Debtor-in-Possession Financing Support

Debtor-in-Possession Financing Support

Debtor-in-Possession Financing (DIP Financing) is a special tool for companies undergoing bankruptcy proceedings under Chapter 11 of the U.S. Bankruptcy Code. This is a critical mechanism that allows a business to maintain operational activities, attract new financing, and ensure debt restructuring.

Our team provides a full range of services for supporting and facilitating DIP financing. We work with both debtors and potential creditors, ensuring compliance with all legal requirements and court procedures.

What is Included in the Legal Support Service for DIP Financing

• Assessment of the Legitimacy of DIP Financing: analysis of the debtor’s situation, financial statements, assets, and debt structure.
• Preparation and Support of Court Filings: drafting motions for financing approval, coordinating the priority order of debts.
• Legal Support for Creditor Negotiations: assistance in defining loan terms, ensuring legal protection of the debtor’s interests.
• Monitoring Compliance with DIP Loan Terms: oversight of court orders and financial conditions, reporting to the court.

Why It’s Important to Involve a Lawyer When Obtaining DIP Financing

Debtor-in-Possession Financing is one of the most court-sensitive aspects of bankruptcy proceedings. A legal error or insufficient justification of terms may lead to the court rejecting the financing or other creditors challenging it.

Bankruptcy Trustee:

• Ensures the legality and validity of documentation.
• Helps avoid conflicts of interest with existing creditors.
• Guarantees compliance with court-defined timelines and procedures.
• Represents the debtor in court hearings and negotiations.

When and Under What Conditions the Service Can Be Provided

Legal support for DIP financing is possible if:

• The company has filed for bankruptcy under Chapter 11.
• There is a potential investor or lender willing to provide loan funds.
• The company has an operational business that needs to be preserved during restructuring.
• The court has not yet made a final decision on liquidation or asset sale.

How the Bankruptcy Trustee Works at Each Stage

• Preliminary Case Audit: analysis of financial indicators, corporate structure, and debt history.
• Legal Structuring of the Agreement: defining DIP loan terms that comply with Section 364 of the Bankruptcy Code.
• Court Representation: preparing and filing necessary documents, participating in hearings, facilitating court approval of financing.
• Compliance Monitoring: legal oversight of fund distribution, interaction with the creditors’ committee and financial advisors.