Financing Your Business While in Chapter 11 Bankruptcy

DELRAY BEACH, FL / ACCESSWIRE / February 14, 2024 / Reorganizing a struggling business requires thorough consideration of various aspects. Assessing the feasibility of a successful restructuring involves addressing key questions: Can you negotiate better terms with current creditors? Are your employees and management aligned with the plan? What are the prospects for operational and cost-saving improvements? Can you maintain critical customer and supplier relationships? And crucially, can you secure fresh financing?

Chapter 11 bankruptcy provides a framework for financially distressed businesses to reorganize their debt, requiring them to confront operational challenges and plan strategically for future profitability. Access to new financing often becomes vital in this process, yet existing creditors are typically reluctant due to heightened risks associated with bankruptcy. Recognizing this, the courts have established provisions for Debtor-in-Possession (DIP) financing to facilitate reorganization efforts.

DIP financing enables businesses in reorganization to continue generating revenue while safeguarding asset values. This financial support is essential, as without it, many businesses face a daunting path to successful reorganization. The court's approval is necessary for DIP financing, ensuring fairness to both the business and its existing creditors. With proper legal guidance and an experienced DIP lender, businesses can incorporate DIP financing into a pre-packaged Chapter 11 bankruptcy filing, streamlining the process to filing and allowing for swift (often days) access to fresh new working capital.

Businesses with quality, albeit slower-paying receivables are particularly well-suited for DIP financing, as these accounts serve as desirable collateral without adding additional debt.

If you're contemplating Chapter 11 bankruptcy and can address the aforementioned questions but have concerns about financing, Debtor in Possession Financing offers a prudent solution for ensuring consistent working capital and a successful exit from bankruptcy. For more information, contact Marc J. Marin at Gateway Commercial Finance, LLC, a nationwide invoice factoring company with a niche in DIP factoring.

For more information

Marc J. Marin
Gateway Commercial Finance, LLC
Marc.marin@gatewaycfs.com
561-424-2940

SOURCE: Gateway Commercial Finance, LLC