Debtor-in-possession financing

(redirected from DIP Financing)

Debtor-in-possession financing

New debt obtained by a firm during the Chapter 11 bankruptcy process, Federal Bankruptcy Rule 4001 (c)(1). This financing is unique because it is secured, that is, it has priority over existing debt, equity and other claims.

Debtor-in-Possession Financing

Financing made available to a debtor in possession, which is a company that maintains its operations during a Chapter 11 bankruptcy. A debtor in possession is generally attempting to fulfill its reorganization plan, discharging certain debts and changing any structural weaknesses to put it on a path to profitability. A company often requires financing in order to restructure, and DIP financing enables it to do so.
References in periodicals archive ?
M2 EQUITYBITES-July 17, 2013-Orchard Supply Hardware announces receipt of DIP financing approval for USD177m(C)2013 M2 COMMUNICATIONS http://www.
The DIP financing will only fund the US subsidiary's operations while in Chapter 11.
The DIP financing and cash from the company's ongoing operations will provide Patriot with financial flexibility to operate its business in the ordinary course, including funding post-petition payments to suppliers and meeting other customary business obligations, during the reorganization process.
We are pleased that the court has granted Pinnacle final approval for DIP financing with the support of the unsecured creditors' committee," said Sean Menke, president and CEO of Pinnacle.
Funding for the DIP financing is being provided by Delta Air Lines Inc (NYSE:DAL).
Air Canada on Monday said that following the filing by Aveos Fleet Performance for insolvency protection under the CAA, Air Canada has extended to Aveos CAD15m DIP financing.
Despite the DIP financing, the agency still estimates the company's gross enterprise value for recovery purposes at USD1.
Over the course of the past week we have evaluated several DIP financing proposals from multiple lenders.
Mervyns LLC said that it would use the DIP financing and cash generated from operations to pay vendors and cover operating costs as part of its restructuring plans.
Proceeds of the DIP financing, along with cash generated from daily operations and cash on hand, will be used to fund post-petition operating expenses, such as supplier organizations and employee salaries.
A corporate customer who seemingly has run Out of cash to pay its debts and finance operations, suddenly announces that it has arranged a new credit line with its lender by virtue of filing Chapter 11--the so-called DIP financing or DIP facility.
DIP financing may be used to pay professionals (the debtor's legal and financial advisors, the monitor and its legal advisors and sometimes stake-holder's legal and financial advisors), to provide operating financing to maintain the debtor's business during the restructuring process, sometimes to finance necessary capital expenditures, to pay for the costs of necessary repairs or maintenance of the assets of the debtor and to fund the marketing of all or a portion of the debtor's property.