Is the Business Authorized to Borrow Funds while in Bankruptcy?
The debtor in possession is authorized to borrow funds. He may obtain unsecured credit in the ordinary course of business without court approval. And he may obtain secured credit by granting a lien on unencumbered property of the estate or a subordinate lien on encumbered property with court approval. Finally, if the debtor cannot obtain credit on either an unsecured basis or by using previously unencumbered assets, a super priority lien may be obtained if he can establish that any lender who also has a lien on the property will be adequately protected.