Bankruptcy Law Questions? Ask a Bankruptcy Lawyer.
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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.
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.
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