Early last year, when corporate defaults were headed for the stratosphere and capital was hard to come by, lenders willing to provide debtor-in-possession loans to Chapter 11 companies looked to make a killing. Some deals were churning out yields of 13 to 14 percent, up-front fees of 3 to 5 percent and exit fees of 1 to 3.5 percent - double what was common for DIP financings in 2002, the last big default cycle.
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