In the third of a series of four stories, IFLR digs
into the state of debtor-in-possession (DIP)
financing in Latin America. DIP financing is funding for a
debtor which ordinarily comes in the form of secured notes or
loans. It’s designed to inject liquidity and aid
in covering expenses and operations during a
DIP financing is not much used in Colombia – but
local lawyers would like to see its use expanded.
"It’s the exception, rather than the rule," said
Ricardo Trejos Robledo, director of the banking and finance
Baker & McKenzie in Colombia.
Instead, financing for insolvency companies most typically
comes from sources such as key suppliers, potential buyers
and shareholders. According to Trejos Robledo,
that’s because banks generally allow for DIP
financing only where companies have longstanding
relationships, a catch that limits what small and
medium-sized insolvent companies can expect to secure...