Nature of the Case
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Facts
P filed chapter 11 and operated as a DIP. P sought DIP financing under 364(c) and (d). P “negotiated” a deal with Key Bank for the financing. Bank was one of P’s prepetition lenders. It had unsecured claims in bankruptcy. As part of the deal Bank would loan P money if and only if Bank was able to combine its prepetition debt with the post-petition financing which was fully secured debt. P motioned to the court for approval of the loan and its terms and conditions. P claimed it could not get financing from any other sources. The court found that Bank was willing to consent to the use of the cash collateral only upon the terms and conditions contained in an Interim Order. Ps were unable to obtain sufficient levels of unsecured credit to maintain and conduct their businesses under 503(b)(1). Nor was P able to obtain unsecured financing under 364(a), (b), (c)(1) or under 364(c)(2), and (3) nor on more favorable terms than from Bank. The offer by Bank was made in good faith wherein the terms were negotiated at arms’ length in an open and honest fashion and that Bank is entitled to the protection of 364(c). It is in P’s best interests to accept this financing. P represents that without this agreement P will not have the funds necessary to pay post-petition payroll, taxes, vendors, suppliers, overhead, and other daily regular expenses such as utilities.
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