Debtor-in-Possession (DIP) Financing
Improve liquidity, stabilize operations, and keep your business moving forward with CRG Financial’s nimble and creative Debtor-in-Possession financing solutions.
DIP Financing (Debtor-in-Possession Financing)
Debtor-in-Possession Financing is highly specialized funding provided to a company operating under Chapter 11 bankruptcy protection. It serves as the critical capital required for the company (the Debtor-in-Possession) to maintain operations while it restructures.
The Foundation: Super-Priority Security
DIP lending is secure because the Bankruptcy Court grants it unique legal protections:
Super-Priority Status: DIP loans are senior to most, if not all, pre-petition debt claims. This is the key incentive for lenders to provide capital to an otherwise distressed borrower.
Court Approved: All financing terms—including fees, collateral, and usage—must be explicitly approved by the Bankruptcy Court, ensuring judicial oversight and compliance.
Why It’s Essential for Chapter 11
DIP funding is necessary to transform a distressed situation into a viable reorganization:
Operational Lifeline: Provides cash for immediate needs: payroll, vendors, and critical inventory purchases, preventing operational collapse.
Value Preservation: Keeps the business running as a “going concern,” which maximizes asset value compared to a rushed liquidation.
Funding the Process: Pays for the legal, financial, and advisory teams required to formulate and execute a value maximizing Plan.
Certainty and Speed in Commitment
The complexity of Chapter 11 restructuring demands capital partners who operate with urgency and precision. CRG’s Debtor-in-Possession (DIP) financing strategy is not a standard transactional workflow; it is an expedited, solutions-driven process engineered to maximize the probability of a successful emergence.
In a crisis, time is the debtor’s most valuable asset. CRG eliminates the friction and delay inherent in traditional institutional lending.
Rapid, Proprietary Assessment: We bypass lengthy credit committees. Our team rapidly assesses core business viability, asset coverage, and crucial short-term liquidity needs to provide an initial diagnosis, not just a document review.
Immediate Term Sheet Issuance: Based on our focused assessment, we move immediately to issue a commitment-backed term sheet, often within 48 hours. This provides the debtor and the court with certainty of funding at the earliest moment, stabilizing the situation.
Bespoke Structuring for Complex Cases
We don’t rely on off-the-shelf loan documents. The CRG solution is engineered for the unique challenges of the debtor’s estate.
Responsive Capital Solutions: We are responsive to the realities of a live restructuring. Our financings are structured to ensuring the facility remains a constructive tool throughout the case.
Flexible Restructuring Milestones: Instead of punitive, generic covenants, we design customized restructuring milestones. These metrics are practical, achievable, and align directly with the debtor’s approved Plan of Reorganization timeline, providing operational flexibility.
Seamless Court Integration and Deployment
CRG provides expert guidance through the critical legal phases of Chapter 11 to ensure uninterrupted liquidity.
First Day Motion Expertise: Our legal and financial teams have deep experience navigating the First Day Motions and addressing creditor objections, accelerating the path to the Final DIP Order.
Instant Capital Deployment: We ensure capital is available instantly upon the Interim Order. Our process is designed to prevent any lag in liquidity, enabling the debtor to meet critical payroll and vendor obligations without interruption, thereby preserving enterprise value.
Targeted Value-Creation Opportunities
CRG Financial provides critical DIP financing to stabilize operations and fund the restructuring of companies under Chapter 11 bankruptcy protection. Our deployment strategy is asset-focused, targeting situations where our certainty of capital can unlock enterprise value for the debtor’s estate.
Asset-Focused Strategy Across Key Sectors
We prioritize businesses with strong, verifiable assets and a viable path to reorganization. While our approach is asset-centric, we have proven expertise in sectors often requiring complex restructuring.
Sector Expertise: We have experience across key sectors, including Aerospace & Defense (demonstrated by deals like FMI Aerostructures), Retail, Manufacturing, Energy (Oil & Gas), and Healthcare.
Targeted Collateral: We underwrite our financing against a wide range of tangible and intangible assets, including Accounts Receivable, Inventory, Real Estate, Machinery & Equipment, and Intellectual Property.
Complex Scenarios: We specialize in deploying capital into time-sensitive, highly complex restructurings that traditional lenders often avoid, including those involving non-standard collateral or significant operational challenges.
Flexible Structuring and Facility Size
Our capital is structured for maximum utility and deployed through court-approved mechanisms tailored to the debtor’s unique needs.
Financing Structures: We utilize various court-approved facilities, including Super-Priority Term Loans, Interim (Priming) Facilities, and Bridge-to-Exit Facilities designed to transition the company out of bankruptcy.
Facility Size: We target DIP financing facilities typically ranging from $500k to 15M, allowing us to serve a wide spectrum of needs, particularly some that are smaller than would typically garner the attention of traditional lenders.
Deal Spotlight: Preserving Critical Defense Supply Chain
Debtor: Dynamic Aerostructures LLC
Type: Debtor-in-Possession (DIP) Financing
Industry: Aerospace and Defense Manufacturing
Facility Amount: $12.5 million
Purpose: To support ongoing operations during Chapter 11 bankruptcy proceedings and facilitate the company’s asset sale process.
Outcome: Enabled uninterrupted production and supply of critical F-35 components for key customers including Lockheed Martin and Northrop Grumman, culminating in a Section 363 sale to Avem Partners.
"This is really true rescue financing…CRG came forward when others wouldn’t."
Our DIP Financing Process
CRG evaluates the debtor’s liquidity needs, case posture, and proposed use of proceeds to assess overall fit, timing, and feasibility within the bankruptcy framework.
Based on a focused and expedited review of financial information and collateral considerations, CRG structures a proposed DIP facility aligned with the debtor’s assets, liquidity forecast, and anticipated restructuring path.
Upon execution of a term sheet, CRG works closely with the debtor and its advisors to diligence asset value, cash-flow forecast, liquidity needs and anticipated exit path.
Leveraging CRG’s extensive understanding of DIP financing structures and experience with the DIP approval process, CRG works with the debtor to structure a DIP facility that complies with Bankruptcy Code requirements and market-accepted standards, positioning the financing for prompt court approval.
CRG Financial remains a partner, working with the debtor and its professionals throughout reorganization.