$1,315,000 Debtor-in-Possession Loan in Rancho Mirage, CA
$1,315,000 Debtor-In-Possession Loan in Rancho Mirage, CA
Loan Amount: $1,315,000
Loan Term: 12 Months
LTV: under 25%
Lien Position: 1st Deed of Trust, Court-Approved DIP Priming Lien
Not every deal Rubicon Mortgage Fund, LLC closes starts with a real estate transaction. Sometimes the opportunity starts with a business in distress and a court process that needs a debtor-in-possession loan to get to the other side. That was the case for a private school in California that came to Rubicon through a bankruptcy attorney who had referred a borrower to the Fund once before.
Deal Overview
The school had built a stable enrollment of roughly 400 students, generating the tuition revenue needed to cover payroll and day-to-day operating costs. A conduct-related controversy involving a staff member, unconnected to the school’s academic program, triggered a wave of parent withdrawals. Enrollment fell to around 300 students, a 25% decline that the school’s operating budget couldn’t absorb. Facing a sudden shortfall it had no way to bridge on its own, the school filed for Chapter 11 protection and needed a debtor-in-possession loan to keep operating.
The Loan
Proceeds went directly toward the school’s operating costs, payroll, facilities, and the other expenses that keep a school running day to day while the bankruptcy case plays out. That capital buys the school the time needed to work toward a resolution instead of an abrupt shutdown.
Exit Strategy
The borrower’s exit is a sale of the property. Rubicon’s priority position keeps the fund well protected through that process, whatever the ultimate outcome for the school itself.
A Repeat Referral
This deal also reflects the value of Rubicon’s relationships across the legal and brokerage community. The bankruptcy attorney who brought this deal to Rubicon had referred a prior borrower to the Fund, and came back once a fitting opportunity appeared again. It’s exactly the kind of repeat relationship that lets Rubicon move quickly on complex, story-driven deals.
Why This DIP Loan Worked
- Priming Lien: Court-approved first-lien priority ahead of existing creditors.
- Speed: Full loan amount funded upfront so the school could keep operating without interruption.
- Repeat Relationship: Referred by a bankruptcy attorney who had worked with Rubicon before.
- Clear Exit: A sale of the property provides the path to repayment.
Final Thoughts
Rubicon Mortgage Fund, LLC specializes in the kind of financing traditional lenders won’t touch, including court-supervised DIP loans and other special-situation financing across California. If you’re navigating a complex financial situation and need a lender who can move quickly and think creatively, contact Rubicon Mortgage Fund, LLC today.
Frequently Asked Questions
Who can qualify for DIP financing? Businesses operating under Chapter 11 protection that need working capital to continue operations, and that can obtain court approval for a priming lien, are candidates for DIP financing. Private lenders like Rubicon Mortgage Fund, LLC can move faster than many traditional banks in these situations.
Why is a priming lien important in a DIP loan? It allows a lender to fund a distressed business with confidence, even ahead of creditors who were already secured.
How is a DIP loan typically repaid? Repayment usually comes through a plan of reorganization, a sale of the underlying asset, or a refinance once the business exits Chapter 11. In this deal, the exit is a sale of the property.
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