What is debtor-in-possession (DIP) financing?

Debtor-in-possession (DIP) financing is a type of financing available to companies filing for bankruptcy in South Carolina under Chapter 11 of the Bankruptcy Code. This type of financing is available to help companies reorganize or restructure their operations while continuing to operate. Under DIP financing, the debtor may obtain a loan from a third-party lender to help pay for expenses associated with operating their business during bankruptcy proceedings. This loan is secured by the debtor’s assets, including their inventory, accounts receivable, and other property obtained during the bankruptcy process. DIP financing is typically used to cover expenses such as payroll, taxes, rents, utilities, and other necessary operating costs. The reason DIP financing is often preferred over other types of financing is that it does not require repayment until all other creditors are paid or until the company successfully reorganizes its debt. DIP financing is more attractive to lenders because it is typically secured and the interest rate is typically lower than other financing options. DIP financing is an important tool for businesses who file for Chapter 11 bankruptcy in South Carolina. It allows the company to stay operating while they work through the bankruptcy process, and it gives the company more flexibility to reorganize its debts and restructure its operations. For these reasons, DIP financing is often the preferred financing option for those filing for bankruptcy.

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What is debtor-in-possession (DIP) financing?

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