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

A debtor-in-possession budget is a budget prepared by a debtor while in Chapter 11 bankruptcy. It outlines the expected amount of revenue generated by the debtor, as well as the expected costs. It is also used to determine how much money the debtor can pay to creditors. The debtor-in-possession budget also has to account for potential unexpected costs and expenses. In California, the debtor-in-possession budget has to be approved by the court and creditors. The budget must be done in such a way to demonstrate the debtor’s ability to continue in operation and reorganize and emerge from bankruptcy. It is also used to determine the amount the debtor can pay creditors. The debtor-in-possession budget must be accurate and detailed. Creditors may question the assumptions used by the debtor for the budget, so the debtor should be prepared to defend the assumptions. If creditors do not find the budget acceptable, they may ask for modifications or reject the budget altogether. The debtor-in-possession budget is an important part of the Chapter 11 bankruptcy process as it will determine how much money the debtor can pay to creditors. It is important for the debtor to understand the process and prepare a budget that is accurate and approved by the court and creditors.

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

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