Creditor Committees' Objections to DIP Financing


Summary

This practice note discusses objections to debtor in possession financing facilities (DIP) that are usually made by creditors' committees in Chapter 11 bankruptcy cases. DIP financing refers to the loan a debtor obtains, usually on a secured basis, from one or more lenders to fund its operations throughout the course of its bankruptcy proceedings. Notably, the Bankruptcy Code provides DIP lenders with a higher degree of certainty in connection with collateral, perfection, and priority than would typically be the case outside of bankruptcy.