Eva Shang explains debtor-in-possession financing, a court-approved loan that gives bankrupt companies priority over existing creditors. It buys time to reorganize or sell assets methodically instead of fire-selling them. Granite factories, sawmills, and equestrian farms used it to recover far more value than a rushed liquidation would bring.
Bankruptcy is often a very scary word, but what DIP financing really means is that if you have a company that's filed for bankruptcy that has a bunch of assets and a bunch of liabilities, DIP financing is a type of court-approved financing that allows you to come ahead of other creditors and offer the debtor time to restructure or to liquidate its assets in an orderly fashion. Some of the companies that we've dealt with have been granite factories, sawmills, equestrian farms where they just need a little bit of time to liquidate and they can't be rushed into a fire sale process. Otherwise, we'll get pennies on the dollar.
