The US Bankruptcy Court gave an order to Novan, Inc. to obtain DIP financing on a final basis on August 21, 2023. As per the order, the debtor has been authorized to obtain a term loan facility in the amount of up to $15 million in aggregate from Ligand Pharmaceuticals. The DIP loan would either carry an interest rate of 12% p.a., along with an additional 6% p.a. interest more than the Contract Rate in the event of default.

As per the terms of the DIP agreement, the loan carries a commitment fee of 2% p.a. The DIP facility would mature either on earliest of the 70 days after the Petition Date or on the date of consummation of the sale of substantially all assets, whichever is earlier. Adequate protection would be provided to the DIP lenders in the form of super-priority administrative expense claims which is subject to a carve-out in the amount not exceeding $0.03 million towards unpaid professional fees / administrative expenses and priority lien upon and security interest in the debtor?s collateral. The proceeds of DIP financing would be used to pay approved Prepetition Obligations in accordance with the DIP Budget and for working capital and general corporate purposes.