Debtor in Possession (DIP) Financing

RECENT NEWS  May 4  Comment 
WASHINGTON (dpa-AFX) - Aéropostale, Inc. (AROP), a specialty retailer of casual apparel and accessories, Wednesday said it has commenced voluntary chapter 11 process with commitment for $160 million in DIP financing. The company filed voluntary...
Yahoo  Apr 15  Comment 
SunEdison said it needed about $310 million to stay in business, estimating a cash shortfall of $260 million by mid-June. SunEdison said it expected to secure the financing by pledging assets, including those of its units. Typically, companies...  Mar 17  Comment 
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Reuters  Feb 17  Comment 
OSX Brasil SA, the bankrupt shipbuilding company controlled by former billionaire Eike Batista, is in talks with Cerberus Capital Management LP and a number of unnamed...
Forbes  Jun 13  Comment 
ATP Oil & Gas’ DIP lenders say they have reached an impasse with the company’s management over a budget for, in the first instance, maintaining the company’s operations pending the closing of the DIP lenders’ purchase of ATP’s Gulf of...  Nov 12  Comment 
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Debtor in Possession, or DIP Financing is a kind of debt that is more senior than all other debt - meaning if the lender doesn't have the funds to pay everyone back, the DIP loan is paid back first.

DIP financing is used by companies that are entering bankruptcy to continue operations (ie, to pay employees, cover legal costs, etc.) as they complete the bankruptcy process.


The financing is more senior than other debt because otherwise banks will not otherwise lend to a bankrupt company - ie one that has acknowledged it does not have the funds to pay back all its creditors.

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