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Protecting Cash Collateral in Chapter 11: Adequate Protection, Intercreditor Agreements, Carve-Outs, Valuation

Recording of a 90-minute CLE video webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Wednesday, May 18, 2022

Recorded event now available

or call 1-800-926-7926

This CLE course will discuss challenges related to providing adequate protection for the use of cash collateral and debtor-in-possession (DIP) financing that are most often contentiously negotiated among the debtor, its secured creditors, and DIP lenders, and that bankruptcy judges intensely scrutinize.

Description

When, how, to what extent, and which creditors to protect are the most critical financial issues in any bankruptcy case. The Bankruptcy Code does not define the nature or extent of adequate protection. Still, the debtor's obligation to provide adequate protection must be addressed in budgets, sale orders, bidding-procedures orders, and even plans.

The impact and enforceability of intercreditor agreements and DIP financing terms are central to using cash collateral and adequate protection. Complex issues arise when enterprise value falls over the life of the case and the court must allocate individual collateral value among various competing creditors.

Courts are well aware that creditors often make excessive adequate protection demands and that debtor's stipulations and waivers, for example, under Section 506, are not made at arm's length. Carve-outs require special attention by all parties, and fee caps in a cash collateral order may not be enforceable in confirmation.

Listen as our authoritative panel of bankruptcy practitioners offers guidance on these issues, looks at current case law, and provides practice tips for counsel representing secured creditors, debtors, and DIP lenders.

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Outline

  1. Introduction: statutory requirements (Sections 105, 361, 362, 363, 364, and 507; Rule 4001)
    1. What is cash collateral?
    2. What is adequate protection?
    3. Court approval, hearing, notice
  2. Creditor considerations for consenting to use of cash collateral
  3. Impact of intercreditor agreements
  4. Budget issues
  5. Methods of providing adequate protection
  6. Critical provisions in cash collateral orders

Benefits

The panel will discuss these and other key issues:

  • What should creditors do if adequate protection is not negotiated pre-filing?
  • What are the key terms for any cash collateral order?
  • What are some unusual types of adequate protection that have been approved?
  • Can legal fees be recharacterized as payments on debt?
  • What is a fictitious going concern value?
  • Can assets in non-U.S. jurisdictions constitute adequate protection?

Faculty

Whittman, Brian
Brian Whittman
Managing Director
Alvarez & Marsal Holdings

Mr. Whittman is a Managing Director with Alvarez & Marsal's North American Commercial Restructuring practice in...  |  Read More

Hoffmann, Timothy
Timothy (Tim) Hoffmann
Partner
King & Spalding

Mr. Hoffmann's practice focuses primarily on bankruptcy and insolvency-related matters. He has represented debtors,...  |  Read More

Montoni, Peter
Peter Montoni
Partner
King & Spalding

Mr. Montoni is a partner in our Corporate, Finance and Investments practice, specializing in debt restructuring and...  |  Read More

Wilson, Sarah
Sarah Beth Wilson
Partner
Phelps Dunbar

Ms. Wilson's areas of focus include bankruptcy and reorganization, business and litigation.

 |  Read More

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