What Is Cash Collateral And The Use Of Secured Property?

After the filing of the case the first motion usually filed is for a  Cash Collateral Order. Generally there is property that will be used for  the business that generates revenue. If the property has been used to  secure a loan the creditor must be given Adequate Protection. For  instance, if Accounts Receivables have been pledged payments have to be  made to the creditor before the company can use the revenue. Or, if you  have a delivery truck with interest payments have to made to the finance  company in amount based on its monthly depreciation.


The filing fee for a Chapter 11 including administrative charges is $1,717.00.

Attorney’s  fees are to be paid before the filing of the case. These initial fees  must be approved by the Bankruptcy Court when the lawyer by motion  becomes the attorney of record. The lawyer cannot seek additional  compensation for at least 120 day after the case is filed.

After  the case is filed the D.I.P may hire other professionals such as an  accountant or an appraiser but only after filing a motion and allowed by  an Order of Court.

The D.I.P is  required to file monthly reports with the U.S. Trustee on income and  operating expense. On a quarterly basis there is a fee to be paid to the  U.S. Trustee. The fee is based on disbursements. The minimum fee is  $325 every three months.


The U.S. Trustee oversees the entire Chapter 11 and will be present at all court hearings.

Shortly  after the filing of the case principals of the company must attend an  “initial interview” with the U.S. Trustee. At this interview the U.S.  Trustee will emphasize the duties of the Chapter 11 Debtor and will  evaluate the possible plan that will be filed.

Within  20 to 40 days after the filing of the case there will be a formal  meeting with the trustee. The principles of the Chapter 11 Debtor will  be sworn under oath. Any interested party may attend the meeting and ask  questions.


The  aim of the Chapter 11 is that a plan will be approved that explains how  the Debtor will repay its creditors over a period of time (rarely  exceeding 5 years).

Impaired creditors  vote on the plan. These creditors either need to vote to accept the plan  or the Debtor In Possession needs to go through confirmation hearings  on and convince the judge the plan is in the best interests of all the  creditors.

Once a plan is confirmed, the  business is on its way but is obligated to make payments to its  creditors as laid out in the Plan. Some reports are filed demonstrating  that the first of the payments have been made.

For more information on Cash Collateral & Secured Property, a Complimentary consultation is your next best step. Get the information and legal answers you are seeking by calling today.

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