The debtor-in-possession (DIP) financing entails a debtor obtaining a loan, usually on a secured basis, from one or more lenders in order to fund its operations throughout the course of its bankruptcy proceedings. This is crucial because the debtor needs access to cash to pay employees, purchase necessary inventory, pay landlords, pay professional fees incurred during the case, and otherwise satisfy ordinary course obligations. The bankruptcy court must authorise the debtor's entry into any unsecured post-petition financing arrangement that is incurred outside of the ordinary course of business and allowable as an administrative expense (see 11 U.S.C. § 364(b)), or any post-petition financing that is secured by assets of the estate (see 11 U.S.C. §§ 364(c)–(d)).

This Practice Note provides counsel with an in-depth discussion and related practical tips with respect to the fundamental aspects and issues related to DIP financing, as follows:

1. •

   Parties to a DIP financing

2. •

   Obtaining credit under section 364 of the Bankruptcy Code

3. •

   Court approval of DIP financing

4. •

   Negotiating