What is “debtor in possession” financing?

Debtor in possession (DIP) financing is a type of financing available to individuals or businesses in Oklahoma that are filing for Chapter 11 bankruptcy. It allows a debtor to borrow money or use other financial instruments to fund operations while the bankruptcy case is still being heard. This type of financing is generally preferred over other types of financing methods, such as taking out a traditional loan. The main advantage of DIP financing is that the debtor can continue to operate and pay its creditors while the bankruptcy proceedings are ongoing. This can help the debtor to stay in business and eventually emerge from bankruptcy with a healthier financial situation. Furthermore, since the loan was acquired before the filing of the bankruptcy petition, the loan terms are not subject to the approval of the bankruptcy court. DIP financing can also help the debtor by allowing it to use its assets as collateral for the loan instead of relying solely on the bankruptcy court’s ability to set the terms of the loan. This means that the debtor can be more confident that it will be able to obtain the loan and can use the collateral as a security measure in case the loan is not repaid. In Oklahoma, DIP financing must be approved by the bankruptcy court and must be in the best interests of the debtor’s creditors. It is important to note that not all debtors are eligible for DIP financing. Furthermore, DIP financing can be expensive and should only be considered if a debtor is confident that it can successfully repay the loan.

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What is “debtor in possession” financing?

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