Debtor in possession

A company that continues to operate while under the Chapter 11 bankruptcy process.

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Chapter 11 gives the debtor a fresh start, subject to the debtor's fulfillment of its obligations under its plan of reorganization.

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Legal name for a firm or business concern filing for protection from creditors under Chapter 11 of the Bankruptcy code, acting as its own Bankruptcy Trustee.

Financing arrangements given to an insolvent borrower under court supervision may have some attractions to lenders because these are supervised closely by the bankruptcy court.

Situation arising in a bankruptcy when the party who owes money remains in control of the use of property.
Example: After Bite & Die Diners filed for Chapter 11 bankruptcy, they continued to serve customers as a debtor in possession.

Bankruptcy in the United States
Bankruptcy in the United States
Authority · History U.S. Trustee Court · BAP Code · FRBP
Chapters
Chapter 7 · Chapter 9 · Chapter 11 · Chapter 12 · Chapter 13 · Chapter 15
Aspects of bankruptcy law
Automatic stay · Discharge Bankruptcy trustee · Claim Means test · DIP
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A debtor in possession in United States bankruptcy law is a person or corporation who has filed a bankruptcy petition, but remains in possession of property upon which a creditor has a lien or similar security interest. A corporation which continues to operate its business under Chapter 11 bankruptcy proceedings is a debtor in possession.

Under certain circumstances, the debtor in possession may be able to keep the property by paying the creditor the fair market value, as opposed to the contract price. This is often the case where the property is a personal vehicle which has depreciated in value since the time of the purchase, and which the debtor needs in order to be able to find or continue employment to pay off his debts.

See also

• Debtor-in-possession financing
• Seniority (financial)
• Bail out (finance)
• Default
• Distressed securities
• Insolvency
• Liquidation
• Bankruptcy alternatives

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