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Investments glossary

Debtor-in-Possession (DIP) Financing


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Quotes of the day:

Business strategies can interestingly be assimilated with medicinal drugs. There are no better or worse strategies. There are only adequately adopted business strategies or inappropriately selected and implemented strategies.

— Abderrahman Hassi

Debtor-in-possession (DIP) financing is a special kind of financing meant for companies that are in bankruptcy. Only companies that have filed for bankruptcy protection under Chapter 11 are allowed to access DIP financing, which usually happens at the start of a filing. DIP financing is used to facilitate the reorganization of a debtor-in-possession (the status of a company that has filed for bankruptcy) by allowing it to raise capital to fund its operations as its bankruptcy case runs its course. DIP financing is unique from other financing methods in that it usually has priority over existing debt, equity, and other claims.


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