DIP Financing Support (Debtor-in-Possession Financing) - How to Preserve Business During Chapter 11
DIP financing is a tool that provides a company with essential funding during bankruptcy. It enables paying employees, maintaining supply chains, and continuing operations while restructuring is underway.
What We Do: Full-Cycle DIP Financing Support
- Analysis and solution preparation. Rapid audit of finances, assets, and debt structure; assessment of DIP loan feasibility.
- Legal transaction packaging. Preparation of motions and all procedural documentation for the court (Section 364), justification for financing needs and proposed priority status.
- Negotiations with creditors and investors. We negotiate terms and establish protective mechanisms against challenges from other creditors.
- Court representation. We represent the debtor's interests in hearings, seek approval of financing, and coordinate priority arrangements.
- Execution monitoring. We ensure funds are used appropriately and maintain reporting to the court and creditors' committee.
Why Is It Risky Without an Attorney?
DIP financing receives heightened scrutiny from the court and creditors. Errors in documentation, conflicts of interest, or poorly defined priorities can lead to application rejection or litigation. Professional legal support:
- protects against challenges to financing terms;
- eliminates conflicts with existing creditors;
- ensures compliance with court requirements and deadlines;
- maintains transparency in fund distribution and reporting.
Role of the Attorney/Bankruptcy Trustee - Key Responsibilities
- Conducts preliminary audit and structures the legal framework of the transaction.
- Designs loan terms in compliance with §364 of the Bankruptcy Code.
- Prepares and files motions, participates in hearings, coordinates with creditors' committee.
- Implements monitoring and control systems for fund usage after approval.
When Is This Applicable?
This service is relevant when:
- company has already filed for Chapter 11;
- there's genuine operational need for financing;
- potential lender or investor is identified;
- assets and business have recovery potential;
- liquidation process hasn't commenced.
What You'll Achieve
- legally sound DIP loan structure;
- court-approved financing with minimal challenge risk;
- transparent control and reporting mechanisms;
- opportunity to preserve business, jobs, and ensure successful restructuring.
SummaryDIP financing is not just a loan but a survival and restart tool during Chapter 11 proceedings. With legal support, it becomes secure: court approves the deal, creditors cannot challenge priorities, and funds are strictly allocated to business maintenance. The company gains time, liquidity, and opportunity to complete restructuring without operational shutdown.
