Roll-Up Financing

A “roll-up” refers to a debtor-in-possession (or DIP) financing facility that is provided by the debtor’s prepetition (pre-bankruptcy) lenders and effectively pays off (or “rolls-up”) the prepetition secured debt. The roll-up can take place in a single stage or the debtor, as postpetition funding is obtained, applies an equivalent amount of proceeds first to the repayment of the prepetition facility until the outstanding obligations are fully “rolled” into the postpetition facility by the debtor. A roll-up effectively transforms the existing lenders’ prepetition claims into a postpetition, administrative expense.