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.

BREAKING DOWN '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.

  1. Chapter 10

    A type of corporate bankruptcy filing in the U.S. Chapter 10 ...
  2. Chapter 11

    Named after the U.S. bankruptcy code 11, Chapter 11 is a form ...
  3. Chapter 13

    A U.S. bankruptcy proceeding in which the debtor undertakes a ...
  4. Chapter 7

    A bankruptcy proceeding in which a company stops all operations ...
  5. Bankruptcy

    A legal proceeding involving a person or business that is unable ...
  6. Chapter 15

    A chapter under the U.S. Bankruptcy Code, added to foster a cooperative ...
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  1. What effect did the Bankruptcy Abuse Prevention and Consumer Protection Act of 2 ...

    Credit card companies and banks hate deadbeats who take from their bottom lines. They especially dislike the Chapter 7 bankruptcy ... Read Answer >>
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    Read about debts that are dischargeable when filing for bankruptcy. Learn about how personal loans are treated when filing ... Read Answer >>
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    Learn what some of the principal advantages are for a company that chooses to utilize equity financing in preference to debt ... Read Answer >>
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