A New Financing Model for Distressed Companies: DIP

DIP (Debtor-in-Possession) financing refers to a priority credit mechanism provided to enable a debtor in a restructuring process to sustain its operations uninterrupted. Widely used in the US under Chapter 11, this model is increasingly adopted in Europe as well.

In Turkey, however, the picture is different. The current legal framework and judicial practice do not fully meet the structural requirements of DIP financing. This creates a critical financing gap for companies in restructuring processes, leaving the debtor in a weak position, particularly during negotiations with creditors.

For international examples to be adapted to Turkey, both the legal ground and institutional awareness must be developed simultaneously. Restructuring professionals understanding this mechanism correctly and offering it to the right clients in a timely manner can give many businesses a chance to survive instead of being liquidated.