Get the funding you need for a successful restructuring through DIP financing

DEBTOR-IN-POSSESSION (DIP) FINANCING CAN SIMPLIFY YOUR RESTRUCTURING PROCESS

DIP financing is a tool that can help your business get back on track during a formal restructuring process.

In situations where businesses must either seek bankruptcy protection by filing of a Notice of Intention to Make a Proposal (commonly referred to as “NOI”) under the Canadian Bankruptcy & Insolvency Act or plan a restructuring under the Companies’ Creditors Arrangement Act (CCAA), the choice is often determined by the total existing debt.

In either case, companies can obtain financing through a DIP financing process.

Filing for bankruptcy code protection is an accepted way to turn around a business. Once the bankruptcy case runs its course, all stakeholders benefit from stability at a critical time.

Regardless of your industry or the size of your company, you can successfully restructure your business with DIP financing.

Any company may find itself facing challenges where cost-cutting measures or a new business plan may not be enough to return to profitability and conventional financing is out of reach. A formal restructuring and reorganization process, facilitated by new financing, may be the solution.

Debtor-in-possession financing is similar to asset-based lending and can be used by companies from a wide range of business sectors, including manufacturing, wholesale, import & export, and many others.

Our mission is to simplify your restructuring through a DIP financing process that is suited to your business.

For example, companies often need additional financing while operating under bankruptcy protection. A court can grant a DIP lender, such as Accord Financial, a special priority charge over company assets, allowing it to leverage debtor-in-possession financing during the restructuring process.

Withadditional liquidity during the restructuring process, DIP financing helps ensure that businesses can continue to meet their commitments while they navigate turbulent waters.

We want your restructuring process to succeed. With a team of professionals that has decades of experience in DIP financing, we’ll help guide you through this financing phase.

By choosing Accord Financial as your DIP financing partner, you open the door to a range of financing options. As your company exits bankruptcy, we can continue to work with you and your team, providing financing to help you achieve your next milestone.

Our flexible options, available both as debtor-in-possession financing and as exit financing, include:

Frequently Asked Questions

Debtor-in-possession financing provides liquidity to businesses so they can continue operations while under bankruptcy protection or formal restructuring.

DIP financing is put in place via a court order. The court approves the debtor-in-possession financing and provides the lender with a special DIP finance charge, or security interest, which ranks ahead of other lenders.

DIP financing provides a business with access to a new loan in order to help finance their operations while restructuring under bankruptcy protection.

When it comes to DIP financing, timing is critical.

If your company finds itself in a situation where you need to seek bankruptcy protection in order to restructure and DIP financing is needed, it will be critical to find a lender that has the ability to put a debtor-in-possession financing facility in place very quickly. At such a critical juncture for your business, any delays in executing your turnaround could be a serious risk to your plans.

DIP financing can be very beneficial to your company if you are ready to implement a turnaround and restructuring plan by providing timely access to liquidity at a critical juncture, as your business may have to pay suppliers on a COD basis.

DIP financing may only be practical for larger loan facilities. As DIP financing is a specialized form of financing and not offered by all lenders, you may find the cost of a debtor-in-possession financing to be higher than that of traditional financing.

In order to establish DIP financing, you will need to work with professionals who specialize in insolvency matters. Typically, a lender providing a DIP financing will take these additional costs into consideration and fund them as part of the DIP financing facility.

DIP Financing rates vary from one transaction to the next. Typically, rates for debtor-in-possession financing facilities are based on:

  • the type of assets available as collateral;
  • the level of risk; and
  • the nature of your turnaround and restructuring plan.

Given the complexities associated with DIP Financing and the requirement to obtain court approval, you may expect to pay some additional set-up fees related to the financing arrangement.

Yes, debtor-in-possession financing is often used in the retail industry, as insolvency laws are well suited to helping retailers restructure their businesses. Retailers in Canada often file under the CCAA while leveraging DIP financing in order to restructure.

DIP financing is one of the many financing vehicles specifically tailored to the retail industry.

DIP financing can be complex, and DIP financing facilities often need to be set up quickly, so it is critical that you work with a team that has DIP financing experience.

With 40 years of experience providing DIP financing, and with many of our senior management team involved with the Turnaround Management Association, Accord has the experience and expertise needed to quickly put a DIP financing facility in place. Call us for more information on how to put your DIP financing facility in place at +1-800-967-0015.

Although debtor-in-possession financing is sometimes offered by banks and traditional lenders, the primary sources for DIP financing in Canada are asset-based and other non-traditional lenders.

Accord Financial has extensive experience and expertise in debtor-in-possession financing as well as exit financing. Call us now to learn more about a DIP financing facility for your business at +1-800-967-0015.