Pryor Cashman Partner Seth H. Lieberman, Chair of the Bankruptcy, Reorganization + Creditors' Rights Group and Co-Chair of the Corporate Trust Practice, was featured in an ABF Journal podcast interview with Editor-in-Chief Rita Garwood, discussing the trends and legal issues shaping debtor-in-possession (DIP) financing in Chapter 11 cases.

In the interview, "Inside Today's DIP Financing Landscape: Seth Lieberman on the Issues Reshaping Chapter 11," Seth examines the growing complexity of DIP financing negotiations, including increased lender participation, adequate protection disputes, non-pro rata roll-ups, and DIP-to-equity conversions.

Highlighting one of the most significant developments in the market, Seth notes:

"I think inclusiveness is one of the great changes about DIP financing and how it's negotiated over the last several years."

Explaining why DIP financing has become a focal point in major Chapter 11 cases, Seth observes:

"Lenders have lent conditionally, not unconditionally, upon certain events transpiring by certain dates.

If those events don’t occur by the dates contemplated in the DIP documents, those documents—subject to what they actually provide—likely allow the lenders to exercise certain remedies: expedited conversion, calling a default, or foreclosing on collateral."

Offering guidance to debtors and creditors navigating DIP negotiations, Seth emphasizes the importance of considering who has been included and excluded from the process:

"Assess who may object. Assess what opportunity they had to participate in the first instance. If they never had an opportunity, proceed at your own peril. But if they had the opportunity and chose not to participate, I think you're on much stronger footing."

Seth's insights underscore the evolving role of DIP financing and the legal developments influencing many of today's most significant Chapter 11 restructurings.

Listen to or read the full interview using the link below.