Cash Collateral Motion

Cash Collateral Motion

Drafts a motion for authority to use cash collateral under § 363(c)(2) — a critical first-day pleading in bankruptcy. Covers adequate protection, budget constraints, carve-outs, and interim/final hearing procedures.

Required Inputs

1. Case info — debtor name, case number, chapter, court, judge
2. Prepetition debt — secured creditor(s), loan docs, amounts, collateral descriptions
3. Cash collateral sources — accounts receivable, bank accounts, inventory proceeds, rents
4. Budget — 13-week cash flow projection with line-item detail
5. Adequate protection proposal — what debtor offers the secured creditor
6. Lien records — UCC filings, mortgages, security agreements, intercreditor agreements
7. Urgency basis — why interim relief is needed before final hearing

Workflow

1. Introduction and Relief Requested

• Identify debtor, case, chapter
• State debtor seeks authority under § 363(c)(2) for interim and final relief
• Preview adequate protection package

2. Background

• Business operations and necessity of cash collateral
• Prepetition secured debt (nature, amount, lien position, priority)
• Events leading to filing

3. Jurisdiction

Cite: 28 U.S.C. §§ 157, 1334 · 11 U.S.C. §§ 363(c)(2), 363(e) · Bankruptcy Rule 4001(b) · applicable local rules.

4. Cash Collateral Description

• All cash and cash equivalents traced to secured creditor's collateral
• Bank/deposit accounts, inventory/receivable proceeds, rents and profits (if applicable)

5. Necessity

• Debtor cannot operate without cash collateral
• Immediate obligations: payroll, vendors, operations
• Consequences of denial: shutdown, job losses, asset deterioration
• No alternative financing on better terms

6. Proposed Budget

• 13-week cash flow projection (attach as exhibit)
• Categories: payroll, rent, utilities, insurance, critical vendors, professional fees
• Variance reporting (typically ±10–15%) and budget modification procedures

7. Adequate Protection Package (§ 363(e))

Select from and tailor to facts:

• Replacement liens — same priority on post-petition assets of same kind
• Superpriority claims — § 507(b) administrative expense
• Cash payments — periodic interest or principal
• Equity cushion — if collateral value exceeds debt
• Reporting — financials, budget variance, books-and-records access
• Insurance — maintained on collateral
• Additional — milestones, operating covenants, termination events

8. Interim and Final Orders

Interim (first-day hearing):

• Limited period (2–3 weeks), budget compliance, immediate adequate protection, schedule final hearing

Final:

• Extended authorization, full adequate protection, termination events/remedies
• Carve-out for professional fees (debtor's counsel, committee counsel, UST fees)
• Reservation of rights for all parties

9. Carve-Out Provisions

• Professional fee carve-out (amount and structure)
• UST quarterly fees, clerk fees, committee professionals
• Triggers that reduce or eliminate carve-out

Checks

• File as emergency/first-day motion requesting interim relief
• Comply with Rule 4001(b)(1)(B) — highlight all specified provisions in the motion
• Address intercreditor agreement issues and multiple-creditor priority
• Budget must be realistic — inflated projections destroy credibility
• Adequate protection must be substantive, not perfunctory
• Include a supporting declaration from a debtor representative
• Proposed order must be filed as a separate document

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