Can I Still Use the Business Funds While in Bankruptcy?
Generally a debtor may continue to use assets in the ordinary course of business without court approval. There are, however, certain restrictions on the debtor’s use of cash collateral. The debtor in possession cannot use, sell, or lease “cash collateral” unless each creditor with an interest in the collateral consents or unless the court authorizes such use. To obtain court permission to use cash collateral, such as proceeds of stored grain, milk proceeds, the proceeds of livestock sales, or other business income, the debtor in possession must provide any creditor who holds a lien on such property with adequate protection. In other words, the creditor’s secured position must be protected and not harmed by the use of the creditor’s collateral.
