DIP Lending Facilities and Liability Management Transactions: Non Pro Rata Rollups and Other Issues

This CLE webinar will discuss the use of liability management transactions (LMTs) in debtor-in-possession (DIP) financing facilities, specifically in non pro rata roll ups, identify and evaluate helpful decisions in this still-developing area, and offer insights about the issues that will likely have to be addressed when resolving objections to these practices.

LMTs are now appearing as non pro rata DIP rollups: proposed DIP financing only rolls up the prepetition debt of a favored lender group. Lenders not included in the roll ups are objecting on many of the same grounds raised in non-bankruptcy LMTs, but there is scant insight on how courts actually view these issues because the objections get settled. 

In May 2026, the U.S. Bankruptcy Court for the District of New Jersey held that by itself, a roll up of pre-petition debt in DIP financing did not trigger a pro rata sharing provision in the applicable prepetition credit agreement. It left for another day, how pro rata sharing might be enforced once payments under the DIP facility began. This approach stands in contrast to how other influential bankruptcy courts have addressed the issue.

Listen as our panel of esteemed practitioners discusses the evolving and controversial use of LMTs in DIP financing facilities, best practices for reducing the amount of litigation that is likely to result from LMTs related to roll ups, and unique bankruptcy issues that disparate treatment may create.