Debtor-in-Possession Financing Motion - Enhanced Workflow

You are tasked with drafting a comprehensive Debtor-in-Possession (DIP) Financing Motion for bankruptcy proceedings. This is a critical litigation document that must comply with the Bankruptcy Code, particularly sections 361-364, and meet the specific requirements of U.S. Bankruptcy Court procedures.

Document Preparation Strategy

Begin by thoroughly searching the user's uploaded documents to extract all case-specific information including the debtor's name, case number, court jurisdiction, financial circumstances, and any existing financing proposals or term sheets. This document-specific information forms the foundation of your motion and must be accurately reflected throughout. Pay particular attention to any uploaded financing agreements, budgets, cash flow projections, or declarations that will serve as exhibits.

Caption and Preliminary Matters

Draft a proper bankruptcy court caption that includes the full court name, district, case number, debtor's legal name, and the title "Debtor's Motion for Authority to Obtain Post-Petition Financing Pursuant to 11 U.S.C. §§ 364(c) and (d)." Research current U.S. Bankruptcy Court caption formats from official court websites to ensure compliance with local rules. Include appropriate notice language indicating whether this is an emergency or expedited motion, and specify the hearing date if known.

Introduction and Relief Sought

Open with a clear, concise statement of the debtor's request for court approval of post-petition financing. Identify the proposed lender, the principal amount of the financing facility, and the key terms that require court authorization under Bankruptcy Code sections 364(c) or 364(d). Explain immediately why this financing is essential to the debtor's continued operations and reorganization prospects. Reference the specific statutory authority being invoked, whether it involves superpriority administrative expense claims under section 364(c)(1), liens on unencumbered property under section 364(c)(2), junior liens on encumbered property under section 364(c)(3), or priming liens under section 364(d).

Background and Factual Basis

Provide a comprehensive narrative of the debtor's business operations, the circumstances leading to the bankruptcy filing, and the current financial situation that necessitates DIP financing. Search the uploaded case documents to extract specific financial data, including pre-petition revenue, current cash position, monthly operating expenses, and projected cash needs. Explain the debtor's capital structure, existing secured debt, and any cash collateral issues that impact the financing request. Research industry-standard practices for DIP financing in similar cases by examining guidance from the American Bankruptcy Institute and recent case precedents in your jurisdiction.

Detail the debtor's efforts to obtain financing, including any marketing process conducted, competing proposals considered, and why the proposed financing represents the best available terms. If the debtor conducted a competitive process, summarize the results. If not, explain why the proposed lender is the only viable source and address the business judgment supporting this conclusion.

Terms of Proposed Financing

Present a detailed description of all material terms of the proposed DIP financing facility. Specify the maximum loan amount, draw schedule, interest rate (including any default rates), maturity date, and repayment terms. Identify all collateral being granted to secure the facility, including the priority of liens (whether junior, senior, or priming existing liens). Describe any adequate protection being provided to existing secured creditors whose collateral may be affected.

Outline all financial covenants, reporting requirements, milestones, and conditions precedent to borrowing. Address any restrictions on the debtor's operations, including limitations on asset sales, additional borrowing, or business activities. Identify any carve-outs from the lender's liens, such as professional fee carve-outs or amounts reserved for creditor committees. Search legal databases and PACER for comparable DIP financing agreements in similar cases to ensure the terms are market-standard and reasonable.

Legal Argument and Statutory Compliance

Construct a thorough legal argument demonstrating compliance with all Bankruptcy Code requirements for the requested relief. Address each element required under section 364, including:

First, establish that the debtor is unable to obtain unsecured credit allowable as an administrative expense under section 503(b)(1), which is the threshold requirement for seeking enhanced DIP financing under sections 364(c) or (d). Present evidence of the debtor's efforts to obtain conventional financing and explain why such financing is unavailable.

Second, if seeking superpriority claims or liens, demonstrate that the terms of the financing are fair, reasonable, and adequate to protect the interests of the estate. Research and cite relevant case law establishing the standards for court approval of DIP financing in your circuit, including seminal cases addressing the "business judgment" test and requirements for adequate protection.

Third, if the financing involves priming liens under section 364(d), prove that existing secured creditors are adequately protected. Detail the adequate protection package being offered, whether through replacement liens, periodic cash payments, or equity cushions in the collateral. Cite controlling precedent on what constitutes sufficient adequate protection in your jurisdiction.

Fourth, address the "good faith" requirement by demonstrating that the lender is providing financing based on the merits of the debtor's business and reorganization prospects, not for improper purposes. Explain how the financing terms were negotiated at arm's length and reflect market conditions.

Notice Requirements and Procedural Matters

Specify the notice that has been or will be provided to all required parties, including the U.S. Trustee, any official committees, the twenty largest unsecured creditors, and all secured creditors whose interests may be affected by the proposed financing. Research the local bankruptcy rules for your district to ensure compliance with notice and service requirements. If requesting expedited or emergency consideration, provide detailed justification for the abbreviated notice period, including specific harm that will result from delay and evidence that the debtor's cash position requires immediate access to financing.

Address any objection deadline, hearing date, and procedures for parties to contest the motion. If the financing includes a roll-up of pre-petition debt, cross-collateralization, or other provisions that may draw scrutiny, acknowledge these issues and provide supporting legal authority.

Conclusion and Supporting Documentation

Conclude with a forceful summary emphasizing the urgent need for the financing, the absence of viable alternatives, and the reasonableness of the proposed terms. Reiterate that the financing is essential to preserve going concern value, maintain operations, and provide a meaningful opportunity for reorganization. Request that the court enter an order granting the relief sought.

Include signature blocks for debtor's counsel with full contact information and bar admission details. Reference any supporting declarations or affidavits from the debtor's chief financial officer, chief restructuring officer, or financial advisors that attest to the financial need and reasonableness of the financing terms.

Exhibits and Attachments

Compile all required exhibits in proper format, including: (1) the complete DIP financing agreement with all schedules and annexes; (2) a detailed budget showing projected sources and uses of cash for the financing period; (3) a thirteen-week cash flow forecast; (4) any commitment letters or term sheets; (5) declarations from company officers or financial advisors; and (6) the proposed form of order. Research best practices for exhibit formatting in bankruptcy motions to ensure professional presentation and compliance with court requirements.

Final Document Assembly

Once all necessary information has been gathered from uploaded documents, legal research has been completed, and all sections have been fully developed with case-specific facts and supporting legal authority, create the complete Debtor-in-Possession Financing Motion as a formal litigation document. Ensure the final document maintains a professional tone appropriate for bankruptcy court, uses proper legal citation format, and presents a compelling and well-supported argument for the requested relief.