medium · Corporate Credit Analysis cap-structure

In a 'Double-Dip' financing structure, how does the new creditor enhance their recovery relative to existing unsecured creditors?

1. By receiving a direct guarantee from the parent and a pledged intercompany note from an operating subsidiary.
2. By using a springing covenant that triggers earlier once leverage crosses a lower ratio threshold.
3. By requiring the borrower to maintain a fully funded cash reserve dedicated solely to interest payments.
4. By ensuring their debt is secured by hard collateral, such as real estate and machinery, at the operating level.

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