Debtor-In-Possession (DIP) Financing
Debtor-In-Possession – A special form of financing granted to companies in financial distress, usually while these companies are in restructuring under a Chapter 11 bankruptcy.
When approved, the bankruptcy court usually grants a super-priority status to the DIP loan. Which means that the new loan is considered senior to any debt, equity and any other securities in the capital structure. Simply put, the new loan jumps ahead of a company’s existing debts for payment.
But even in the simplest Chapter 11 reorganization, the details can get rather complicated. Stipulations emerge, priorities get entangled, and unforeseen requirements bubble to the forefront.
With many projects that suffer cash-flow challenges, equity may be the best financial product/solution so the debtor is not burdened with monthly interest payments, and the financing can be repaid via a “key event,” such as a sale or refinancing of the asset.
Our capital partners have more than 50 years of collective experience. We provide DIP financing (debt or equity) on real estate assets whose ownership entities are in Chapter 11 BK restructuring. We also provide customized, structured products for any scenario requiring a capital infusion.
Please go to our CONTACT US page if you are interested in securing Debtor In Possession (DIP) financing for properties that are in Chapter 11 Bankruptcy.