💥What Is Debtor-in-Possession (DIP) Financing?
💥TOPICS FOR OUR LEGAL ENGLISH COURSES (INSOLVENCY)
⚡️Debtor-in-possession (DIP) financing allows companies that have filed for bankruptcy protection under Chapter 11 to borrow capital to restructure and continue trading. DIP loans usually have priority over existing debt, equity, and other claims and are facilitated in the hope that the distressed company, with a new cash injection, can save itself, begin making money again, and pay off all its debts.
⚡️Debtor-in-possession (DIP) financing is financing for firms in Chapter 11 bankruptcy that allows them to continue operating.
Lenders of DIP financing take a senior position on liens of the firm’s assets, ahead of previous lenders.
Lenders permit DIP financing, as it allows a firm to continue operations, reorganize, and eventually pay off debts.
Term loans are the most common type of financing provided, whereas historically it used to be revolving loans.
Interest costs on this type of financing tend to be high.
If you liked this tutorial, you might read LEGAL ENGLISH TUTORIAL: How to Prepare a Statement of Defense.
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