Pure new-money transactions made up five of the nine DIP deals in August – the first time this year that a majority of transactions were structured without any roll-up component. These deals tended to be simple and short-dated, with Bravo Brio Restaurants, IMG Holdings, Partners Pharmacy Services, and Wellmade Floor Coverings all opting for fixed interest rates and minimal fees. ModivCare was the exception, combining an all-new-money structure with a 20% equity backstop, a 2% OID, and a 3% exit fee.

In dollar terms, however, roll-up packages dominated. Larger facility sizes and roll-up-heavy structures from Aleon Metals, Walker Edison, Avant Gardner, and TPI Composites pushed effective borrowing costs well above their stated rates.

The nine Chapter 11 debtors covered in this report and key terms of their DIP facilities are summarized in the following table:

High-level takeaways:

• New-money-only facilities led by count: Five of the nine August DIPs were structured entirely as new money (ModivCare, Bravo Brio, IMG, Wellmade, and Partners). However, roll-up transactions led by dollar volume, with USD 367.81m in roll-up-linked facilities compared to USD 114.50m in all-new-money deals.
• Incumbents dominate: Six of the nine deals were led by prepetition or insider lenders. The remaining three involved two stalking-horse lenders—IMG Holdings and Partners Pharmacy Services—and one third-party provider, Wellmade.
• Interest rates: Only one deal priced below 10%—Bravo Brio at 8% cash. All others carried double-digit rates, generally ranging from 10% to 16.5% (excluding default step-ups), with several PIK structures that significantly increase effective borrowing costs.

Pure new money DIP facilities

Bravo Brio Restaurants seeks a USD 3.5m new money revolver with an 8% cash interest rate (default + 10%) and a four-month maturity. This is a straightforward bridge facility.

IMG Holdings obtained final approval for a small USD 500k new money term loan at 12% (default + 2%) with a roughly 2.5-month maturity. Although the debtor must reimburse legal fees and expenses, both the size and simplicity of this loan reinforce its stopgap structure. Among debtors seeking DIP facilities in August, IMG Holdings was the first to obtain a final order.

Partners Pharmacy Services seeks a USD 6.5m term loan at 12% (default + 3%) with a roughly 4.3-month maturity. While there is no roll-up or any typical fees, the debtor would be responsible to reimburse the legal fees and expenses incurred by the DIP lender in connection with the DIP facility.

Wellmade Flooring seeks a USD 4.0m new money term loan accruing at 12% (default + 5%) with a six-month maturity (with two three-month extension options). Fees include a modest 1% underwriting fee, 2% origination fee and 2% exit fee. Other fees are contingent rather than fixed, including a USD 120k break-up fee if a third-party lender provides alternative financing, and a USD 40k cash fee for each extension that the debtors request.

ModivCare seeks approval for USD 100m in new-money term loans. The facility will accrue interest, at the debtors’ election, at either SOFR + 7.00% per annum or the Alternate Base Rate—defined as the highest of several benchmarks, including the Prime Rate—plus 6%. Both options carry a 2% default step-up. In addition to a 2% OID and a 3% exit fee, the structure includes a backstop premium equal to 20% of the equity in the reorganized debtors (subject to dilution), payable to the backstop parties. The loan carries a six-month maturity.

Most expensive DIP facilities sought in August

Aleon Metals seeks a USD 187.51m term loan, consisting of USD 62.5m in new money and a 2:1 creeping roll-up totaling USD 125m (66.7% of the facility). Both the new money and roll-up accrue interest, at the debtor’s election, at either SOFR + 10% or the Base Rate—defined as the highest of various benchmarks, including the Prime Rate—plus 9%, with a 2% default premium. Interest on the new-money portion must be paid in cash, while roll-up interest is PIK. Upon default, the SOFR option terminates and all loans convert to Base Rate + 11% PIK. The facility also carries a 3% commitment fee and a 3% exit fee. Maturity is two months from the petition date. Given the 2:1 roll-up, elevated pricing, short tenor, and front- and back-end fees, the package exemplifies the lender-friendly DIP financing terms that have dominated year to date.

Walker Edison Furniture Company seeks a two-tranche USD 52.0m term loan DIP at 10% PIK (default + 2%), with USD 39m roll-up (75%), to mature in five months. Fees are split between the tranches: (1) the New Money DIP Commitment; and (2) the Litigation DIP Commitment. New Money DIP Commitments would be charged a 2% PIK upfront fee, a 2% exit fee, and a 0.5% unused commitment fee, applied per annum on undrawn DIP New Commitment amounts at maturity. Litigation DIP Commitments would be charged a 4% exit, and the same 0.5% unused commitment fee on undrawn Litigation DIP Commitment amounts also at maturity. This is a lender-driven deal heavily weighted toward roll-up, with constrained new money.

Final orders pending for three July DIP transactions

Four of last month’s DIP facilities have received final approval, while three—Merit Street Media, Villages Health System and Linqto Texas—remain on interim orders. Among those filed in July, the facilities that secured final orders did so after an average of 36 days, whereas the three still pending have been awaiting approval for more than 70 days since relief was first sought.