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Representing a Secured Creditor in Chapter 11

§ 15:5 Representing a Secured Creditor in Chapter 11
 
(1) See supra section 15:4.
 
(2) Determine whether creditor has interest in cash collateral. See chapters 5, 8, and 11 of this book. If so:
 
(a) Confirm that debtor is not using cash collateral and require debtor to segregate and account for cash collateral. See 11 U.S.C. § 363(c)(2).
(b) Negotiate with debtor to permit use of cash collateral in exchange for "adequate protection." See chapters 5 and 11 of this book.
 
(3) Evaluate creditor's position.
 
(a) Right to cash payments or other adequate protection. See chapter 5 of this book.
(b) Consider prospects of and benefits to be gained by obtaining relief from the automatic stay to repossess collateral. See chapter 5 of this book.
(c) Consider election under 11 U.S.C. § 1111(b)(2). See chapter 11 of this book.
 
(4) Preserve priority of creditor's lien by opposing any effort by debtor to obtain new credit secured by a lien on creditor's collateral. See 11 U.S.C. § 364(d); see also chapters 5 and 11 of this book.
 
(5) Evaluate debtor's plan of reorganization.
 
(a) Proposed classification and treatment of secured claim. See supra chapter 11 of this book.
(b) Assess whether plan could be confirmed over creditor's objection under "cramdown" provisions. See 11 U.S.C. § 1129(b)(1), (2). If not, creditor should be able to negotiate with debtor from a position of strength.
 
(6) Consider alternatives to Chapter 11.
 
(a) Conversion to Chapter 7. See chapter 3 of this book.
(b) Dismissal. See chapter 3 of this book.