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Article: A Different Flavor of DIP Loan; When the company filed for bankruptcy it turned to a type of loan structure that could have ramifications for the broader economy.(Restructuring)
- Article from:
- Investment Dealers' Digest
- Article date:
- November 6, 2009
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Byline: Aleksandrs Rozens
When CIT Group Inc. filed for bankruptcy it turned to a different type of debtor-in-possession loan structure - one that harkens back to more traditional financings of court-supervised companies - and the century-old company's ability to readily get at the financing could have ramifications for the broader U.S. economy.
Most DIP loans are used to help a bankrupt business keep its doors open. After all, the end-game for a court-supervised workout is to keep a company on its feet and its people employed. But CIT, which aims to shed $10 billion of debt with its bankruptcy, will use its DIP to provide credit to other companies.
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