Dried-Up DIP Financing To Intensify Ch. 11 Sell-Offs

Law360, New York (October 17, 2008, 12:00 AM EDT) -- Debtor-in-possession financing – the lifeblood of bankrupt companies – has become the latest casualty of the economic crisis, exacerbating the trend in Chapter 11 to abandon restructuring plans for a quick fire sale.

With department store chain Mervyn's LLC on Friday joining a growing list of companies opting for liquidation, the sudden scarcity of DIP and bridge loans from big players in the lucrative market, including General Electric Co., is expected to send more ailing businesses to the auction block.

“If you can't get financing to...
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