What does 'rescue financing' refer to?

'Rescue financing' refers specifically to financing that is provided to support immediate cash needs of a company, particularly in distress or facing insolvency. This type of financing is crucial for maintaining operations during critical periods when a business might struggle to meet its financial obligations. It typically aims to stabilize the company temporarily so it can restructure or reorganize efficiently, addressing liquidity issues that could lead to bankruptcy if left unaddressed.

This financing is often structured to be highly flexible, allowing the company to cover day-to-day expenses, avoid layoffs, or keep key suppliers on board while working through its financial challenges. In contrast, other types of funding, such as those aimed at expanding operations or long-term investments, serve different purposes that do not address the immediate urgent cash flow needs associated with distressed situations.