Many circumstances constitute lack of adequate protection: the debtor is continuing to use collateral without making periodic payments;7 insurance has lapsed;8 the debtor is not properly maintaining or protecting the property; other liens or claims are eating into the creditor’s interest in the collateral.
What does adequate protection mean?
Legal Definition of adequate protection
: such action as is judicially determined to protect a secured creditor’s interest in property that is part of a bankrupt estate.
How are adequate protection payments applied?
Pre-confirmation adequate protection payments shall be applied to the principal of the creditor’s claim. Upon confirmation of this plan all secured creditors will receive adequate protection payments as set out below along with the payment of the debtor’s attorney’s fees.
Why is a secured creditor entitled to adequate protection?
Thus, a secured creditor has the right to adequate protection if a debtor proposes to use, sell or lease property which constitutes the creditor’s collateral during the bankruptcy case or if the debtor proposes to secure post-petition borrowing by granting an interest in the secured creditor’s collateral equal or …
What is a replacement lien?
A postpetition lien provided to a lender covering property acquired by the debtor after the bankruptcy filing. Lenders are often entitled to adequate protection of their interests in collateral, especially where the debtor proposes to use or sell the collateral.
Who is entitled to adequate protection?
During the Chapter 11 case, a lender who has a lien on the debtor’s assets is entitled to “adequate protection.” Adequate protection is defined in Section 361 of the Bankruptcy Code and provides for a debtor to: (1) make a cash payment or payments to the extent the stay results in a decrease in the value of its …
How are adequate protection payments calculated?
The amount of the required adequate protection payment typically depends on the value of the collateral, the amount of the monthly loan payment, and the rules in your jurisdiction. In most cases, monthly adequate protection payments range from 1% to 1.5% of the property’s value.
What is a security interest in real property?
Security interest is an enforceable legal claim or lien on collateral that has been pledged, usually to obtain a loan. The borrower provides the lender with a security interest in certain assets, which gives the lender the right to repossess all or part of the property if the borrower stops making loan payments.
What is a cash collateral order?
Cash collateral is cash and equivalents collected and held for the benefit of creditors during Chapter 11 bankruptcy proceedings. … Unless a court orders otherwise, cash collateral is separated from other assets for the purposes of paying creditors.
What are unsecured funds?
An unsecured debt is a debt for which the creditor does not have a security interest in collateral, and the creditor is therefore not entitled to take property from you to satisfy that debt without a judgment. Common types of unsecured debt are credit cards, medical bills, most personal loans, and student loans*.
What is an allowed secured claim?
Allowed General Unsecured Claim means an Allowed Claim not entitled to priority under Section 507(a) of the Bankruptcy Code or otherwise; or as to which the claimant does not have a validly perfected, enforceable lien or security interest as defined in Sections 101(37), (49), (50), and (51) of the Bankruptcy Code; or …
What is a Reditor?
reditor means a natural or legal person who grants or promises to grantcredit falling within the scope of Section 4 in the course of his trade, business or profession; Official Journal of the Ε.U.: L176,27.6.2013,p. 1.“
What is an undersecured creditor?
Undersecured creditors hold a secured claim to the extent of their collateral and an unsecured claim for the deficiency. … In bankruptcy, such creditors are entitled to adequate protection of the secured portion of their claim. They are generally not entitled to be paid postpetition interest.