“Banks Beware: DIP Loans May Prime Setoff Rights,” an article written by bankruptcy attorneys George L. Cass and Frank Harrison, was recently published in the Real Estate Finance Journal, a Thomson Reuters publication. The article describes debtor in possession (DIP) loans and how they can affect the setoff rights of banks and other entities. If a bankruptcy court enters and order that allows a DIP loan to prime a setoff right, a bank with a common borrower/depositer might have difficulties challenging the fact. Therefore, banks should beware these orders.
Read the full article – “Banks Beware: DIP Loans May Prime Setoff Rights” (Real Estate Finance Journal)