Debtor-in-Possession (DIP) Financing.

Debtor-in-Possession (DIP) financing is a type of corporate debt that is typically used by companies that have filed for bankruptcy protection. The purpose of DIP financing is to provide the company with the working capital it needs to continue operating during the bankruptcy process. DIP financing is typically provided by a group of creditors known as the DIP lenders.

DIP financing is typically structured as a loan that is senior to the company's other debts. This means that the DIP lenders will be repaid before the company's other creditors if the company is unable to repay its debts in full. DIP financing can also be structured as a line of credit, which can be used by the company to cover its operating expenses.

DIP financing is typically used to fund a company's operations during the bankruptcy process. The company's DIP lenders will typically require the company to provide them with financial statements and reports on a regular basis. The DIP lenders will also typically have the right to approve or disapprove of the company's proposed bankruptcy plan.

DIP financing can be a useful tool for companies that are facing financial difficulties. However, it is important to note that DIP financing is not without its risks. If a company is unable to repay its DIP loan, the DIP lenders may take control of the company. Additionally, DIP financing can be expensive, as the company will typically have to pay higher interest rates than it would if it were not in bankruptcy.

What is Intercreditor agreement?

An intercreditor agreement is a contract between two or more creditors that establishes the terms and conditions of their relationship with each other. The agreement typically sets forth the rights and obligations of each creditor, as well as the order in which they will be repaid in the event of a default.

The intercreditor agreement is an important tool for managing risk in a syndicated loan. It helps to ensure that all creditors are on the same page in terms of how the loan will be repaid, and it can help to avoid potential conflicts between creditors.

What is ceding of pari passu charge?

A ceding of pari passu charge is a type of corporate debt where the issuer agrees to pay the holder of the debt an amount equal to the percentage of the debt that is held by the holder. For example, if a company has a $100 debt and the holder of the debt has a ceding of pari passu charge for 10% of the debt, the company would owe the holder $10.

What does pari passu means? Pari passu is a Latin phrase meaning "equal step" or "equal footing". In the context of corporate debt, it typically refers to the treatment of different classes of creditors in the event of a default.

In general, creditors are entitled to be repaid in full before any shareholders receive any payments. However, in some cases, creditors may agree to be repaid on a pari passu basis, which means that they will receive payments in proportion to the amount they are owed, regardless of the seniority of their debt.

Pari passu treatment can be advantageous to creditors because it allows them to share in any upside if the company recovers and makes more money than expected. However, it can also be riskier because they may end up getting paid less than they would have if they had been repaid in full.

Pari passu is often used in the context of convertible debt, which can be converted into equity at the creditor's option. In this case, the creditor may choose to convert their debt into equity if the company is doing well, but if the company is doing poorly, they may still receive payments on a pari passu basis.

Pari passu can also be used in the context of collateralized debt, where different classes of creditors are given different levels of security. In this case, the more junior creditors may only receive payment on a pari passu basis if the more senior creditors are paid in full.

Pari passu is an important concept in corporate finance, and it is important for creditors to understand how it works before agreeing to any terms.

What is Dip status? Dip status is a corporate debt rating issued by Standard & Poor's. Dip status is given to companies that have a high likelihood of defaulting on their debt obligations. This rating is usually given to companies that have missed debt payments or have had their credit ratings downgraded.

What is a debtor in possession facility?

A debtor in possession facility is a type of financing that is available to companies that are in the process of reorganizing their business under Chapter 11 of the U.S. Bankruptcy Code. This type of financing is provided by lenders who are willing to work with companies that are in the midst of a reorganization. Debtor in possession financing can be used to fund a variety of business expenses, including working capital, operating expenses, and the purchase of assets.