what is debtor in possession dip financing 
debtor in possession dip financing is a special kind of financing meant for companies that are in bankruptcy only companies that have filed for bankruptcy protection under chapter 11 are allowed to access dip financing which usually happens at the start of a filing dip financing is used to facilitate the reorganization of a debtor in possession the status of a company that has filed for bankruptcy by allowing it to raise capital to fund its operations as its bankruptcy case runs its course dip financing is unique from other financing methods in that it usually has priority over existing debt equity and other claims understanding debtor in possession dip financingsince chapter 11 favors corporate reorganization over liquidation filing for protection can offer a vital lifeline to distressed companies in need of financing in debtor in possession dip financing the court must approve the financing plan consistent with the protection granted to the business oversight of the loan by the lender is also subject to the court s approval and protection if the financing is approved the business will have the liquidity it needs to keep operating 