plan, thereby taking it outside the 95 See Chapter VI.G.2.a above.