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Debtor In Possession (DIP)


Debtor In Possession (DIP) © 2009 Hermes Capital Partners, LLC All rights reserved

The cornerstone of any strong plan for reorganization is DIP (Debtor-In-Possession) financing. Hermes Capital Partners is an experienced financial advisor to companies in distress, in pre-bankruptcy or bankruptcy.

Hermes CP can develop a financing plan that meets a company's operating financing needs in pre-bankruptcy, in-bankruptcy or in exit-bankruptcy. Hermes CP reviews the causes and elements of the client's bankruptcy situation to devise a specific plan to address these problems.

Bankruptcy is a very complicated process that may be voluntary or involuntary, friendly or unfriendly. A voluntary bankruptcy occurs when the borrower concludes that it can't pay all its creditors and initiates the filing process. An involuntary bankruptcy occurs when unsecured creditors get together and petition the court in an effort to protect their interests. If a distressed borrower can't meet its obligations despite doing everything in its power, and its lender refuses to provide more capital, the borrower has limited alternatives. It either can file voluntarily to protect itself or wait for the lender to begin foreclosure, a decidedly unfriendly situation.

There are a myriad of reasons why companies file for bankruptcy protection. Excessive debt, lack of liquidity, fraud, mismanagement, and unforeseen catastrophe are just a few. A company also may use bankruptcy as a strategy to fend off massive litigation or to eliminate burdensome contractual obligations.

Potential DIP Applications:

- Bankruptcy Financing: Voluntary or Involuntary Bankruptcy
- Reorganization Plan
- Restructuring
- Turnaround Financing
© 2011 Hermes Capital Partners, LLC All rights reserved

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