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Abstract: 

In recent years, distressed companies and lenders have been more creative in how they structure post-petition financing arrangements. With companies struggling during the pandemic that until recently had no end in sight, access to traditional debtor-in possession (“DIP”) financing has proven to force existing lenders to treat post-petition financing as more of a long game. In this article, the author discusses how distressed companies and institutional lenders have explored alternative financing avenues; specifically, this article discusses the advantages and disadvantages of four recent exemplar case studies, two of which involved a debtor’s use of cash collateral in lieu of entering into a post-petition financing facility, one of which involved a “hybrid” financing facility, and one of which involved the sale of stock to raise cash.

Keywords: Consensual Use of Cash Collateral; Secured Loans in Lieu of DIP Financing; Sale of Existing but Unissued Shares During Bankrutpcy

Affiliations:  1: McDermott Will & Emery LLP.