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

A cash collateral motion is a motion that is filed in a Chapter 11 bankruptcy, which requests that the court order the use of the debtor’s cash reserves or assets for payment of creditors. This motion is typically filed in order to protect the interests of unsecured creditors that may otherwise not receive payment in a Chapter 11 bankruptcy. In New York, a cash collateral motion must be filed along with a showing of the necessity of using the debtor’s cash reserves or assets to pay creditors. The motion must also include a proposed plan and order detailing how the collateral will be used. Generally, the motion will be granted if the court determines that the collateral is necessary to keep businesses running during the bankruptcy proceedings and that it is in the best interest of the creditors. In addition to using the collateral for payment of creditors, a cash collateral motion may also be used to obtain additional funds to pay operating expenses, such as employee wages. It may also be used to obtain additional financing that is necessary to ensure the successful completion of the bankruptcy proceedings. Finally, a cash collateral motion must also include a copy of the debtor’s financial statements, as well as a plan for the repayment of creditors. This plan must indicate how much of the debtor’s assets will be used for repayment. This plan will be submitted to the court for approval before the cash collateral motion can be granted.

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

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