Dissecting Strategic DIPs

Law360, New York (July 10, 2013, 11:00 AM EDT) -- In certain instances, a debtor-in-possession lender may make a DIP loan for strategic purposes with one or more goals in mind (in addition simply to the collection of fees and interest on principal). Examples of such strategies are set forth below.

“Loan-to-Own”

With the inception of the credit crisis, the term “loan-to-own” has become much maligned and has been used as a catch-all accusation against a lender perceived to have done wrong by a borrower. In the DIP context, accusers would claim that a lender is...
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