Debtor in Possession Proceedings

Debtor in Possession (DIP) proceedings occur when a financially distressed company seeks bankruptcy protection while retaining control of its operations. Instead of being taken over by a trustee, the company continues to manage its assets and business affairs to restructure and repay debts. Under court supervision, the company aims to develop a plan to become profitable again, often while negotiating with creditors. This process allows the business to operate, preserve jobs, and maximize asset value, ultimately benefiting both the company and its stakeholders.