DIP Financing

What this video covers

• The four post-petition DIP credit tiers, from ordinary-course unsecured credit (Tier 1, no approval) up to priming-lien seniority (Tier 4), and why almost all real-world deals sit at Tiers 3 and 4
• Why Tier 4 priming-lien financing requires both a showing that less burdensome credit was unavailable AND adequate protection for the primed lender, not just one or the other
• How DIP loan features differ from ordinary commercial loans: super-priority administrative claims, aggressive liens, tight covenants, milestones, and the DIP budget as hard constraint
• What a roll-up is: the conversion of pre-petition debt into DIP debt that gains super-priority status, and why unsecured creditors fight it
• Why the DIP budget is a hard operational constraint, not a soft forecast, with consequences of lost funding access and acceleration for deviation
• What adequate protection means: compensation for diminution in collateral value through periodic cash payments, replacement liens, or indubitable equivalent, not payment of the full secured claim
• The two-step DIP approval sequence: emergency interim order (day 1-3) versus comprehensive final order (around day 30), and the role of the Unsecured Creditors Committee (UCC) in between