The macroeconomic impact of the coronavirus (COVID-19) on nearly all industries is forcing businesses directly and indirectly affected by the global pandemic to consider restructuring alternatives. Since prospective businesses looking to reorganize or liquidate through the chapter 11 process are likely to need immediate cash in order to operate their businesses, these companies often will look to existing or third-party lenders (and in certain cases, stalking horse bidders or customer groups) to provide them with debtor-in-possession financing (DIP Financing).

An increasing number of businesses — even those that have traditionally been financially and operationally sound — are now experiencing unanticipated revenue losses as a result of the coronavirus pandemic. Companies may find themselves in the unfamiliar position of being out of compliance with financial covenants with lenders, unable to meet financial obligations to vendors, in default of contractual obligations, or in need of financial or restructuring/bankruptcy assistance.

© 2011 Bloomberg Finance L.P. All rights reserved. Originally published by Bloomberg Finance L.P. in the Vol. 4, No. 6 edition of the Bloomberg Law Reports—Asia Pacific Law. Reprinted with permission. Bloomberg Law Reports® is a registered trademark and service mark of Bloomberg Finance L.P.