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Debtor in Possession (DIP) Financing

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G.M. Wins Final Approval of DIP Financing
New York Times  Jun 25  Comment 
General Motors won swift final approval of its $33 billion in bankruptcy financing, in yet another sign of how quickly the carmaker's trip through Chapter 11 is moving.
Lenders mull offer for bankrupt Delphi: report
Reuters  Jun 18  Comment 
Bankrupt U.S. auto parts maker Delphi Corp's debtor-in-possession (DIP) lenders are mulling an offer for the company, the New York Post said, citing a person familiar with the matter.
TPG interested in Aleris DIP financing
Hedge Fund Blogs From HedgeCo.Net  Mar 3  Comment 
Reuters - U.S. private equity firm TPG has expressed interest in providing debtor-in-possession (DIP) financing for Aleris International Inc, a company it bought in 2006, a source familiar with the situation told Reuters. The private equity...
Despite Huge Cash Hoard, Potential DIP Lenders Say Throw To Lions
Zero Hedge  Jan 15  Comment 
According the the Globe and Mail, the main reason Nortel decided to file for bankruptcy was Lazard's pathetic inability to raise even a dollar of Debtor In Possession financing.... Just for that we will go thru Lazard's court-filed fee...
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more ▼WIKI ANALYSIS
This article is part of WikiProject Definitions. Consider editing to improve it. View articles referencing this definition.
 

Debtor in Possession, or DIP Financing is a kind of debt that is more senior than all other debt - meaning if the lender doesn't have the funds to pay everyone back, the DIP loan is paid back first.

DIP financing is used by companies that are entering bankruptcy to continue operations (ie, to pay employees, cover legal costs, etc.) as they complete the bankruptcy process.

The financing is more senior than other debt because otherwise banks will not otherwise lend to a bankrupt company - ie one that has acknowledged it does not have the funds to pay back all its creditors.

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