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Ellen, Attorney
Category: Bankruptcy Law
Satisfied Customers: 36714
Experience:  Bankruptcy Lawyer. Experienced.
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If we are a creditor on a project (meaning we were a vendor

Customer Question

If we are a "creditor" on a project (meaning we were a vendor on a job and the customer has not paid us and is now filing bankruptcy) and we receive a "Notice of Cash Collateral Motion" from the US Bankruptcy Court stating the date of the hearing...what exactly does it mean to us the creditor?
Submitted: 8 years ago.
Category: Bankruptcy Law
Expert:  Ellen replied 8 years ago.


Thank you for your question. I am responding in two parts due to a computer glitch.

Part One:

Typically this means that the debtor in a Chapter 11 is asking the court to allow it to use cash or anticipated cash receipts that were previously pledged as collateral to pay nonsecured debt.

These motions are often granted to allow the debtor to use cash collateral to pay the reasonable operating expenses of the entity in order to provide for a successful Ch 11 plan.

Expert:  Ellen replied 8 years ago.
Part 2:

The secured creditor whose cash collateral is in question will typically request that the court impose limits on the debtor's use of the cash collateral.

An unsecured creditor will typically not object to the motion as the use of cash collateral is typically essential to the success of the plan and the creditor's ultimate repayment.

I hope that the information which I provided was helpful to you.

Best wishes for a successful outcome. If you have additional questions, please do not hesitate to submit them to me directly.

Thank you,

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