Companies going through Chapter 11 bankruptcy often need creative and flexible financing solutions to manage their operations during this process. At Loeb Equipment, we work with you and your business to deliver debtor in possession (DIP) financing options that suit your needs.
Loeb specializes in providing innovative and practical solutions that allow companies to acquire new equipment and to leverage their current equipment to ensure the best financial situation for their current and future operations. We offer DIP financing for equipment that can help businesses and stakeholders to navigate financial difficulties and bankruptcy proceedings much more effectively.
If you are currently assisting or guiding a company through Chapter 7 or Chapter 11 bankruptcy, Loeb’s financing options can provide added flexibility in managing the needs of the business in your care and in planning for the future success of these operations.
What Is Debtor in Possession Finance?
Debtor-in-possession financing is generally put into place when companies are undergoing bankruptcy or undergoing restructuring of corporate finances. Debtor in possession arrangements allow companies to continue to use their equipment and other assets while navigating the bankruptcy or reorganization process.
What is debtor in possession financing in more detail? In general, a debtor in possession is defined as an individual or a business that has filed for the protections of Chapter 11 bankruptcy but that still holds possession of property that may be subject to liens or legal claims. By retaining possession of this property and using it in daily operations, the debtor in possession can continue to generate revenues for the business. Detailed and accurate financial records must be kept by these individuals or companies during the bankruptcy or restructuring process.
What is the difference between debtor in possession vs trustee arrangements? Depending on the structure of the bankruptcy proceedings, a trustee may be assigned to monitor and manage the use of assets for the company or individual. In most cases, however, the company’s own representatives and leaders are responsible for managing the functions of a bankruptcy trustee. Although the debtor in possession is not a trustee, these individuals or corporations typically are held to the same high standards of financial precision and recordkeeping.
How Does Debtor in Possession Financing Work?
One of the most important reasons to consider DIP financing is the flexibility these arrangements allow for continuing business operations during bankruptcy or corporate restructuring. For example, a company that manufactures items for the business-to-business marketplace may experience downturns because of lower demand or upheavals in the general economy. Even though manufacturing is consistently a bright spot in the economic landscape, the company may need to file for bankruptcy protections to prevent a forced liquidation of their assets. DIP finance arrangements can allow this company to continue to use its manufacturing equipment to generate revenues while working their way through Chapter 7 or Chapter 11 bankruptcy proceedings and the reorganization that typically accompanies this process.
What Is Debtor in Possession for Equipment?
The previous example illustrates the value of retaining equipment for use in generating revenues during a corporate bankruptcy. In general, debtor-in-possession financing for equipment allows companies to leverage the value of used equipment and then to lease that equipment back from the purchasing company. By taking advantage of these equipment leasebacks, companies and individuals can often acquire sufficient funds to continue their operations and even to recover from their financial difficulties and to emerge from bankruptcy in a better situation.
Because DIP arrangements for equipment are typically secured loans, they require accurate valuation of the used machinery to protect the lender against default. Loeb offers appraisals that can streamline the process of qualifying for and receiving DIP loan arrangements. Some of the most important points to keep in mind when considering debtor in possession arrangements include the following:
- You must have used machinery in functioning condition to serve as collateral for DIP loans.
- Loeb’s DIP arrangements are for Chapter 7 or Chapter 11 bankruptcies only and are not available for Chapter 13 bankruptcy
- Loeb’s financing solutions are designed to provide cash on hand for distressed companies that can allow them to operate through their bankruptcies.
- Loan amounts for DIP financing through Loeb range up to $1 million for first liens on equipment. This is significantly more than most debtor in possession financing companies can offer.
- Loeb establishes a preferential lien that ensures an increased chance of success in applying for these exit financing options.
- Because the appraisals necessary for these machinery debtor-in-possession lending arrangements can be performed by Loeb professionals, the process can take less time and require less stress for companies and for brokers who locate these types of arrangements on behalf of struggling companies.
- The debtor in possession arrangements available from Loeb can reduce paperwork and streamline these alternative financing options.
If you are an equipment loan broker or bankruptcy trustee, Loeb’s financing options for debtor-in-possession for equipment can provide valuable flexibility for distressed business. These alternative lending solutions allow companies to leverage their used equipment assets and can provide exit financing to allow Chapter 11 debtors to emerge from bankruptcy in a better financial situation.
Why Consider Equipment or Machinery Debtor-in-possession Financing?
Debtor-in-possession financing for machinery and equipment offers some real benefits for businesses looking for bankruptcy loans. DIP financing for equipment can provide cash on hand for companies that have few other options in the money marketplace. For brokers and bankers, debtor-in-possession financing for machinery arrangements from Loeb can provide added flexibility. If you are looking for debtor in possession options that make sense for the individuals and companies you serve, Loeb can deliver flexible options to finance equipment for debtor-in-possession arrangements.
The DIP Loan Process
Exit financing solutions from Loeb typically take about three to four weeks to complete. It is usually preferable to arrange for debtor-in-possession financing for machinery during the bankruptcy process so that liens can be cleared and restructuring can be accomplished more easily. Loeb’s debtor in possession financing options are specifically designed to provide the right financial support for companies going through bankruptcy proceedings.
