Debtor-in-Possession

Debtor-in-possession restructuring is where the debtor remains in possession and control of its assets while it is restructuring. In Canada, debtor-in-possession restructuring is primarily done under the proposal provisions in Part III of the Bankruptcy and Insolvency Act, or under the Companies' Creditors Arrangement Act. In either of these proceedings, the debtor is subject to monitoring by a Licensed Insolvency Trustee (LIT), but the debtor continues to run the business.

Debtor-in-possession financing refers to interim financing provided to a debtor while it is restructuring. See Practice Note, DIP Financing: Overview.