What is a “debtor-in-possession loan” in a Chapter 11 bankruptcy?

A debtor-in-possession loan is a loan that is approved by the court when an individual or business files for Chapter 11 bankruptcy in Utah. This loan is set up to help the debtor keep their business operations running during the bankruptcy process. The loan is provided to the debtor by a lender that is typically an affiliate of the debtor. This loan is secured by the debtor’s assets and can be used to pay for necessary operating expenses and to fund the reorganization plan. The funds from the loan can be used to pay creditors and to help the debtor get back on their feet. The court will review the loan to make sure that it is in the best interest of the creditors and that it is necessary for the debtor to continue their business operations. The court will also set a repayment plan that the debtor must follow. Once the loan has been approved, the debtor will be responsible for paying back the loan in accordance with the terms of the repayment plan that was set by the court. The repayment must be made to the lender and not to the creditors. This loan is an important part of the Chapter 11 bankruptcy process in Utah.

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What is a “debtor-in-possession loan” in a Chapter 11 bankruptcy?

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