Obtaining DIP financing for equipment from Loeb generally requires the following steps:
- Requesting financing from the Loeb team (2 hour response from Loeb)
- Submitting required documentation and information on collateral
- Performing appraisals and lien reconciliation to protect the interests of all parties
- Establishing landlord and access agreements to allow Loeb to protect its investment
- Signing the contract and disbursing the funds
- Staying in contact to ensure the best outcomes
- Emerging from bankruptcy in a significantly improved financial position
DIP financing for equipment can be a practical tool for companies going through bankruptcy and for those tasked with finding bankruptcy loans and other solutions. Loeb works with trustees and brokers to provide the DIP loans necessary to navigate this time period more successfully.
How Bankruptcy Works
Most bankruptcies are filed under Chapter 7, 11 or 13 provisions. The Chapter 11 bankruptcy process involves a few key steps:
- A chief restructuring officer (CRO) or trustee will be responsible for running the company and managing day-to-day expenditures and other operational activities. In some cases, the CRO or trustee will be able to help the company to avoid bankruptcy or to emerge from the process in a better financial position.
- Legal counsel will be required in most cases to seek bankruptcy protections.
- A DIP finance plan will be presented to the bankruptcy court for its approval.
- An exit plan that may include bankruptcy loans, exit financing, debtor-in-possession loans and other financial arrangements will also be submitted to the court for final approval.
- Once it has been approved, the plan will be executed on behalf of the company and its stakeholders.
Chapter 7 bankruptcies follow a somewhat different pattern:
- Most Chapter 7 proceedings require the liquidation of the assets belonging to the individual or company. The funds realized from these sales can be used to pay off debts of the company.
- At the end of the process, the company has usually been dissolved and its debts paid in part by the sale of assets.
- Liquidations are also a common part of the process for finalizing Chapter 7 bankruptcies.
At Loeb, we can assist with liquidations for Chapter 7 bankruptcy proceedings and with DIP financing for equipment for Chapter 11 bankruptcies. Chapter 13 bankruptcy proceedings, also known as installment plan or wage earners’ bankruptcies, require regular payments by debtors to their creditors. Loeb does not provide assistance to individuals or companies in dealing with these types of Chapter 13 bankruptcy proceedings.
DIP Geographical Areas
Loeb offers practical financing solutions for equipment for debtor-in-possession arrangements. Unlike some other debtor in possession financing companies, we serve all of North America and operate in select locations around the globe. Our focus on customer service allows us to provide the debtor-in-possession loan options brokers and bankers need to navigate the world of DIP finance and bankruptcy loans.
DIP Loan Amounts
As one of the leading debtor in possession financing companies for asset-based loans, Loeb can offer equipment loans that range from $500,000 to $20 million. The actual amount of the debtor-in-possession loan will vary depending on the value of the collateral.
How Do I Apply for Machinery Debtor-in-possession Financing?
Loeb makes it easy and convenient to apply for used equipment loans through our company. We offer a pre-qualification questionnaire for debtor-in-possession financing for equipment, which allows borrowers to provide all the necessary information for initial eligibility quickly and without significant stress.
It usually takes between three to five weeks for approval for DIP loans from Loeb. The actual length of time needed will vary depending on the accuracy and completeness of the information provided. We will also need to look at the liens currently on the collateral. This allows Loeb to determine general eligibility for a DIP loan and to offer the highest possible dollar amount for these bankruptcy loans.
An appraisal of the equipment for debtor-in-possession arrangements will also be performed by Loeb’s experienced and knowledgeable staff. Once the loan has been approved and disbursed, annual inspections will be necessary to check the current condition of the machinery for debtor-in-possession arrangements. In some cases, the borrower will be required to pay the principal difference between the outstanding balance and the depreciated value of the equipment to keep the loan in good standing with Loeb.
The final documents will be delivered to the broker, CRO or borrower at the time of execution. Loeb will stay in close contact with all stakeholders to make sure that the terms and the timeframe of the DIP loan are clear and understood.
Who Can Quality for DIP Financing from Loeb?
Qualifying for debtor-in-possession equipment loans from Loeb is relatively straightforward. In general, any borrower with equity in their existing equipment can leverage that equity to qualify for DIP finance arrangements. Our DIP loans are asset-based alternative financing options for businesses that do not meet bank criteria for traditional loans. By working with Loeb’s team of alternative lending specialists, brokers, trustees, CROs and bankers can present the best options for debtor-in-possession loans to their customers.
What Are the Advantages of DIP Financing with Loeb?
Loeb’s more than 142 years of experience in the equipment and machinery business has allowed our team to create the most flexible and practical solutions for our customers. We work with borrowers to create customized options that work for their needs and their unique financial situations. Some of the most important benefits of our debtor-in-possession loans include the following:
- Fewer covenants and restrictions: Covenants are restrictive terms in loan contracts that can affect the potential uses of the machinery for debtor-in-possession arrangements. Loeb minimizes the restrictions on use to ensure that equipment can be used in the most practical ways to generate revenues.
