Cram Down in Bankruptcy Proceedings
February 12, 2025
The news media has been full of claims that the present market is the longest bull market in history. Media reports have claimed that the bull market which began on March 9, 2009, has lasted for close to 3500 days. This Bull Run seems to have surpassed the previous Bull Run which began after the […]
Automobile companies in India have been facing tough competition amongst themselves. Firstly, increasing traffic congestion in the cities is making the millennials shy away from buying cars. Secondly, the number of automobile companies, as well as the models that they produce, are increasing rapidly every day. Hence, registering any kind of growth is difficult in […]
In 2017, a top European Union court has ruled that since Uber’s drivers provide transport services to customers, it should be treated as a transport company. This is against Uber’s stance that it is a technology company. There was good reason that Uber wanted to be seen as a technology company. The biggest reason is […]
Markets across the world can also be segregated based on the type of intermediary. Prima facie, it may appear that the type of intermediary is not of much consequence. However, over time, market participants have realized that the type of intermediaries has a profound effect on the liquidity, efficiency as well as transaction costs related […]
Scalability is considered to be a very important factor in any start-up company. Investors all over the world are highly impressed by scalable business models and prefer investing in the same. However, many people in the start-up community still do not have a clear idea about what scalability is. In this article, we will have […]
As mentioned in the previous article, the financing required by companies in order to keep their operations afloat after filing bankruptcy is known as DIP financing. With regard to DIP financing, there is a standard market for lenders who offer DIP financing. There are investment bankers who specialize in helping clients obtain DIP financing.
However, the task is more complicated than helping debtors obtain regular financing. This is because the lenders know that there are very few options in which borrowers have to raise funds. As a result, they definitely have the upper hand in the negotiations. Hence, the lenders try to get the best deal that they can with the borrowers. However, these deals have to be accepted by the existing lenders as well. If they do not accept the deal, then the negotiations with the borrowers become null and void. As a result, existing lenders often use their clout to get the new borrower to give a better deal.
However, the entire process turns out to be very complicated. This is because, firstly, there are multiple parties involved. Also, secondly, there are various rounds of negotiations in which the details go back and forth several times.
There are various modes of financing which are used to secure DIP financing. The details of some of these modes have been explained in this article.
There are several modes of DIP financing which are used by borrowers and lenders. The details of some of these modes have been written below:
Apart from the above-mentioned modes, there are various unconventional modes which are used in DIP financing as well.
Your email address will not be published. Required fields are marked *