How does a debtor-in-possession loan work in a Chapter 11 bankruptcy?

A debtor-in-possession loan in a Chapter 11 bankruptcy is a type of financing that helps a debtor reorganize their business and pay their creditors. This type of loan is secured by the debtor’s unencumbered assets, such as equipment, accounts receivable, and inventory. The key difference between this type of loan and other types of financing is that the debtor-in-possession lender will retain control over the assets used as collateral. The debtor is allowed to use the proceeds of the loan to pay creditors, wages, and purchase necessary supplies or inventory. The loan may also be used to pay administrative expenses, attorney’s fees, and other costs associated with the bankruptcy process. The debtor-in-possession loan does not, however, provide the debtor with a new line of credit. Instead, it is a loan that is used to finance the reorganization of the debtor’s business and the repayment of creditors. The debtor does not owe any interest or fees on the loan during the bankruptcy process. In South Carolina, the debtor must provide the debtor-in-possession lender with detailed financial information, including a current budget, full description of all assets, and a list of creditors. The debtor must also provide a business plan outlining the debtor’s projected revenues and expenses. The debtor must agree to make loan payments, provide periodic financial reports, and give the lender the right to inspect the business premises and its books and records.

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How does a debtor-in-possession loan work in a Chapter 11 bankruptcy?

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