Bankruptcy Financing

Bankruptcy Financing

Financing made available to a debtor in possession, which is a company that maintains its operations during a Chapter 11 bankruptcy. A debtor in possession is generally attempting to fulfill its reorganization plan, discharging certain debts and changing any structural weaknesses to put it on a path to profitability. A company often requires financing in order to restructure, and bankruptcy financing enables it to do so, though at a very high interest rate to compensate the lender for the risk of making money available to the debtor in possession.