The approved budget is an important part of IDD funding. The «DIP budget» may contain a forecast of revenues, expenditures, net flows and outflows for working periods. It must also take into account the date of payments to borrowers, fees, seasonal variations in revenues and possible capital expenditures. Once the DIP budget is approved, both parties will agree on the amount and structure of the credit facility or loan. This is only part of the negotiations and leg work needed to ensure the funding of the DIP. Two notable examples are the public financing of Chrysler[6] and General Motors[7] during their respective bankruptcies in 2009. The willingness of governments to allow lenders to place debts on debtors` debts on the debts of an insolvent company is variable; U.S. bankruptcy law expressly authorizes it,[8] while French law has long treated the practice as an abusive support, whereby employees and state interests must first be paid, even if the end result was liquidation rather than corporate restructuring. [9] The financing of debtors in possession or DIP financing is a specific form of financing for companies in financial difficulty, usually during restructuring under the Corporate Insolvency Act (such as Chapter 11 bankruptcy in the United States or CCAA in Canada[1]).

As a general rule, this debt is considered a priority for all other debt, equity and other securities issued by a company[2] – and violates any rule of high priority by placing the new financing before a company`s existing payment debts. [3] Since Chapter 11 promotes corporate restructuring over liquidation, the filing of protection can be an important vital artery for troubled businesses in need of financing. With respect to debtor financing (DIP), the court must approve the financing plan in accordance with the protection afforded to the company. The lender`s supervision of the loan is also subject to court approval and protection. If the financing is approved, the entity will have the cash to maintain its operation. IDS is often financed by long-term loans. These loans are fully funded throughout the bankruptcy process, resulting in higher interest costs for the borrower. In the past, revolving credit facilities were the most commonly used method of allowing a borrower to withdraw the loan and repay it if needed; Like a credit card.