Facilitator Guide

Financing in Bankruptcy: Cash, Unsecured Credit, and DIP Loans

Facilitator Guide

Financing in Bankruptcy: Cash, Unsecured Credit, and DIP Loans

Topic: Restructuring
Duration: 1 hr
Format: Remote or in person

What’s covered

Using encumbered v. unencumbered cash
Using unsecured credit in and outside the ordinary course
What a DIP loan is
Benefits offered to DIP lenders
Adequate protection
Process and timeline of entering into a DIP loan

Before the session

Prepare the Attendees

Send the attendees an invitation for the session. Include this link, which has the videos and exercise they’ll need to prepare.

https://www.hotshotlegal.com/trainings/financing-in-bankruptcy-cash-unsecured-credit-and-dip-loans/attendee

Prepare Yourself

Watch the videos and read the exercise so you’re familiar with the Hotshot material.

Course

Financing in Bankruptcy: Cash Collateral and Unsecured Credit

An overview of how companies use cash and unsecured credit to finance their operations during bankruptcy. Covers encumbered cash (cash collateral), unencumbered cash, establishing adequate protection, and how companies can take out additional unsecured credit.
Course

Financing in Bankruptcy: DIP Loans

An overview of debtor-in-possession (DIP) loan arrangements. Covers the process, documentation, and lenders, including a discussion of the benefits offered to DIP lenders under the Bankruptcy Code.
Exercise
PDF

During the session

Part 1: Knowledge Check

Ask attendees these questions to ensure they understand the topic:

What is cash collateral and how can it be used during a Chapter 11?
Can a debtor take on new unsecured debt during a Chapter 11 and what can they offer the creditor in this situation?
What is a DIP loan and what benefits are available to DIP lenders under the Bankruptcy Code?
What is the process of negotiating and entering into a DIP loan, and what must a debtor show the court before the loan will be approved?
Why might a court decide not to approve a DIP loan?

Part 2: Group Exercise

Lead a group discussion based on the exercise. To encourage collaboration, divide the attendees into groups to discuss the exercise, then have a representative from each group summarize their views to the larger group. Call on people to share their thoughts and ask others to respond.

Tip for remote sessions: use your web conferencing system’s breakout room feature to divide people into groups.

Part 3: War Stories and Firm Specifics

Share your own experiences and guidance, including:

Anecdotes and war stories (e.g., about a near-disaster or a tough negotiation)
General practice tips (dos and don’ts)
Firm-specific guidance and practices

After the session

To continue their learning, attendees can check out related courses in Hotshot’s Restructuring topic.

About Hotshot

Hotshot helps lawyers develop their legal, business, and technology skills through short videos, quizzes, and summaries, and we help law firms and law schools plan and deliver engaging training programs. Our customers include Am Law 200 firms, top law schools, and regional and international firms.