What is a “cash collateral motion” in a Chapter 11 bankruptcy?

A cash collateral motion in a Chapter 11 bankruptcy is a legal request filed by a debtor seeking to obtain the use of cash or cash equivalent assets from a creditor in order to finance the ongoing operations of the debtor. This motion presents a list of the assets owned by the debtor, as well as the requests for the use of the assets by the debtor in its Chapter 11 proceedings. The purpose of filing this motion is to allow the debtor to use the assets to cover their operating expenses and obligations while in Chapter 11. This is necessary because many banks and other lenders require most of the debtor’s assets to be put in a trust in order to protect them from the debtor’s potential creditors. This means that the debtor is not able to use those assets during their bankruptcy proceedings. The motion should include the exact terms of how the requested assets will be used and the duration of such use. The court evaluates the motion based on the best interests of the debtor and the creditors. It also determines whether the debtor will be able to pay all of their debts in full over the course of the bankruptcy. If the motion is approved, the trustee will then distribute the assets accordingly.

Related FAQs

What is a “cash collateral motion” in a Chapter 11 bankruptcy?

Related FAQs

Related Blog Posts