Giving Companies A Fighting Chance With DIP Financing

The goal of a Chapter 11 bankruptcy is to reorganize a struggling, cash-poor company—not to liquidate it. But since the owners of these companies generally don’t have the cash on hand for payments and negotiating power, they often find it takes far more time and effort to secure the capital than they expected. The owners of insolvent companies may not be content to give up on their businesses, but they often find they have to put up quite a fight to keep going.

Many businesses filing Chapter 11 would love nothing more than to get funds that allow them to recover from liquidity and debt issues and restructure their company, all while learning from their mistakes and creating a stronger business with the potential to thrive. This is something that General Motors was able to do after it received funding from the U.S. Department of Treasury in 2017.

But GM, as one of the world’s biggest automakers, has power that most companies don’t. So what does a small business owner do when the government isn’t going to step in and help? They look into debtor in possession (DIP) financing, which is a first-priority debt that can be used by an insolvent company to restructure, pay off liabilities, and order needed supplies.

Where to Get DIP Financing

Once they learn about DIP financing, your clients may be relieved, thinking that they finally have a workable solution. But that relief may be short-lived if they try to secure DIP financing from traditional sources such as banks. Traditional lenders are often hesitant to lend to small companies that are admittedly having financial troubles, even if the restructured organization represents a promising investment. A company’s next step may be to look at current shareholders as lenders, but for DIP financing, lenders can’t be company insiders. When turning to alternative lenders, companies need to be careful because the goal of DIP funds must be to help the company—not to buy the company and its assets.

To assist companies filing for Chapter 11 bankruptcy, Pravati Capital now offers DIP financing. With the goal of creating a stronger company, Pravati’s assistance gives your clients a chance to regain their secure financial footing in a compliant way.

Pravati Capital’s DIP Financing Process

Our process for DIP financing approval and funding is fast, easy and secure.

1. A lawyer presents Pravati underwriters with case information for their debtor-in-possession clients.
2. Pravati underwriters review the details of the Chapter 11 filing and the restructuring plans.
3. Once funding is approved, Pravati transfers funds to the trust, which can then use the money to negotiate debt, buy supplies, and implement processes that improve the business.

With terms and contracts designed for each client and loans ranging from $3 to $12 million, Pravati offers lawyers and their bankruptcy clients the capital they need to implement their plan for reorganization. It can help them further litigate, pay off debt, and support their attempts to get new credit lines from suppliers.

To help your clients get the DIP financing they need, give Pravati Capital a call today.

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Partner with Pravati Capital today with DIP financing to help your insolvent company to restructure, pay off liabilities, and order needed supplies.