Priming Loan

You really thought there'd be a market for tomato juice wine coolers. Unfortunately, it didn't happen. Now your entire wine cooler business is entering bankruptcy.

However, there's still a chance you can weather the storm and get back to solvency. Many of your other products are still popular. Instead of going into liquidation, you are filing for Chapter 11 bankruptcy, which gives you a chance to restructure.

Part of the process involves a priming loan. This money allows you to keep the company going while you work out the restructuring. You can pay employees, buy ingredients, etc. to keep your profitable products on the market while you go through the Chapter 11 process. The priming loan keeps your operations going, avoiding a permanent shut down (for now) and buying you time to work out the financial details of the bankruptcy.

The "priming" part of "priming loan" comes from the fact that it gets primacy in repayments. As cash comes in from selling your wine coolers, you'll pay off the priming loan before paying your other creditors. It gives the lender providing the priming loan some piece of mind that the deal won't just become another bad loan on the bankruptcy pile.