Debtor-in-Possession (DIP) Financing
Is your company going through chapter 11 bankruptcy reorganization? We believe the cornerstone of any strong plan for reorganization or re-capitalization is either an out-of-court amicable refinance or DIP (Debtor-in-Possession) Financing. It is in everyone’s best interest to restructure outside the court system. However, it is more important that we are prepared to provide you with financing within the confines of Chapter 11 bankruptcy, if needed. Debtor in possession (DIP) financing can provide the capital liquidity you need to meet business expenses and can help you emerge from the bankruptcy process sooner.
Business Capital value added
“This type of restructuring allows a business to continue to provide reliable, uninterrupted service to its customers and meet obligations to its suppliers. If implemented successfully, Debtor-in-Possession financing can result in a revitalized company with a vastly improved and deleveraged balance sheet.”
– Chuck Doyle
Benefits of a DIP Financing Program
- Decreases risk of delinquent debt
- Provides a platform for growth
- Provides substantial flexibility
- Restore supplier & customer confidence
DIP Financing – Qualification Criteria
We will work with your company to get DIP financing if you meet the following criteria:
- Be a company that is about to file for Chapter 11 (or already in Chapter 11)
- Sell to commercial customers (no retail sales)
- Have minimum yearly sales of $2M
- Have a plan to return to solvency
Due to today’s volatile market, some lenders have become more reluctant to provide capital to companies in bankruptcy. Consequently, the DIP market has shrunk and completing financing is now more complex than ever before. There are many factors that can complicate the cycle: capital structures today often include relatively new market participants, such as hedge funds, distressed debt funds and private equity – often with competing agendas; excessive leverage; and increasing credit risk.
In addition to DIP financing, through our asset based lending programs, Business Capital can also secure commercial financing in the case of a prepackaged business bankruptcy. In this circumstance, Debtor in Possession financing supplies the funds to work out a resolution with creditors up front, so a company can walk into bankruptcy court with a prepackaged settlement. This accelerates and simplifies the process, putting the focus back where it belongs — on the business.
Any Plan of Reorganization (POR) must specify how the debtor intends to pay the creditors and DIP financing is a means toward that end.
At Business Capital, we work closely with attorneys, accountants, bankers and clients to deliver the solutions and support needed to turnaround distressed companies. As one of the top business financing companies, we offer Debtor-in-Possession (DIP) financing as they emerge from Chapter 11. DIP financing can be the key ingredient to move forward a difficult restructuring process by bolstering liquidity as well as helping restore supplier and customer confidence and goodwill toward a troubled company.