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Doctor Credit

I think this question was asked before, but I want to be sure I know the answer: Is there risk associated with selling to a debtor in possession in a Chapter 11 bankruptcy? Is there a safe way to sell to a debtor in possession - a DIP?

Answer: The Bankruptcy Code encourages vendors to sell on credit post-petition by offering an administrative priority claim. Unfortunately, an administrative claim may go unpaid if the debtor becomes insolvent; therefore, a credit professional must carefully evaluate the risk before agreeing to sell to a DIP on open account terms. The safest way to sell to a DIP is by requiring wire transfer payments in advance.

 
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