Bibby Financial Services "DIPS" In As Bank Lending Backs Out

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Bibby Financial Services, a leading provider of factoring and accounts receivable financing, is stepping in to help qualified small companies in Chapter 11 bankruptcy by providing debtor-in-possession (DIP) financing. DIP funds provide liquidity to companies undergoing a court supervised reorganization. Banks, the traditional source of DIP funds, have backed away from that market because of credit quality issues. But Bibby Financial Services has the experience, expertise and financial backing to support this market for qualified borrowers.

Bibby Financial Services

The current shortage of DIP funds is because the banks, looking for only the most pristine credits, have backed away from transactions

possession (DIP) lenders who can provide them with the necessary cash flow to keep their companies operating while they sort through their court supervised reorganizations. The problem is that these days DIP financers are scarce.

"Small businesses in Chapter 11 need money to keep running so they can continue to manufacture their products and service their customers. Otherwise they may face liquidation and that's not good for anybody," said Stewart Chesters, CEO, Bibby Financial Services. "DIP financing is that bridge from bankruptcy to solvency."

DIP financing is designed to help companies stay cash flow positive while they are under court protection to reorganize, so that they emerge from bankruptcy with adequate liquidity to function. Court-approved DIP lenders in the meantime are given superior position ahead of other creditors enabling them to get paid first. But DIP financing can be risky for lenders; it takes special familiarity with credit structure, legal acumen and a company with rock solid financial liquidity. Not many financing companies focused on the small end of the market meet those qualifications.

"The current shortage of DIP funds is because the banks, looking for only the most pristine credits, have backed away from transactions," Chesters said. "Other kinds of lenders often lack the qualifications for DIP lending, or they view small businesses as "too risky." But because of its long, extensive history as a factoring company, Bibby Financial Services is expert at evaluating the credit of a client's customers. If a client in Chapter 11 has decent debtors with collectible account receivables that we can verify, then that's a DIP deal we can consider," Chesters added.

Recent DIP transactions funded by Bibby Financial Services include a total of $2 million to a Louisiana-based auto manufacturing company and $750,000 to an underground cabling company based in Arizona.

Bibby Financial Services is a worldwide market leading specialist of business cash flow solutions to small and medium-sized businesses. With offices in 10 North American cities and 27 countries around the world, its product portfolio includes receivables finance, factoring, export finance, purchase order finance, specialist solutions for the staffing and trucking sectors, and is an approved lender for the Export-Import Bank's working capital guaranty delegated authority program. Bibby Financial Services is a subsidiary of The Bibby Line Group, a 202 year-old privately held company based in the United Kingdom. Please visit us at Facebook and for expert advice on small business please visit CEO Stewart Chesters' blog.

For more information, please call Lisabeth Weiner at 312-252-7360


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