DIP Financing and Liens On Avoidance Actions

The Eighth Circuit's decision in Simply Essentials has practical significance for Chapter 11 debtor in possession (DIP) lenders. U.S. Trustees and unsecured creditors regularly object to the granting of liens on avoidance actions, but this and other appellate rulings should now eliminate the purported legal obstacle.

9 minute read October 01, 2023 at 12:09 AM
By
Michael L. Cook
DIP Financing and Liens On Avoidance Actions

In In re Simply Essentials, LLC, 2023 WL 5341506, *1 (8th Cir. Aug. 21, 2023), the Eighth Circuit held that "avoidance actions [e.g., preferences, fraudulent transfers] can be sold as property of the [Chapter 7 debtor's] estate."

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