On November 7, 2012, the US Bankruptcy Court for the Southern District of New York approved a DIP financing package in In re: Arcapita Bank that may be the first US bankruptcy financing loan to be fully compliant with Sharia law. The $125 million loan (which can be increased to $150 million) from Fortress Investment Group LLC to Arcapita Bank is structured as a murabahah transaction. The terms of the loan were filed confidentially with the court.

However, in a murabaha, one of the most common Islamic finance structures, the loan is structured as a sale by the lender where the borrower pays the purchase price plus a profit element over time (see Checklist, Islamic Finance Deal Structure: Murabaha). This cost plus arrangement gives the lender the return it requires while complying with the Islamic prohibition against interest.

To learn more about Sharia-compliant financing, see Practice Notes, Islamic Finance: US Law Overview and Islamic Syndicated Financing: An Underdeveloped Method of Sharia Compliant Financing. For more on DIP financing, see Practice Note, DIP Financing: Overview.