Strategies to Reduce or Eliminate the Need for Exit Financing

Summary

This practice note discusses strategies for reducing or eliminating the need for new exit financing. This includes (1) allowing the secured lender to retain its liens while making deferred cash payments on the secured debt or (2) reinstating the pre-petition secured debt. These two strategies usually involve a "cramdown" or "crampup" plan. Of course, the debtor can also reach a consensual agreement with the pre-petition lender as to the treatment of the lender's claim.