DIP loan

A DIP loan, or Debtor-in-Possession loan, is a special type of financing provided to a company that is going through bankruptcy but still operating its business. It helps the company maintain operations and restructure its debts while in bankruptcy. DIP loans are usually granted by existing lenders or new investors, and they have priority over other debts, meaning they are repaid first once the company recovers or sells its assets. These loans are essential for the company’s survival during bankruptcy proceedings, enabling it to continue running and attempt to become financially stable again.