Use of Cash Collateral

Concept vital to the debtor, as its cash is its lifeblood as it attempts to reorganize under Chapter 11. To use its cash in bankruptcy, the debtor must obtain either court approval or the consent of its secured lender if the cash is subject to the lender’s lien. Where the secured lender does not consent, the case’s first battle is often fought at a cash collateral hearing conducted just after the bankruptcy filing in which the creditor tries to prove that its interest in the cash is not adequately protected or that the cash does not belong to the debtor at all.

Bankruptcy Code § 363. See also Absolute Assignment of Rents, Adequate Protection, Assignment of Rents for Security, Cash Collateral.

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