DIP Financing

DIP Financing, or Debtor-in-Possession Financing, is a critical mechanism often employed by companies undergoing bankruptcy. This type of financing enables a financially distressed company to secure new investment and funding during its reorganization process under court supervision. DIP financing offers the necessary liquidity to cover ongoing operations, stabilizing the business while it navigates through bankruptcy proceedings. Unlike typical loans, DIP financing holds a senior position in a company's capital structure, often prioritized above existing debts. This makes it attractive to lenders even in high-risk scenarios. Understanding and effectively utilizing DIP financing can be the key to a successful turnaround for struggling businesses.