Debtor in possession or DIP financing is for businesses that are in financial distress and have filed for Chapter 11 bankruptcy, to protect themselves from creditors. It is used to enable the reorganization of a business by accessing capital to support operations while their bankruptcy is under way. A typical candidate for DIP financing is able to show lenders that their company has a valid plan with a foreseeable outcome to turn its business around.
This is not an option for businesses that just want to liquidate their company.
Many small business owners are not aware that they can obtain financing to turn their company around after they have declared bankruptcy. If they file for Chapter 11 bankruptcy protection, they may be able to take advantage of debtor in possession financing. DIP financing will help companies get back on track, provide restructuring support, and return to being profitable.
