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Debtor-in-Possession Business Bankruptcy


Question: Debtor-in-Possession Business Bankruptcy

In a business bankruptcy, a debtor-in-possession means that the debtor has filed for bankruptcy but has continued to remain in control of the assets and business operations. In a Chapter 11 (reorganization) bankruptcy, a debtor may retain possession of the business and serve as trustee during the bankruptcy proceedings.

The opposite of a debtor-in-possession would be to have an outside trustee handle the business or have control of the assets.

Section 1107 of the Bankruptcy Code places the debtor in possession in the position of a fiduciary, with the rights and powers of a chapter 11 trustee, and it requires the debtor to perform of all but the investigative functions and duties of a trustee.

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