Debtor in Possession (DIP) Financing for Commercial Real Estate
Gelt Financial and DIP Lending, LLC provide debtor-in-possession (DIP) financing for distressed companies in the Chapter 11 bankruptcy process that own or control commercial real estate assets. Our DIP financing process is designed to provide funding and working capital, address pre-petition obligations and existing debts, stabilize cash flow, and help your business continue operations. In contrast, you and your bankruptcy attorneys work with the bankruptcy court on a restructuring plan and exit financing. Our collateral-based funding has a minimum loan amount of $50,000 and a maximum loan amount of $2,000,000.
Key benefits of our Chapter 11 DIP financing:
When your bank says No, we say Yes!™
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DIP Financing Highlights and Guidelines
Our debtor-in-possession financing provides short-term capital so Chapter 11 debtors can keep operating while a reorganization plan is negotiated and approved.
Basic loan parameters
- Loan amounts: typically $50,000 to $2,000,000
- Closing time: 3 to 7 days after court approval and final documentation
- Collateral: income-producing commercial real estate assets
- Leverage: up to 65% of the current value (up to 100% LTV with additional collateral)
- Structure: short-term DIP facility, usually 6 to 36 months
- Position: secured in a senior position on the collateral property, subject to bankruptcy court approval
Use of proceeds
- Provide working capital and liquidity to stabilize cash flow and address critical operating expenses
- Pay employees and key vendors so you can continue operating during the restructuring process
- Cure pre-petition arrears, address secured lender defaults, support the confirmed plan, and bridge to exit financing, refinance, or sale
Purpose and outcomes
- DIP financing ensures your business has the resources to keep core business operations running while you restructure
- Helps avoid forced liquidation by giving time to implement a realistic plan that restores long-term profitability and protects firm assets
What Is Debtor-in-Possession (DIP) Financing?
Debtor-in-possession (DIP) financing is a form of financing provided to businesses in financial distress that have filed a Chapter 11 bankruptcy case. After the bankruptcy filing, the company continues to operate as a debtor-in-possession, retaining control of its assets and business operations. At the same time, it works through the restructuring process with its creditors and the bankruptcy court.
DIP financing provides liquidity and working capital so the business can pay employees, cover critical expenses, and continue operations while addressing existing debts and pre-petition arrears. The facility is typically secured by assets such as commercial real estate, and the DIP lender normally holds a senior or superpriority claim, as approved by the court.
Properly structured debtor-in-possession financing is a key tool in Chapter 11 because it stabilizes cash flow, funds the reorganization plan, and creates a path to exit financing or a sale, rather than an immediate liquidation of the business.
Jack Miller gives a little history and overview of DIP financing benefits
What is DIP Financing
Debtor-in-Possession (often referred to as “DIP”) Financing is when financing is provided to a company that has filed for Chapter 11 bankruptcy protection & reorganization under the U.S. Bankruptcy Code.
Due to the economic recession, debtor-in-possession financing has recently seen substantial growth in order to keep up with the rapid demand for financing.
Why use DIP Financing?
Key reasons to use DIP financing
First Mortgages Only. We can get flexible with these terms. Every situation has a story.
How DIP Financing Works with Gelt Financial
Gelt Financial and DIP Lending, LLC follow a straightforward DIP financing process tailored to businesses in financial distress that need to continue operations during Chapter 11. We focus on the value of your commercial real estate, the strength of your restructuring plan, and the requirements of the bankruptcy court to structure financing that can be approved and funded quickly.
Simple, collateral-based underwriting
We underwrite primarily to the firm’s assets, specifically the commercial real estate collateral that will secure the debtor-in-possession financing. Our review focuses on:
This collateral-based approach allows us to provide funding when conventional lenders and traditional loans are not available during the bankruptcy process.
Coordination with your bankruptcy counsel and the court
We work closely with your bankruptcy attorneys to structure a DIP facility that fits your restructuring process and complies with Chapter 11 law. Together, we:
- Align the facility with your budget, plan, and creditor negotiations
- Prepare the DIP term sheet and supporting materials for the bankruptcy court
- Help you seek court approval so that the financing provided is properly authorized in a senior position or superpriority status
Our role is to provide capital and transaction expertise, while your counsel handles the legal filings and hearings required to obtain approval.
Step-by-step DIP financing process
The typical debtor-in-possession financing process with Gelt Financial looks like this:
Timelines depend on the court calendar and the complexity of the case. Still, our internal review and decision-making are designed to move quickly so you can access capital when it matters most.
Who Qualifies for DIP Financing?
Our debtor-in-possession financing is designed for businesses, not consumers, that are in financial distress and need capital to continue operating through a Chapter 11 bankruptcy filing.
Typical DIP financing clients
- Companies currently in Chapter 11 or preparing to file and act as a debtor in possession
- Distressed companies that own or control commercial real estate suitable as collateral
- Businesses that need working capital to pay employees, stabilize business operations, and address critical expenses
- Debtors seeking funds to cure pre-petition arrears, restructure existing debts, or implement a confirmed reorganization plan
Basic eligibility guidelines
- Operating businesses only, no personal or consumer bankruptcies
- No primary residences or pure land as collateral, commercial real estate assets are required
- Viable path to restructure and exit Chapter 11 through refinance, sale, or a court-approved plan
Why Choose Gelt Financial and DIP Lending, LLC
for Debtor in Possession Financing?
Experience with DIP financing on commercial real estate
Gelt Financial and DIP Lending, LLC focus on debtor-in-possession financing secured by commercial real estate, so we understand the cash flow needs and operational issues of distressed companies in Chapter 11. Our team has experience working with bankruptcy attorneys, creditors, and the bankruptcy court to secure DIP facilities for review and approval.
Fast, straightforward decisions from direct lenders
We are direct lenders, not brokers, which allows us to review your situation quickly and provide funding without the delays common with conventional lenders and traditional loans. Our process is streamlined so that the financing provided can help you continue operating, pay employees, and stabilize the firm when timing is critical.
Custom structures aligned with your reorganization plan
Every Chapter 11 case is different, so we design DIP facilities around your specific plan, budget, and exit strategy. We work with your advisors to align the DIP structure with the confirmed plan, including how capital will be used to address existing debts, pre-petition arrears, and the business’s long-term success.
Ability to close when traditional lenders will not finance Chapter 11 debtors
Most banks and conventional lenders will not provide new credit to Chapter 11 debtors, even when there is solid collateral and a realistic plan. Our role as a DIP lender is to step in when traditional financing is unavailable, take a senior position in the collateral where appropriate, and provide liquidity so you can execute your restructuring process rather than face immediate liquidation.
Debtor in Possession (DIP) Financing FAQs
TYPES OF SERVICES AND LOANS WE OFFER
Sorry, we don’t lend on land, and we are not construction lenders.