DIP financing

Debtor-in-possession financing: funding for a business in bankruptcy that may receive court-authorized priority or security. Its priority and collateral rights depend on the applicable authority and approved terms.

DIP financing in round numbers

Hypothetical: a retailer in Chapter 11 obtains a US$20m loan to support operations, subject to court-approved terms. The size of the loan does not establish its repayment priority.

Source: 11 U.S.C. 364: obtaining credit.

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