Griffin Enterprises Group, LLC has experience in arranging the best debtor in possession (DIP) financing for companies operating while in bankruptcy. DIP financing is a special form of financing provided for companies in financial distress or under Chapter 11 bankruptcy process.
Potential applications of DIP financing:
- Bankruptcy financing: voluntary or involuntary bankruptcy
- Plan of reorganization
- Turnaround financing
DIP financing is unique in comparison to other financing methods in that it usually has priority over existing debt, equity and other claims. DIP financing is considered an attractive solution because it is done only under order of the Bankruptcy Court, which is empowered by the Bankruptcy Code. Debtor-in-Possession financing can also provide corporate bankruptcy financing to engage in discussion that will allow the company to enter into a prepackaged bankruptcy plan where the asset-based lender providing the DIP financing supplies the funds to work out a settlement with creditors up front, in order to walk into corporate bankruptcy court with a settlement. In cases where a prepack settlement cannot be reached, DIP financing can provide the cash required to keep the Company in business until a plan or reorganization is approved by the court.
Asset based lending sources provide Debtor-In-Possession financing following the filing of either a voluntary or involuntary corporate bankruptcy proceeding. DIP financing utilizes the same fundamental asset valuation approach to provide the loan as it would utilize for a company not in business bankruptcy accept all funds are released under a court approval.
DIP loans are usually collateral-driven The asset-based lending community is also the best at valuing assets. It is well versed in the bankruptcy process and it offers financially troubled company a friendly environment for restructuring. The best way to improve the chances of a successful exit from bankruptcy or have a plan of reorganization approved is to have an asset-based lender in place at the earliest sign of financial problems.