A company in the midst of a restructuring process often requires access to incremental liquidity to bridge to a transaction. If such transaction is implemented through a Chapter 11 filing, the bankruptcy code provides the company with the ability to obtain post-petition financing in the form of a debtor-in-possession (“DIP”) loan. These loans typically benefit from a super-priority lien that is senior to all of the debtor’s pre-petition liens. In addition to lien priority, DIP lenders are often given material influence over the case through case milestones, financial covenants and various other provisions that may influence the direction of the debtor’s case.
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