12 AN INTRODUCTION TO DIP FINANCING Jane Lee

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finished lots, the value of the collateral decreased with
each sale and the secured lender was not offered extra
collateral and would be forced to look to least valuable
collateral for repayment), In re Strug-Division LLC,
380 B.R. 505 (Bankr. N. D. Ill. E. Div. 2008) (projected
increase in value of apartment complex from
renovations would not adequately protect pre-petition
secured lender where value would at best narrowly
exceed aggregate amount owed to first priority and
priming lenders, there was substantial uncertainty as to
completion of renovations and, with unrentable nature
of apartments, property was unlikely to generate
revenues sufficient to service the first priority lender’s
debt).
Part Five: Procedure
In most circumstances, a trustee may only use cash collateral or obtain new
credit “after notice and a hearing”. 11 U.S.C. §§ 363(b)(1), 363(c)(2)(B),
364(b), 364(c), 364(d).
1) “After Notice and a Hearing” Defined. Section 102(1) defines “‘after
notice and a hearing’, or a similar phrase” to mean “after such notice
as is appropriate in the particular circumstances, and such opportunity
for a hearing as is appropriate in the particular circumstances.” 11
U.S.C. § 102(1)(A). However, “after notice and a hearing” does not
necessarily require a hearing. 11 U.S.C. § 102(B) (providing that an
“actual hearing” is not necessary if proper notice is given and (i) a
hearing is not timely requested by a party in interest; or (ii) insufficient
time exists for a hearing to be conducted). Query whether there are
any circumstances that warrant lack of notice. See Suntrust Bank v.
Den-Mark Const., Inc., 406 B.R. 683, 689–90 (E.D.N.C. 2009) (failure
to notify all lienholders precluded a finding of adequate protection as
required under section 363(d) as a matter of law). However, those
concepts may be modified by sections 363 and 364 and Rule 4001 of
the Federal Rules of Bankruptcy Procedure.