Voluntary Payments to Creditors

Voluntary payments to creditors in debtor-in-possession proceedings occur when a company that has filed for bankruptcy chooses to pay certain debts despite being in financial distress. In these cases, the company is still managing its operations and assets. Making voluntary payments can help maintain relationships with key suppliers or service providers, ensuring continued support during the restructuring process. However, these payments must be carefully managed and approved by the bankruptcy court to ensure they are fair and do not hinder the company’s ability to recover financially.