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ARTICLE · 20 MAY 2009

Boom, Bust And DIP

Stikeman Elliott LLP
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The extraordinary turmoil in the financial markets in recent times has caused many major economies, including the Canadian economy, to enter into a recessionary period.

CanadaFinance and Banking
Justin Parappally
Justin Parappally
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The extraordinary turmoil in the financial markets in recent times has caused many major economies, including the Canadian economy, to enter into a recessionary period. With the financial sector still trying to cope with the shocks of 2007 and 2008, prospects for a full Canadian economic recovery in the near future appear uncertain. Recent decisions by well-established Canadian companies such as Nortel Networks and Masonite International Corporation (a Kohlberg Kravis Roberts & Co. portfolio investment) to file for bankruptcy protection reflect the challenging economic environment through which Canadian businesses must navigate. Moreover, the recent high-profile bankruptcy protection filing by Chrysler LLC and the general turmoil in the automotive industry, foreshadow an increase in the number of distressed companies seeking access to debtor-in-possession (DIP) financings in order to restructure their operations to weather the current economic downturn. However, despite

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