$1 Million in DIP Financing Helps Paper Manufacturer Keep Payroll, Production, and Progress Moving

The Situation

A long-established paper products manufacturer—serving major financial and retail clients—entered Chapter 11 reorganization after consolidating several affiliated entities. Once generating over $20 million in combined revenue, the company saw a decline in recent years and ended 2024 with limited liquidity despite having $1.3 million in open receivables. 
With payroll and production expenses mounting, the company needed immediate access to working capital but couldn’t secure traditional financing due to its bankruptcy status. An attorney referred the company to SouthStar Capital for a solution. 

The Solution

SouthStar Capital provided a $1 million Debtor-in-Possession (DIP) Financing Facility, secured by court-approved super-priority status on the company’s invoices. The facility offered immediate liquidity against outstanding receivables, flexibility to accommodate large customer concentrations, and transparent reporting to meet both court requirements and internal oversight needs. The funding allowed the company to maintain operations while working through its restructuring process.  

The Result

With SouthStar’s support, the manufacturer was able to meet payroll, pay vendors on time, and preserve critical customer relationships and production timelines. The DIP facility gave the business the financial breathing room needed to stabilize its operations and chart a structured path forward-positioning the company for a successful turnaround without taking on additional debt.