hard · Investment Banking Restructuring (RX), DCM, & ECM
A distressed company in Chapter 11 seeks new debtor-in-possession (DIP) financing structured to prime (rank senior to) the liens securing its existing first-lien term loan, over the first-lien lenders' objection, under 11 U.S.C. S 364(d).
Under what condition may the bankruptcy court approve this priming DIP facility over the first-lien lenders' objection?
- A simple majority of the unsecured creditors' committee approves the priming lien.
- It cannot obtain financing without priming, and primed lenders remain adequately protected.
- The new DIP lender agrees to fund strictly up to the primed lenders' existing borrowing base.
- The primed first-lien lenders instead receive equity warrants in the reorganized company.