March 2017
The "Devil's Dictionary" is a quick-reference guide for commercial lenders and other restructuring professionals. In this series, we highlight many of the buzz words found in the Dictionary and used in today's bankruptcy arena.

EAT DIRT PLAN: A Chapter 11 plan under which a debtor or other plan proponent proposes to transfer some of the lender’s collateral to the lender as payment in full of the lender’s claim, while the debtor keeps the remainder of the lender’s collateral free of any claim by the lender. 
The credit amount is set by the debtor’s plan and approved by the court rather than by the results of an actual sale of the property. This creates the risk that the credit to the lender’s claim will be greater than the value the lender can realize from the property. If the lender objects to this treatment, the plan cannot be confirmed unless the bankruptcy court finds that the debtor’s “dirt for debt” proposal furnishes the lender the “indubitable equivalent” of its claim—a finding that many courts are reluctant to make because of the inherent difficulties in estimating the value of the lender’s collateral.
Bankruptcy Code § 1129(b)(2)(A)(iii). See also Indubitable Equivalent, Reverse Alchemy, Valuation.

"The Devil's Dictionary" is an excellent reference tool that reflects the collective wisdom of its four authors, Brett Anders, Jim Bird, David Ferguson and Dan Flanigan, and digital editor, Christopher Ward, who have a combined total of more than 130 years working in the forefront of real estate and other commercial finance, loan enforcement, financial restructuring and bankruptcy law.