When your business enters Chapter 11 bankruptcy, maintaining operations becomes a race against time. Debtor-in-Possession (DIP) financing provides critical capital to continue operations, pay employees, and execute successful reorganization plans. At Capital Direct Funding, we specialize in DIP financing solutions that work within California's complex regulatory environment.
Current Market Conditions
Premium Pricing Reflects Risk
DIP financing rates currently exceed 15%, with total costs including fees reaching 20%. This premium reflects the inherent uncertainty of businesses in bankruptcy and the specialized expertise required.
Stringent Qualification Standards
Recent federal law changes have tightened bankruptcy eligibility criteria, creating a more selective borrower pool. We've adapted our underwriting to identify the highest-quality candidates within this refined market.
Capital Direct Funding's DIP Expertise
California Specialization
We understand the intersection of federal bankruptcy law and California's unique state-level protections, ensuring our financing structures comply with both jurisdictions.
Rapid Response Capability
Bankruptcy timelines don't accommodate lengthy approval processes. Our specialized team can evaluate DIP opportunities and provide term sheets quickly when businesses face critical deadlines.
Court-Approved Experience
We have extensive experience presenting financing proposals to bankruptcy courts and working with trustees, creditor committees, and other stakeholders in the bankruptcy process.
DIP Financing Requirements
Court Approval Mandatory: Every DIP loan requires bankruptcy court approval, making lenders active participants in the judicial process. We understand court requirements and can structure loans that meet judicial standards.
Priority Security Position: DIP lenders typically receive first-priority liens on virtually all debtor assets. Our experience in structuring these comprehensive security packages protects our interests while preserving business operations.
Credible Reorganization Plans: Businesses must demonstrate viable paths to profitability and loan repayment. We work with management teams to evaluate and strengthen reorganization strategies before committing capital.
Case Study Success
A regional retail chain successfully secured $10 million in DIP financing through our services to stabilize operations during Chapter 11 proceedings. Our financing enabled them to:
- Maintain workforce and preserve customer relationships
- Fund inventory for peak season operations
- Execute store optimization and lease renegotiation strategies
- Complete successful reorganization and emerge from bankruptcy
This exemplifies how properly structured DIP financing preserves business value rather than merely postponing liquidation.
Our Comprehensive Approach
Enhanced Due Diligence
Our comprehensive due diligence examines financial statements, customer contracts, intellectual property, and employee agreements to ensure loan viability.
Professional Team
oordination We collaborate closely with bankruptcy attorneys, financial advisors, and turnaround professionals to ensure financing supports overall reorganization strategy.
Regulatory Compliance
We maintain expertise in Federal Rules of Bankruptcy Procedure and California state-specific requirements to protect our interests and ensure enforceability.
Beyond Capital: Strategic Value
Market Knowledge
Our experience in California bankruptcy cases provides valuable insights into local court practices, trustee preferences, and successful reorganization strategies.
Network Access
We connect clients with qualified professionals including bankruptcy attorneys, financial advisors, and industry specialists.
Exit Strategy Planning
We help businesses plan for post-bankruptcy financing needs, ensuring smooth transitions from DIP financing to traditional credit facilities.
Qualification Process
- Initial Assessment: Rapid evaluation of business viability, asset base, and reorganization prospects
- Due Diligence: Comprehensive analysis of financial position, market conditions, and restructuring strategy
- Court Presentation: Professional presentation of financing proposal to bankruptcy court with supporting documentation
- Ongoing Monitoring: Active involvement throughout the bankruptcy case to protect our interests and support successful outcomes
The California bankruptcy market's increased complexity creates opportunities for businesses with proper professional guidance and appropriate financing. DIP financing isn't just crisis funding—it's strategic capital that enables successful reorganizations and business preservation.
Need DIP financing for your Chapter 11 case? Contact Capital Direct Funding