Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
A bond issued by a debtor in possession, which is 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. A company often requires financing in order to restructure, and a reorganization bond enables it to do so. Because of the risk inherent to buying a bond issued by a debtor in possession, reorganization bonds carry a high interest rate.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved