What is “adequate protection” in a Chapter 11 bankruptcy?

Adequate protection is a concept in Chapter 11 bankruptcy law in Utah. It refers to the protection of a creditor’s rights while a debtor reorganizes their finances. A creditor may be entitled to protections such as payments, additional liens, or transfers of property from the debtor. The legal basis for adequate protection is found in U.S. Code - Title 11 - Section 361. Under this statute, the debtor must provide adequate protection for any claim or interest of an entity that has an allowed secured claim in the case. Adequate protection helps to ensure that creditors are not prejudiced by changes in the debtor’s finances or property during a Chapter 11 reorganization. For example, if a debtor’s secured creditors have been granted a security interest in certain assets, the court may require the debtor to provide additional liens or other protections for those assets. This way, the creditors’ interests are protected even if the debtor sells or transfers the assets during the period of reorganization. Adequate protection is just one of the important aspects of Chapter 11 bankruptcy law in Utah. It helps to protect creditors from unfair losses that could result from changes in the debtor’s assets during the reorganization period. It is important to understand the legal basis and implications of adequate protection in order to ensure that the creditor’s rights are properly protected.

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What is “adequate protection” in a Chapter 11 bankruptcy?

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