DIP (Debtor-In-Possession) Loans
DIP loans should be considered and negotiated well before filing.
- The entity that filed the bankruptcy is referred to as the debtor. Chapter 11 rules allow the debtor to make a loan post-petition with security rights over and above existing rights of pre-petition secured lenders.
- Of course, this loan is best negotiated prior to filing the bankruptcy.
- However, it can only be funded post-petition.
- It must be approved by the court.
