What is “debtor in possession” financing?

Debtor in possession (DIP) financing is a type of financing that is available under Chapter 11 bankruptcy law in Virginia. DIP financing, also known as DIP financing, is a loan made to a company that is undergoing a reorganization and has filed for Chapter 11 bankruptcy protection. In this type of financing, the debtor is allowed to continue operating, using the money from the loan to pay debts and reorganize the business. Without this type of financing, the court might order the debtor to liquidate their assets and cease operations. The main advantage of DIP financing is that it allows the debtor to continue the business, stay in control, and reorganize. It allows the company to make payments on existing debt, restructure debt, and make payments to creditors. It also gives the business an opportunity to negotiate payment terms with creditors and develop a plan to repay creditors. This plan must be approved by the court before the loan is approved. DIP financing is often used when a company is insolvent, meaning that its assets are worth less than the amount of its debts. DIP financing allows the company to restructure its debt without the need for liquidation of assets. In summary, DIP financing is a type of financing available to companies under Chapter 11 bankruptcy law in Virginia. It is a loan that allows the company to continue operations, stay in control, and restructure its debt. The loan must be approved by the court before it can be used. DIP financing can be a valuable tool for companies that are insolvent and need help reorganizing their finances.

What is “debtor in possession” financing?

Related FAQs

Related Blog Posts