Debtor in Possession
A company that maintains its operations during a Chapter 11 bankruptcy
. A debtor in possession is generally attempting to fulfill its reorganization plan
, discharging certain debts
and changing any structural weaknesses to put it on a path to profitability. As such, a debtor in possession is drastically different from a company in liquidation
, which ceases operations and sells
all its assets
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debtor in possession
A company that continues to operate while in Chapter 11 bankruptcy.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
debtor in possession (DIP)
(To pronounce the abbreviation always say each letter; it is not pronounced as a word.) In bankruptcy,a Chapter 11 debtor who remains in possession of his or her property and continues to operate a business or sell the property. The DIP must still obtain court approval for nonroutine transactions but is able to conduct business, receive monies, and pay bills, including a reasonable salary for the debtor. Contrast with the situation in which a bankruptcy trustee is appointed;in this case the trustee is then in control of all assets of the debtor.
The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.