In the context of bankruptcy, what does the term "Debtor in Possession" refer to?

The term "Debtor in Possession" refers specifically to a debtor who retains control over their business and its assets during Chapter 11 bankruptcy proceedings. This is a key concept in bankruptcy law that allows the debtor to continue operating their business while restructuring their debts. The debtor in possession has the authority to manage daily operations and make decisions to stabilize the business financially, all while being subject to the oversight of the bankruptcy court.

Maintaining control during this process is significant as it increases the likelihood of successful reorganization, allows the debtor to maintain customer and supplier relationships, and helps protect the value of the business as a going concern. This position is different from the roles of creditors or outside agencies, which do not have the same level of control or responsibility in the restructuring process.