- Faster decisions: Loeb also offers faster approvals than most other debtor in possession financing companies. This can put funds into the hands of companies much more quickly to help them navigate the DIP finance process.
- More flexible terms: Because Loeb offers customized solutions for debtor-in-possession financing for equipment, we can offer terms tailored to the specific needs of our customers.
- Experience: Loeb has been serving the needs of manufacturers and businesses since 1880. With five generations of growth, Loeb can provide the debtor-in-possession loan options needed to keep businesses operating through bankruptcy.
- Less paperwork and documentation: As a leader among debtor in possession financing companies, Loeb can streamline the documentation and paperwork needed to complete these loans.
- Cash on hand to manage DIP requirements: By taking out a DIP line of credit from Loeb, companies can manage their budgetary requirements to emerge from bankruptcy on a better financial footing. This can provide the funding needed to pay landlords, insurance companies and to operate the business during bankruptcy.
- Liquidation and auction services: Especially for Chapter 7 bankruptcies, Loeb’s long history of success in liquidations and auctions can provide added funding during the sale of assets belonging to the company.
Debtor-in-possession Loans by Industry
With nearly a century and a half of experience in alternative financing for equipment and machinery, Loeb has the knowledge and resources necessary to deliver outstanding solutions in the debtor-in-possession for equipment marketplace. Here are just a few of the industries we serve:
- Cosmetics equipment debtor in possession financing: Our depth of experience in the cosmetics equipment industry allows us to provide cosmetics equipment debtor-in-possession loan arrangements that work for real-world situations. Our DIP loans for cosmetics equipment are flexible and practical distressed lending and alternative lending solutions for this industry.
- Food equipment debtor in possession financing: Loeb’s food equipment DIP lending arrangements are practical options for businesses in bankruptcy. These food equipment alternative financing options can promote greater profitability and an improved chance of emerging from bankruptcy in a healthier financial position.
- Metalworking equipment debtor in possession financing: Companies looking for metalworking equipment debtor-in-possession lending arrangements can find reliable solutions from Loeb. We offer distressed and alternative financing options for metalworking equipment to help companies work out DIP situations successfully.
- Plastics equipment debtor in possession financing: Debtor-in-possession for equipment used in manufacturing or processing plastics can provide much-needed funds to these operations. Loeb offers DIP plastics equipment lending options and debtor-in-possession loans for plastics equipment and the companies that use it.
- Pharmaceutical equipment debtor in possession financing: Loeb offers pharmaceutical equipment DIP finance solutions and alternative lending options for pharma and pharmaceutical manufacturing firms. We deliver DIP for pharma equipment that can promote faster recovery from financial issues.
- Beverage equipment debtor in possession financing: Beverage machinery debtor-in-possession financing and DIP for beverage equipment can offer a new lease on life for distressed companies. At Loeb, we offer beverage equipment alternative lending options and debtor-in-possession loan options that create the potential for growth and financial success.
- Brewery equipment debtor in possession financing: Loeb offers arrangements for debtor-in-possession for equipment used in the brewery industry. Our depth of knowledge of brewery equipment distressed lending and DIP for breweries ensures that our customers receive the most practical and positive solutions for their financial needs.
- Packaging equipment debtor in possession financing: Debtor-in-possession for equipment used for packaging products can provide additional funds for distressed companies. DIP for packaging equipment arrangements from Loeb are among the most useful and practical distressed lending options for companies experiencing financial difficulties.
- Processing equipment debtor in possession financing: Processing equipment includes machinery used in manufacturing or in producing products for sale or use. DIP for processing equipment can provide necessary funding for manufacturing plants and other industrial environments. Distressed lending and alternative lending arrangements for processing equipment are available from Loeb.
- Transportation equipment debtor in possession financing: Loeb offers arrangements for debtor in possession for transportation companies. Our distressed lending options for transportation equipment can help companies to acquire the funds they need to navigate Chapter 11 bankruptcy proceedings.
- Yellow iron equipment debtor in possession financing: Loeb’s array of yellow iron liquidations and financing solutions include yellow iron DIP, distressed lending for yellow iron equipment and debtor in possession options for yellow iron companies.
Loeb also offers other services for our customers throughout North America and at locations around the world.
Other Services from Loeb Equipment
Loeb is perhaps best known for our equipment auctions and equipment financing loans. Our team can provide asset management services to assist in optimizing cash flow and profitability for business owners. Loeb delivers alternative lending options that can promote better financial stability during difficult economic times.
At Loeb, we also offer an array of other solutions that include equipment lines of credit, liquidations, appraisals and direct purchases of in-demand equipment for resale. Our asset-based lending options include bankruptcy financing, DIP loans and term loans that are tailored to suit the needs of our customers. Whether you need equipment sales, leasebacks or financing for DIP arrangements, Loeb is your one-stop source for all your equipment sales, liquidations and financing needs.
As a trusted source for all types of used equipment sales and services, Loeb works with borrowers, brokers, buyers and sellers to deliver the best solutions in the industry. Call our team today at 1-800-560-LOEB or visit our website to learn more about our services. We look forward to the opportunity to serve you.