By Stephanie Gleason

First Mariner Bancorp has lined up a $2.5 million bankruptcy loan to allow it to continue operations as it works to sell its assets at auction.

"Because the Debtor does not have any independent operations, it lacks sufficient funds to consummate the proposed transaction," First Mariner said in court documents filed Monday. The loan will "function as a 'bridge' to the closing of transfer and sale of the Purchased Assets."

The financing is being provided by the same group of investors that have offered to purchase the bank-holding company and infuse as much as $100 million into the ailing bank. The company is requesting the U.S. Bankruptcy Court in Baltimore consider this financing, as well as a set of rules it has proposed to govern an auction for its assets, by March 7.

First Mariner Bancorp, the holding company for Maryland community bank 1st Mariner, filed for Chapter 11 bankruptcy Monday to sell its bank subsidiary.

The company would like to auction its assets and name the $100 million recapitalization offer as lead bidder. The group is made up of six investors, including Priam Capital, Patriot Financial Partners, GCP Capital Partners and TFO Financial Institutions Restructuring Fund LLC.

The investor group has offered $4.775 million to purchase the bank holding company. The bank would then merge with an entity set up by the investors. The entity would provide between $85 million and $100 million to recapitalize the bank.

According to auction rules submitted Tuesday, the group would be entitled to a $1 million breakup fee if bested at auction.

This deal with investors comes after multiple failed attempts to recapitalize the bank, according to court documents. The company has moved through preliminary negotiations stages at least five times since 2011, it said. Three of those deals considered a prepackaged Chapter 11 plan, similar to the one First Mariner proposed Monday.

Some of the investors that are part of the deal now were involved in those early discussions.

If First Mariner's proposed transaction is approved by the bankruptcy court, two former Wilmington Trust executives will take the reins. Jack Steil would become chairman and chief executive, and Robert Kunisch Jr. would become president and chief operating officer. Both men were also formerly with Mercantile Safe Deposit and Trust.

There are 16 1st Mariner Bank branches throughout Maryland, as well as a 12-branch mortgage arm called 1st Mariner Mortgage. The bank employs 465 people.

(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection. Go to http://dbr.dowjones.com)

Write to Stephanie Gleason at stephanie.gleason@wsj.com