Legal Definitions - DIP

DIP

DIP stands for Debtor-In-Possession.

When a company files for bankruptcy, it becomes a debtor. The Debtor-In-Possession is the company that is still in control of its assets and operations during the bankruptcy process. This means that the company is responsible for managing its own affairs and making decisions about how to restructure its debts and operations.

One example of a DIP is a company that has filed for Chapter 11 bankruptcy. In this case, the company is still in control of its assets and operations, but it must follow certain rules and regulationsset forth by the bankruptcy court.

Another example of a DIP is a company that has filed for Chapter 7 bankruptcy. In this case, the company is still in control of its assets and operations until a trustee is appointed to liquidate its assets and distribute the proceeds to its creditors.

These examples illustrate how a company can still be in control of its assets and operations during the bankruptcy process, even though it is considered a debtor.