DIP Financing: Structuring Roll-Overs, Cross-Collateralization, Priming Liens, Junior DIP Financing and More

Drafting Provisions That Often Involve Contentious Negotiations and Judicial Scrutiny

Recording of a 90-minute CLE webinar with Q&A


Conducted on Wednesday, September 7, 2016

Recorded event now available

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Program Materials

This CLE webinar will discuss challenging issues in debtor in possession (DIP) financing that are most often the subject of contentious negotiations between DIP lenders and other secured creditors, as well as to intense scrutiny by bankruptcy judges. The program will look at roll-overs, cross-collateralization, priming liens, super-priority claims on avoidance actions, lien waivers, and junior DIP financing. The panel will discuss current case law as well as practicing tips for counsel that represent DIP lenders, other secured lenders and debtors.

Description

DIP financing is often subject to an evolving list of conditions by lenders to limit the risks of post-petition financing. Some of these conditions lead to contentious negotiations between DIP lenders and other secured creditors and are also closely scrutinized by the courts.

Challenging terms include roll-overs, cross-collateralization, priming liens, and super-priority claims on avoidance actions. Pre-petition lenders often seek releases from the debtor regarding the validity, priority and amount of the pre-petition claims as well as a release of defenses. Other terms include carve-outs, liens on avoidance actions, Section 506(c) waivers, and waiver of the automatic stay.

One of the ABI Commission’s proposals for Chapter 11 reform seeks to reduce the level of control secured lenders have in Chapter 11 cases and give more power to debtors and junior creditors. The report also recommends limiting the effect of intercreditor agreement provisions that make it difficult for junior secured creditors to offer competing DIP financing.

Listen as our authoritative panel of bankruptcy practitioners offers guidance on challenging and contentious issues in DIP financing. The panel will discuss roll-overs, cross-collateralization, priming liens, super-priority claims on avoidance actions, lien waivers, and junior DIP financing, take a look at current case law, and provide practicing tips for counsel that represent DIP lenders, other secured lenders and debtors.

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Outline

  1. Rollover of pre-petition secured debt
  2. Priming liens
  3. Cross-collateralization
  4. Liens or super-priority claims on avoidance actions
  5. Releases and waivers of challenges to liens and other future borrowings
  6. Section 506(c) waivers
  7. Junior DIP financing
  8. “Carve-out” for professional fees
  9. ABI Commission recommendations for reforms impacting DIP financing

Benefits

The panel will review these and other key issues:

  • What must counsel consider in evaluating defensive vs. offensive DIP lenders?
  • How does the debtor seeking a priming lien convince the existing lender to consent or alternatively convince the court that the existing lender’s lien is adequately protected?
  • How do bankruptcy courts treat releases of pre-petition secured lenders?
  • What are the ABI Commission’s recommendations for DIP financing reforms and how do the recommendations address junior DIP financing?

Faculty

Anderson, Eric
Eric W. Anderson

Partner
Parker Hudson Rainer & Dobbs

Mr. Anderson concentrates his practice in bankruptcy, workouts, financial restructuring and commercial finance. He...  |  Read More

Lipke, Douglas
Douglas J. Lipke

Shareholder
Vedder Price

Mr. Lipke is Co-Chair of the firm’s Insolvency, Bankruptcy and Corporate Reorganization Group. He concentrates...  |  Read More

Smith, Steven
Steven B. Smith

Of Counsel
Blank Rome

Mr. Smith focuses his practice on complex corporate restructuring and creditors' rights, including in court Chapter...  |  Read More

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