Bankruptcy Financing

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DEFINITION of 'Bankruptcy Financing'

Financing arranged by a company while under the chapter 11 bankruptcy process. Clearly, such financing is extremely high risk and is done at a relatively high interest rate.

INVESTOPEDIA EXPLAINS 'Bankruptcy Financing'

Sometimes referred to as "turnaround financing" or "debtor in possession financing". It can be very profitable to lend to companies that need money this badly, but at the same time, a lender runs a high risk of the creditor defaulting.

RELATED TERMS
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    A bankruptcy proceeding that is structured to move through legal ...
  2. Chapter 11

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  3. Moratorium

    1) A period of time in which there is a suspension of a specific ...
  4. Debtor-In-Possession Financing ...

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  5. Default Risk

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RELATED FAQS
  1. What are the differences between chapter 7 and chapter 11 bankruptcy?

    Chapter 7 bankruptcy is sometimes also called liquidation bankruptcy. Firms experiencing this form of bankruptcy are past ... Read Full Answer >>
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