Debtor in Possession

deb-ter in puh-sesh-uhn
A person or business that has filed for Chapter 11 bankruptcy protection but is still allowed to maintain control of their assets and continue operating the business.
The company filed for Chapter 11 bankruptcy and was granted DIP status, allowing them to remain in operation while restructuring their debts.
In re B-R Holding Company, LLC (2019). The court approved the debtor's request to operate as a DIP, finding it would allow the company to preserve asset value and maximize creditor return.
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Frequently Asked Questions

What are the advantages of a DIP?

Operating as a DIP allows business continuity, preserves customer relationships, and potentially emerges stronger from bankruptcy.

Are there any limitations on a DIP's power?

Yes, DIPs require court approval for major decisions outside the ordinary course of business and are monitored by a creditor committee.

Can a DIP lose control of the assets?

In some cases, the court may appoint a trustee if it loses confidence in the debtor's ability to manage assets.

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