If Your Company Is In Transition, You Still Have Good, Affordable Options For Financing
Debtor-in-possession (DIP) financing allows a company to secure additional financing for the ongoing operations of the business throughout its Chapter 11 bankruptcy. DIP financing enables a company to continue to pay employees and suppliers while it restructures and stabilizes its business.
CFI works directly with bankruptcy attorneys to streamline the DIP financing process to get clients the funds they need.
To best serve the needs of the debtor-in-possession, an understanding of the DIP financing needs is critical to the success of the restructuring process. Below is a quick guide on what to expect throughout the DIP financing process.
Additional Details Below:
TIP: CFI can be engaged before the filing of a bankruptcy petition so that funding can be available immediately upon court approval at the beginning of a case.
TIP: CFI has an in-house team that is ready, prepared, and has the knowledge to help draft the motion and proposed order allowing CFI to readily provide funding.
TIP: DIP financing can be converted to Exit Financing or CFI can provide exit financing if there was no DIP financing or the client is not satisfied with its existing DIP lender.
In addition, with DIP financing in place, the company has access to capital to work better with its creditors, thus leaving more time to address and correct organizational, financial, and operational issues.
Overall, debtor in possession financing gives the company the ability to remain in possession of the business after the Chapter 11 bankruptcy filing and provides them with the financing, time and resources to reorganize for a fresh start.
Read our case study about a waste company that obtained DIP financing to continue operations.
If your client provides the necessary documents quickly, we’ve been able to provide proposals within a few hours.
A. We need a signed letter of intent (supplied by us, outlining the general terms of the financing), the application, W9, certificate of insurance, customer address list, and current account receivables aging report.
A. The verification process that precedes funding can move very quickly but is dependent on the responsiveness of the bankruptcy client’s customers (also known as account debtors). If CFI receives the information from the account debtors quickly, funding can occur in as little as a few hours.
A. By purchasing the invoices, the client gets funded faster than if they wait for their customers to pay the invoice. This provides a more predictable and steady income stream that the company can use for a court approved cash collateral order (which allows the entity that just filed bankruptcy to spend their cash on hand while in bankruptcy).
A. DIP financing is a term for providing liquidity during the bankruptcy process. The three most common types of DIP financing are: a traditional loan, a line of credit, and factoring.
A. CFI works with a wide array of industries including logistics, manufacturing, oil and gas, staffing, transportation, and waste disposal. Our clients are all business-to-business entities, meaning they invoice other companies (not consumers) for products and services provided.
A. If there is no lien on pre-petition invoices (invoices for work done prior to the bankruptcy filing) we may be willing to purchase them. Certainly, we are willing to purchase post-petition invoices upon court approval and completion of our underwriting and approval process.
A. Yes, CFI can absolutely work with companies filing under these new bankruptcy provisions.
A. CFI is able to help your client at any stage of their bankruptcy journey. That said, CFI is able to help with the fewest complications early on in the bankruptcy. We have had excellent results when we have the opportunity to partner with companies from the earliest stages of this journey, before the bankruptcy case is even filed.
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