Cash Collateral

Last Updated: Jun 6, 2019

Created By :

Last Edited By :

Created On :

In a bankruptcy setting, cash collateral is cash that is collected when liquid assets are sold during Chapter 11 bankruptcy proceedings. This can be obtained through the sale of cash equivalent securities or through the sale of personal property against which debt may be secured.

Cash collateral is only an issue for corporate bankruptcy proceedings. When a creditor has an interest in a company's proceedings, the cash generated when these proceeds are sold is considered cash collateral and therefore can't be used by the debtor without the creditor's consent or by court order.

Cash collateral can also be defined as cash on hand that a company has pledged to a lender to secure all or part of its loan.