Primed

AAA

DEFINITION of 'Primed'

The act of granting a new lender a higher claims priority over a current secured debt holder. A lender is considered primed when they are surpassed on the priority ladder for a borrower's assets.

INVESTOPEDIA EXPLAINS 'Primed'

A lender may agree to being primed if they feel the new loan can prevent bankruptcy in the company or help increase its financial stability. For example, a company files bankruptcy, but is operating as a debtor in possession. If the firm is offered DIP financing, where a new lender gives the ailing company additional funding, its current lenders would usually be primed to the new lender. The current debt holders might agree to being primed if they believe the new funds will allow the company to recover. In this case, the company would have a better chance at paying off all of its debts in the future.

RELATED TERMS
  1. Absolute Priority

    A rule that stipulates the order of payment - creditors before ...
  2. Bankruptcy

    A legal proceeding involving a person or business that is unable ...
  3. Debtor In Possession - DIP

    An individual or corporation that has filed for Chapter 11 bankruptcy ...
  4. Debtor-In-Possession Financing ...

    Financing arranged by a company while under the Chapter 11 bankruptcy ...
  5. Priming Loan

    A form of debtor-in-possession, or DIP financing, whereby the ...
  6. Leveraged Benefits

    The use – by a business owner or professional practitioner – ...
Related Articles
  1. What happens to a company's stocks and ...
    Investing

    What happens to a company's stocks and ...

  2. An Overview Of Corporate Bankruptcy
    Bonds & Fixed Income

    An Overview Of Corporate Bankruptcy

  3. What are the differences between chapter ...
    Entrepreneurship

    What are the differences between chapter ...

  4. Taking Advantage Of Corporate Decline
    Bonds & Fixed Income

    Taking Advantage Of Corporate Decline

comments powered by Disqus
Hot Definitions
  1. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  2. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  3. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  4. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  5. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
  6. Limit-On-Open Order - LOO

    A type of limit order to buy or sell shares at the market open if the market price meets the limit condition. This type of ...
Trading Center